From: John Boyle 
Newsgroups: uk.finance
Subject: Re: From Drawdown to ISA
Date: Wed, 24 Jan 2007 00:08:03 +0000

In message <45b69bac$0$97220$892e7fe2@authen.yellow.readfreenews.net>, 
Miss L. Toe  writes
>> Not only that, but I would maximise the ISA allowance during
>> pre-retirement before contributing to a pension.
>
>Always ?

Not necessarily, I just dont believe in the salesmans maxim 'maximise 
your pensions'. I think pensions are worth it for those who are 40% tax 
payers when working and lesser rate in retirement. The trouble is the 
maxim can often mean that the income in retirement is in the 60% also. 
This means that after about 10 years or so you pay more tax on the 
output than was saved on the input. Plus you have inflexibility and 
(possibly) IHT problems.
>
>(share) ISA's only protect against capital gains, and the minimal extra tax
>on dividends.

Just the same as Pensions.
>
>Pensions allow you to more than double the money you put in almost
>instantaenously (subject to a few conditions).

But heavily taxed and controlled on the way out.. which ISAs arent.

If you are a 40% tax payer then I would suggest maximising your 
ISAllowance (which isnt all that much) before considering pensions. It 
gives far more flexibility and doesnt contribute towards the lifetime 
allowance.

eg. I know some consultant doctors who have a maximum NHS pension plus 
£200k p.a. private income. Their advisers have told them to maximise 
pension conts for the reasons you describe. Result ? Over the lifetime 
allowance.

So, in answer to your question of 'always'? well I have to admit, my 
answer would have to be 'no'! but I think people should look at 'post 
retirement planning' rather than 'pensions'.
-- 
John Boyle