Converting Your Pension To An ISA

When it comes to pensions and ISAs, most people in my experience find ISAs much easier to understand and so would like to convert their pension to an ISA.

After all ISAs are free of Income and Capital Gains Tax. For most types of ISAs what you put in grows tax free and you don’t pay any tax when you make withdrawals. There are usually no restrictions in the age you can make withdrawals or on the amount you can withdraw.

Pensions, whilst a great savings product are much more complex. With different rules on access and tax consequences.

Unfortunately, it is not possible to transfer a pension into an ISA. However, there are ways and times you might want to consider moving money out of a pension and re-investing it back into an ISA.

How to convert your pension to an ISA:

#1 – Pension tax free lump sum
#2 – Pension income

What you need to consider before converting your pension to an ISA:

1.Pensions are a great Inheritance Tax planning tool.
2. Taking pension ‘income’ flexibly means being subject to the Money Purchase Annual Allowance.
3. You will trigger a Lifetime Allowance test.

So as always there are pros and cons but ultimately there are ways to convert a pension to an ISA if it is something you really wish to do. You just need to be clear on why you’re doing it and how it benefits you.

In order to understand exactly when you can comfortably retire you need to focus on 4 key areas.

Find out more in the 'The 10-Minute Retirement Plan' a free eBook that can be accessed here: https://rtsfinancialplanning.co.uk/co...

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