See how pensions and ISAs compare for your situation. Move the sliders, switch the toggles, and explore what each option looks like — the numbers do the talking.
ISAs can be accessed at any time, for any reason, with no penalty. This makes them valuable for early retirement or unexpected financial needs.
Pensions cannot be accessed until age 57 from April 2028 (currently 55). If you retire before this, you need other savings to bridge the gap.
A common approach: use ISA savings to cover early retirement years, then draw from pension from age 57 onwards.
Pension contributions receive income tax relief at your marginal rate — the government tops up every £1 you contribute. Higher rate taxpayers benefit more.
For employed workers, pension contributions also reduce National Insurance — typically saving 2–8% on top of income tax relief.
ISAs receive no upfront tax relief, but all withdrawals are completely tax-free with no limit.
Employer contributions only go into your pension — never an ISA. This is often the single biggest factor in the comparison.
By law, employers must contribute at least 3% of qualifying earnings under auto-enrolment. Many will match higher contributions up to a cap.
Not contributing enough to capture your full employer match means leaving part of your salary on the table.
Pension contributions through your employer reduce your contractual salary. Some mortgage lenders use this lower figure for affordability, though many accept your full salary.
Statutory Maternity and Paternity Pay is calculated on average earnings in the qualifying weeks. If pension contributions were in place, SMP may be based on the lower figure.
Worth checking with your employer and mortgage lender before significantly increasing your pension contributions.
Currently, pension pots sit outside your estate for inheritance tax — passing to heirs free of 40% IHT. ISA savings form part of your estate today.
From April 2027, most unused pension funds will be brought into the estate for IHT. This significantly reduces the pension's estate planning advantage.
A surviving spouse or civil partner can inherit your ISA allowance through an "Additional Permitted Subscription."
Pension annual allowance: £60,000 (2026/27), including employer contributions. Exceeding this triggers a tax charge.
ISA annual allowance: £20,000. Cash ISA allowance will reduce to £12,000 for under-65s from April 2027.
High earners with adjusted income above £260,000 face a tapered annual allowance, potentially reducing their pension limit to as little as £10,000.
Available to those aged 18–39, a LISA adds a 25% government bonus (up to £1,000/year) on contributions up to £4,000/year.
It can be used penalty-free for a first home (max £450,000) or from age 60. Early withdrawal triggers a 25% penalty — which can cost around 6% of your own money, not just the bonus.
The £450,000 property cap has not risen since 2017 and excludes many buyers in London and the South East.
April 2027: Most unused pension funds brought into estates for IHT. Cash ISA allowance cut to £12,000 for under-65s.
April 2028: Minimum pension access age rises from 55 to 57. Some older schemes have transitional protection at 55.
April 2029: The NI exemption on pension contributions is being capped at the first £2,000 of employee contributions per year. Income tax relief is unchanged.
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