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Misselling warning as Isas win over pensions

IFAs selling pensions to basic-rate taxpayers could be guilty of misselling as Isas will be more attractive under the new Inland Revenue regime, leading pension consultant Ros Altmann is warning.

Altmann, a former adviser to No 10 Downing Street, says it is a good job that stakeholder has not been a success as anybody in its target market is likely to be assessed for pension credit.

She warns that the Revenue&#39s taxation simplification proposals, with the £1.4m lifetime limit and annual contribution of up to £200,000 means most people will be better off saving in an Isa, using the funds if they need it before retirement and moving it into a pension later in life if circumstances merit.

Altmann says: “The Inland Revenue paper makes it easier to see the relative advantages of Isas over pensions. Selling pensions to the 80 per cent of the population who are basic-rate taxpayers and on target to be means-tested in retirement amounts to misselling. Pensions still will not be suitable for most under Sandler but it will be misbuying rather than misselling.”

Chartwell pensions adviser Gemma Bryer says: “Isas are more flexible than pensions but many people like the fact that they cannot get their hands on their money with pensions, otherwise they would spend it.”

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