interactive investor: ‘Mad March’ sees pension and ISA contributions rush at tax year end

For years, the run-up to the end of the tax year has traditionally been known as “ISA season” in some quarters, but interactive investor data suggests that for 2022, when it comes to their customers,  it could equally justify the title “pension season”.

Interactive investor has reported today that throughout March, the average pension contribution made in each week on the platform was £5,425 – slightly higher than the average ISA contribution per week in March of £5,378.

Both average SIPP and ISA contributions in March were significantly up on the average contributions made in a week throughout the rest of the year, which were £2,843 and £2,816 respectively in 2021/22*. Interactive investor, the UK’s second biggest investment platform for private investors, offers SIPPs, ISAs, junior ISAs and GIAs (General Investment Accounts).

The data suggests investors who have a SIPP view the end of the tax year in a similar way to ISA investors who scurry to meet the deadline of April 5 to max out their allowance. SIPP holders appear to have been rushing to fill up their annual pension allowance as well, which for most workers is either £40,000 or up to their level of earnings in the year, whichever is lower.

Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “We don’t tend to think of there being a rush to fill up a pension annual allowance towards the end of the tax year in the same way we view filling up the ISA allowance. However, our data suggests that many people with SIPPs do want to make the most of their pension annual allowance. The pension annual allowance works differently to the annual ISA allowance, but because of the tax relief on offer on pensions, ‘maxing out’ your pension can also be a good investment strategy.

“The ability to make additional contributions and get tax relief up to your allowance doesn’t just apply to SIPP investors. Workplace pension investors may also be able to make additional contributions to their workplace scheme beyond their regular contributions if they want to take advantage of the annual allowance. Additional contributions from a bonus can be a good use of extra income, too,”

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