Natural yogurt.

A friend from uni, who went onto study for a Doctorate at Queens College, Oxford, and who now works in the City of London, advised me many years ago to not pay into a workplace pension scheme. Admittedly, what I am about to suggest is probably unsutiable to you with relatively few years remaining to me.

He suggested - and carries out personally - £2k into a cash ISA each and every year. For 35 years this is added. A total cash input of £70k is made though with compound interest on a conservative estimate of 3.5% APR you're looking at £137k, of which £67k is pure interest, i.e. you effectively double your money with interest payments.

As you'll be aware, cash ISAs are the safest, sure-fire investment currently open to anyone in the UK, backed unreservedly by HM Treasury. While their name may alter from decade to decade, the essentials remain the same.

The disadvantages of doing things my way are as follows:

1. No employer matches my contribution
2. I do not get a lump sum upon retirement
3. I may not be trusted enough not to dip into the ever-growing stash when times are hard
4. The cash may expire long before I die

The advantages of doing things my way are as follows:

1. My stash is not connected to the stock exchange and therefore its value will never decrease
2. My stash is completely tax-free, unlike every other pension scheme in the UK
3. I know precisely my stash's worth and can calculate the amount I will draw per week upon retirement
4. My stash has nothing to do with any employer and consequently the anguish of not knowing what will happen to it should an employer fold is not an issue

Upon retirement I can of course invest my stash in a fund that will guarantee me a set amount for life - though taxed. Otherwise, the stash is there for me to eek out as I wish until it runs out - the crunch is hoping it does before I die.

I appreciate this is not the most traditional way of saving for one's retirement, but it is something a trusted, well-educated friend is doing and has been doing for years. Working in the City, he's one of the few not to be affected by the recession (he didn't see it coming though) and consequently I'm taking even more notice now of his financial advice than ever before.
 

Hi Steve

I was advised something similar due to the irratic nature of my employment by a Financial Adviser. I currently pay by direct debit a regular amount into a Stocks and Shares based ISA each month. Of course currently the value is low but because this is a long term investment I'm not too concerned. In fact the lower value of shares at the moment means that I'm getting more shares for my money.

There are both advantages and disadvantages to this as Graham has clearly described and you do still have plenty of working years to go to make it worth while. (although I did start mine about 7 or 8 years ago)

John
 

Thanks for your comments guys, we all appreciate that whatever choices we make, it will always be a balanced gamble. It is not a level playing field and it involves a huge amount of guess work. The unfair thing about a Cash ISA is that you have paid tax and National Insurance on your wages before you make a payment into your ISA. With a workplace pension the payment is from your gross salary so you do not pay tax or National Insurance, making your contribution 45 per cent higher at no extra cost to you.
 

From 2007 Stagecoach introduced a ruling, making the most of a loop-hole that they had permission to take advantage of. They would remove your pension contribution but not call it as such - it would be removed as a sundry stoppage; this would then see your NI contribution reduce slightly. Stagecoach would ensure the stoppage (i.e. your pension contribution) would add to your pot. Most people were around £3.50 per week better-off.

At the time, employees were automatically enlisted for this to take place unless they opted out.