A RURAL insurer has issued advice to farmers who are investiing in ISA's rather than pensions. 

NFU Mutual says that farmers in their 50s and 60s could be missing out on 'thousands of pounds' after figures show that 3.8million people between 55 and 64 have ISA's worth an average of £38,257. 

Flexible pension rules mean investors can access pensions from 55 years old (57 from 2028), says NFU Mutual. They also added that the impact of pension tax relief means returns could be boosted by up to 41.6% for higher rate tax payers. 

Sean McCann, chartered financial planner at NFU Mutual, said: “Unless you’re about to retire, pensions can seem like a bit of a dull subject – but if you’re in your fifties or older, they can offer a whole new way of thinking about investment.

“Once you reach 55 you can take money from your pension either as lump sums, income or both. This means they can offer an attractive alternative to ISAs if you’re looking to build up funds for the future or to potentially pass on wealth free of inheritance tax.

“Latest figures show 3.8 million people aged between 55 and 64 hold ISAs with an average value of 38,000 – but many of them could be better off topping up their pension and claiming the tax relief.

“In the rural community, we know a lot of farmers won’t have an employer paying into a pension scheme, so saving early and utilising pension benefits is a good idea, no matter your age.

“The tax boost you get when you put money into a pension can make a huge difference to returns.”

NFU Mutual have given the following example: 

  • Over 55, earning £60,500 a year and with £6,000 to invest
  • As a 40% income tax payer, £8,000 could be invested into a pension – HMRC would then boost with a further £2,000 giving them a fund of £10,000.
  •  Up to an additional £2,000 can then be claimed back direct from HMRC, meaning cost to them to create a £10,000 fund would be £6,000
  • Assumes no growth and no charges