ursaminortaur wrote:Lootman wrote:ursaminortaur wrote:For an employee you can get your employer to pay into an occupational pension whereas they cannot contribute to an ISA.
The US has what i think is a wonderful solution to this and other related dilemmas. Employer pension plans come in two forms. One is like the UK system where there is tax relief on the way in but full taxation as income on the way out. (Paying income tax on what is really a capital gain is really annoying).
But there is also an option which is more like a UK ISA: no tax relief on the way in but tax-free on the way out. The latter is called a Roth plan after William Roth, who was the GOP senator for Delaware for much of the same time that Joe Biden was the other one.
The same choice comes with individual US pension plans, called IRAs, which come both in a before tax and after tax form (Traditional versus Roth, in their lingo).
Moreover a traditional plan can be converted at any time to a Roth plan, although there is tax on that. The reverse is not possible as far as I know.
I think that is what Osborne hoped the LISA ISA variant would turn into eventually. One problem though is that a lot of people would be worried that the no tax on withdrawal might suddenly disappear in the future under a different government.
Another thing I should have mentioned about Roth employer plans is that the employer contributes as well, although typically there is a "vesting" period and if you leave your job before then, it can be reclaimed.
An interesting option is that you can borrow from such a pension plan, and repayments and interest go back into your account, boosting it. Some people buy their homes that way and pay their mortgage to themselves!