Funds Insider - Opening the door to funds

Welcome to the Citywire Funds Insider Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error
I HAVE A DILEMA
+ Reply to discussion
Options
PETER CASTLE
Posted: 05 February 2012 22:02:10(UTC)
#1

Joined: 05/02/2012(UTC)
Posts: 1
Hi

I have just reached the age of 55 a self emloyed gardener and plan to keep working until I am 65, thats the easy bit!!

I have a couple of final salary pensions that should yield a pension of about £6.5K per annum, that bit is qute straight forward as well.

My dilema comes with regard to a personal pension I have with a transfer value of about £160,000. (I do not pay into this pension)

Do I leave it where it is and hope that the value increases and that annuity rates improve over the next 10 years or do I take out the annuity and tax free lump sum now and invest it in cash and or stocks&shares ISA's over the next 10 years?

By my calculation this could yield a savings pot of about £100,000 which would be tax free and the interest earned used to supplement the annuity and final salary pensions plus I would have all of the capital available if I required it,

Any comments or advice on my thinking would be very welcome and appreciated.
Back to top Quote
a m whitehouse
Posted: 06 February 2012 09:16:12(UTC)
#2

Joined: 06/02/2012(UTC)
Posts: 1
Hi Peter

I would respectfully point out that you are not (yet) in a dilemma because all the options have not been gone through and your needs haven't been considered.

You & I are similar in age; I am assuming it will have taken you 30 to 40 years to get to your current financial situation. Now you are projecting forward a further 10 years - this could change, either from choice or necessity - and then you expect to stop earning; and start enjoying?

You may get very specific advice from people reading your post - there isn't anywhere near enough information in it for anyone to give you detailed guidance.

As a financial adviser, working predominantly in pensions I would strongly recommend that you assess your situation with an experienced, qualified adviser who can discuss it fully & properly with you.

You may be able to get recommendations on finding an adviser from friends, family or neighbours, internet searches, and www.findanadviser.org - run by the PFS/Cii which is one of the professional bodies for our business.

It's worth spending time in this area, and now is absolutely the right time to be doing so,

Best of luck,

Back to top Quote
Andrew Moreton
Posted: 06 February 2012 10:07:52(UTC)
#3

Joined: 06/02/2012(UTC)
Posts: 1

Taking money out of a tax-advantaged environment (your pension) to save/invest in a taxed environment (out of the pension, remember you can only save £5,340 in a Cash ISA plus £5,340 into a S&S ISA) is daft especially as the tax treatment of the invested fund is the same in a S&S ISA as it is in a PPP. What would you do with the £30,000 of lump sum that you can't get into an ISA this tax year?

Also, annuities are taxable as earned income so I'm not quite sure what the point of drawing a gross annuity of £5,000 pa only to save/invest the £4,000 net which remains. And you'd be stuck with a relatively low level of annuity for life - in 15 years time assuming 3% inflation £5,000 gr would only be worth £3,200 in today's money.

Much better to get a proper risk assessment done and invest your pension fund appropriately. As the other poster says, go and see a financial adviser to discuss. There are more options for you than just an annuity as well.
Back to top Quote
+ Reply to discussion

Markets

Other markets