Should I spend my pension?
So I had a statement the other day from one of my pensions. At 65 – not when I retire, obviously – it’ll be worth £1k per Annum in today’s money. That’s over 20 years from now.
So I’m thinking, is it better of part spent against doing up my (London) house which we are in for long term, and any left pays off some of the mortgage? On know bricks and mortar don’t make massive pensions any more but still, seems it could make/save me more than it’s worth no?
Ps it’s not my only one, I have 3 one other is a biggish company pension.Posted 4 years agobrakesMember
I was in a DC scheme for a couple of years before qualifying for a DB scheme. I cashed the DC in when I left it to pay off some debts. More use to me then than in 40/50/60 years time.
I doubt spending £1k on your London house will add value to it – I’d be tempted to spunk it on a holiday or something frivolous.Posted 4 years agoslackaliceMember
Ha ha ha ha! 😀
But that pot of money isn’t yours! I know you’ve paid into it and everything, just like a good saver and citizen does, but you can’t now go around thinking that it’s your money anymore. No no no, that just won’t do.that spoil everything.
Look, all you have to do is just pay me at least 15% of your net salary each month for as many years as you can! but for it to really be good for you! let’s just say that if you didn’t start when you were 16, you certainly won’t have enough, so let’s make it 20% each month. I’ll then look after it for you and at some point when you have stopped working because you’re too old and unproductive, I’ll be able to pay you a small amount each month out of the money you have given me to look after.
Although, please be aware that sometimes, the money you give me to look after, doesn’t like being looked after that much and it might not all be there. It’ll be somewhere else, but I’m sure that won’t be a problem.
Biggest **** scam of the modern era. It’s a con and we all fell for it. Mugs.Posted 4 years ago
I cashed in a UK pension. There was a list of conditions that allowed me to do it one of which was resigning. I wouldn’t have cashed it in to wallpaper a house but reckoned I could do better with the money than a pension fund, I have.
I know that saving is not very popular in the UK but a bit of cash in the bank is choice. For you to decide who can best manage your money. Pension funds are often so badly managed that even with the tax advantages they are a poor investment.Posted 4 years agoPawsy_BearSubscriber
from someone who has retired early and spent yesterday in the sun at bike park Wales. Dont fool yourselves about pensions they do work and are very much well worth having to save for. Anyone telling you not to has never retired. A £1000 per year for the rest of your life is a very good start build on it.Posted 4 years agotowzerMember
In general you can’t get at your pension till you are 55, at which point you can take (a maximum) of 25% of the total amount tax free.
(Google on drawdown and annuity for the rest of the pot)
Re pension statement, I would review (*annually):Posted 4 years ago
– what are the charges and commision
– what % did it earn
– what did the ‘overall market’ do
note that if it earns less than charges + commission it won’t be much of a pension at retirement.
Note that moving money may involve commission and is worth learning about. However note the impact of compound interest and the difference between a good performing fund and a poor one will be massive over 20 years.
Some investigation reveals my work pension is a Hargreaves Lansdown SIPP. Does this means I’d be better off add my other 3 pensions (standard non serps) into it?
I’m wary of putting all my eggs in one basket, but I could choose to “manage” though amounts with HL in a more risky manner?Posted 4 years agomudsharkMember
Kryton57 – well it’s easy to manage if all with HL so that’s what I’d do – there’s no risk so don’t think of it as putting all your eggs in one basket. Picking the investments is the trick but HL have quite a bit of info such as their Wealth 150. You’ve got your login info for your HL a/c?Posted 4 years ago
I have yes.
Obviously I need to work out how to do it and the best fund to use etc. quite obviously I’ve never bothered with any if that. My contributory work pension is in a reducing risk portfolio, I think I’d like to put this little lot into something higher risk / hopefully higher returns.Posted 4 years agob rMember
I’m wary of putting all my eggs in one basket
I’ve left all mine with the companies/private ones they started with. At least that way if one/two go pop I’ve not lost the lot.
To me, I think reinvesting your money is best. £1k per year is nothing now, let alone in 20years times.
With most pensions the £1k is a prediction, so whatever £1k buys now should be about what the pension will/may buy at retirement. And if you could generate £1k for every year of work you could be retiring as a higher-rate tax payer.Posted 4 years ago
If ever you are going to need a lot of money it will be before 55 rather than after it. Financing your kids’ education, starting a business (perhaps with a kid), a big move, baling out of a sinking country, taking advantage of a property market crash… . Having access to one’s own money is more important than a tax advantage to me.Posted 4 years agojulzmMember
I’m a pension specialist. Firstly, you can access a pension before age 55 in the following circumstances :
A you are deemed to be in severe ill health (life expectancy of less than 12 months )
B you have paid into a company pension scheme for less than 2 years, in this case you get a refund of the contributions that you have made, but not any that your employer has made.
After 55 you have the following options:
1. Tax 25% of the fund value as a tax free cash sum and use the rest to buy an income ( either via an annuity, which is buying an income for the rest of your life, generally you can’t change your mind on this at a later date OR by using a thing called income drawdown, where your money remains invested and you draw an income from this within set limits; tends to be higher risk as funds need to match your attitude to risk, capacity for loss and maintain your income levels). With income drawdown it’s possible to take the tax free lump sum and defer income but if you die there will be a 55% tax charge on the remaining fund
2. Leave it where it is until a later date but you should access it no later than age 75 to avoid penal tax charges on death.
Currently if under 55 and none of the above apply to you:
1. Leave it where it is
2. Transfer it to another scheme, either an existing company scheme or a completely new scheme. Again like income drawdown you will need to select funds that match your objectives and attitude to risk. It’s not all about performance.
If you’re not familiar with terms such as alpha, beta, standard deviation, etc, I would not recommend managing your own portfolio. Unskilled investors tend to make basic mistakes like investing when stocks/funds have already had most of their growth and dis-investing at the bottom of the market when the best thing to do would be to ride it out and wait for gains.
Get independent advice from a qualified financial adviser. Rules changed last year so that all charges are very transparent and upfront and you can negotiate on costs.Posted 4 years agoredstripeMember
julzm – what’s best to look / ask for in an independant financial adviser e.g. qualifications, membership of professional body etc. Seen a few advisors over the years and always got the impression they are steering you towards what might get them the most commission, maybe that’s to be expected.Posted 4 years ago
I’ve got 24 years on a private pension and 12 on a work one (with their contributions), the annual statements look okay to me and what I kind of expect but still wouldn’t mind getting an objective view and whther might be better having all in one pot.
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