Pension vs ISA: The saving vehicle that is ‘certainly a good place to start’ | Personal Finance | Finance

He said: “For higher-rate taxpayers, pension saving carries even greater benefits. Alongside the basic rate top-up, they can obtain a reduction on
their tax bill for the year so that total tax relief is at their marginal rate of 40 percent or 45 percent.

“For someone paying tax at the 40p band, this obtains them a £10,000 gross pension investment for a net cost of £6,000 after tax relief, and for a 45p taxpayer the net cost is £5,500.”

That would seem to relegate investing ISAs to a poor second, as people pay into those from net income and on the main ISA allowance there is no top-up from the state.

But they have the benefit that no tax is payable on either income or capital gains when the ISA is accessed, and that access is more flexible, he explained.

Pensions make up 42 percent of wealth in Britain, according to the latest research by the Office for National Statistics – an even greater proportion than property, minus mortgage debt, which accounts for 36 percent.