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Clients opting for freedom of Isa instead of pension

I recently visited a client who wanted advice on where to redirect the AVCs he had, until recently, been paying to his employer&#39s scheme with Equitable Life.

As it happened, he earns less than £30,000 a year so we were able to explore options for a personal pension. But when it came to decision time, he backed out as he was not prepared to put money into something with such a poor and restrictive range of options open to him at retirement.

In short, he wanted his fund to be his for life to use as he pleases to generate income to supplement his pension from his employer&#39s main pension scheme. Nothing unreasonable about that, is there?

So what of all these new rules and so-called freedoms arising from stakeholder?A complete irrelevance. This client – and I am sure there will be many others – is quite prepared to forego tax relief on his contributions by doing an Isa instead of a personal pension. The fund he accumulates will be his for life to do with as he pleases, not to mention being able to provide him with a tax-free income in retirement. Furthermore, Isa income does not impinge on any age-related tax allowances or means-tested state benefits, unlike pension income.

The whole stakeholder campaign has been a shameful waste of millions of pounds of taxpayers&#39 money to promote something that nobody really wants. Instead of branding the financial services industry as a bunch of rip-off merchants, Jeff Rooker & Co could have done a considerably more useful and relevant job in return for their (index-linked) salaries by opening up the options available to people with their accumulated pension funds at retirement. That is what would really encourage people to put money into personal pension plans.

Julian Stevens

Partner,

WDS Independent Financial Advisers,

Kingswood, Bristol

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