Planning for retirement - on your own terms


Peter Nutini

Peter Nutini

Financial Planner


At Johnston Carmichael Wealth, we are frequently asked how much money a person needs to retire. At that point we smile, and open a conversation purely about you; your lifestyle, ambitions and needs. 

There is no such thing as a typical retirement, and no one-size-fits-all when it comes to pensions. 

It might be that you want to trade down on assets over time, to free up your responsibilities and resources for leisure. It’s just as likely however, that you might want your pension to fund you while setting up a brand, new business venture, moving to an isolated croft, or buying a soft-top Bentley to tour Europe for six months. 

Retirement is YOUR time, like no other, and it’s hugely beneficial to start planning early, in order to keep your options open.

That’s where we come in. Johnston Carmichael Wealth use clever cashflow modelling technology to see how current and future (forecast) assets can be put to best use. We ask the right questions to ensure your loved ones are safeguarded. We build in flexibility and spot opportunities to make better use of your time and money now; building stronger foundations to support retirement on your own terms.   

Which is best – investing in a pension or an ISA?

This is another frequent question, and the top line answer is that, all other factors being equal, a pension will usually produce the greater investment value, because of the income tax relief attached to personal pension contributions.

However, there are additional and more complex considerations to take into account than just the tax relief that is available. 

Some advantages of a pension;  

  • Income tax relief is available on personal contributions, at the saver’s highest rate. e.g. for every 80p saved into a pension, the UK Treasury adds 20p at basic rate income tax relief. Higher rate taxpayers are able to claim additional relief via self-assessment.
  • Pensions offer a potentially higher maximum contribution level of £40,000 per year, subject to certain criteria. (The maximum ISA contribution is £20,000 per tax year).
  • Savers can make use of previous years’ unused allowances. (Again, subject to certain criteria).
  • Your pension fund will usually not form part of your estate for inheritance tax purposes.  Whether it does or not should be checked with the pension provider, especially on older plans.

Some disadvantages of a pension;

  • You cannot access a pension before the age of 55 (rising to 57 by 2028) unless you are seriously unwell.
  • If your pension fund exceeds the pension Lifetime Allowance, currently set at £1,073,100, additional tax may be payable.
  • When it comes time to take your pension, typically, only 25% of your pension fund is tax free; the balance will be treated as earned income and taxed accordingly when it is paid.

Some advantages of an ISA;  

  • Savings within an ISA are generally open-ended with no fixed term however, the investor can choose between easy access and fixed term products.
  • You can lift 100% of your money as a tax free lump sum at any time, unless you have invested in a fixed term ISA.
  • Any income generated from the underlying investments in an ISA will be tax free.
  • The opportunity exists to transfer assets held in an ISA into your pension fund at a later date, and still obtain income tax relief. (If your earnings are sufficient and the current legislation remains unchanged).

Some disadvantages of an ISA:

  • An ISA does not offer income tax relief on personal contributions.
  • Individual contributions are limited to £20,000 in a single tax year, and any unused allowance cannot be carried forward.
  • ISAs will be included in your estate for inheritance tax purposes.

Retirement is YOUR time, like no other, and it’s hugely beneficial to start planning early, in order to keep your options open.

The age at which you hope to retire is just one of the considerations which we will chat through with you, along with your anticipated need for income or capital as time progresses. 

If you don’t think you’ll need to access the funds invested until you are 55 (or age 57 by 2028) or older then, with the advantage of additional tax relief, investing in a pension fund might be appropriate for you.

However, if you could be in a position to enjoy a healthy and happy retirement before 55, then an ISA might be more appropriate due to the fewer restriction on access to the funds.

For those investors where an ISA and/or pension are not appropriate, there are a range of other solutions available that we can advise on. 

And of course, like all things in life, plans and circumstances change. We will be with you every step of the way to make sure your hard-earned money works as well as possible for you for when it’s time to stop building and just enjoy it. 

Come and speak to us about your retirement savings options. Regardless of circumstances, it’s never too early to start planning. 

Disclaimer: Johnston Carmichael Wealth Limited is authorised and regulated by the Financial Conduct Authority.

This communication should not be read or considered as financial advice. While all possible care is taken in the preparation of this communication, no responsibility for loss occasioned by any person acting or refraining from acting as a result of the information contained herein can be accepted by this firm. 

This communication is based on our understanding of tax legislation as at 7 June 2021. The value or benefit of any specific tax reliefs or allowances will depend upon your own situation. All statements concerning the tax treatment of products and their benefits are based upon our understanding of current tax law and HMRC practices. Legislation and the levels and basis of reliefs from taxation are subject to change and are dependent on your individual circumstances.