Pension or ISA first

The Home stretch offers two moves for savings outside an ISA: a payment into the pension and a top-up of the ISA. They draw on the same savings, so what one takes is not offered to the other. Either can stand alone, and the order is yours.

A pension payment is grossed up with relief on the way in, and the pot is taxed on the way out, part of it tax-free. It is locked until the drawing age, and it counts against the annual allowance.

An ISA takes the money as it is. Its growth and income are free of tax, it can be drawn at any time, and it counts against that year’s ISA allowance.

The bridge weighs on the choice: money in a pension cannot pay for the years before it can be drawn, while money in an ISA still can. The tab’s balance shows what the bridge needs either way.

So can an obligation in a later year, a pension pot already large enough that more inside it buys little, and the wish to keep room for other uses later, from a home to a trust.