what are my husbands options at 50

starfish10

My husband has been paying into a personal pension plan with Royal London for twenty years and on his 2007 pension statement it is giving the option of taking the pension from age fifty even though he is still working, well he is fifty in a few months. We had been thinking of stopping the payments for a while as this money £160 a month we could save this ourselves to do with what we wish either spend, save or invest, pass on to children.

My husband is self employed and intends to carry on working in his business for a few more years. Through hard work and no holidays we are mortgage free and have savings of 250K(in cash at the moment) which we are currently getting on average about 6.8% which we can just save/add to the pot each year.

The notional personal fund is 49k and the transfer value is 66k, what are his options at the moment. I am not sure which is the value of the pension if he takes it at fifty. I know he can take 25% tax free.

We don’t understand that much about drawdown or sipps and unuities but have invested, bought and sold in stocks and shares for a number of years in the past before the technology crash. Which is the best way to get the most out of this money, which it seems you cannot get at the capital to do with what you want as we can with our savings pot.

EdInvestor

starfish10 wrote: »

My husband has been paying into a personal pension plan with Royal London for twenty years .....The notional personal fund is 49k and the transfer value is 66k, what are his options at the moment. I am not sure which is the value of the pension if he takes it at fifty. I know he can take 25% tax free.

Is this a With profits pension? If so, does it have a guaranteed annuity rate? Worth checking that and at what age you can get it, as these pensions can be valuable and shouldn't be moved.

dunstonh

We had been thinking of stopping the payments for a while as this money £160 a month we could save this ourselves to do with what we wish either spend, save or invest, pass on to children.

You are investing at the moment within the pension and death benefits of a pension investment (prior to crystallisation) are higher than any other investment product.

My husband is self employed and intends to carry on working in his business for a few more years.

So, that means he is only qualifying for the basic state pension which at most is £4700 a year. Do you have sufficient by other means to make up the shortfall you will have in retirement?

Which is the best way to get the most out of this money, which it seems you cannot get at the capital to do with what you want as we can with our savings pot.

We cannot really answer your questions without knowing your circumstances. £160pm contribution for a 49 year old self employed person with a pot of £66k is a bit low (as is a pot of £66k). So, taking it at 50 doesnt seem that sensible based on what you have said so far as it will hamper your retirement provision, reduce death benefits and probably incur a transfer penalty (although that may not be a major issue).

Apart from this pension (which will pay around £2500 a year pension income at 65 in todays money) and the state pension of £4700 for your husband, what other provision have you got to live on in retirement?

starfish10

EdInvestor wrote: »

Is this a With profits pension? If so, does it have a guaranteed annuity rate? Worth checking that and at what age you can get it, as these pensions can be valuable and shouldn't be moved.

Sorry its taken a while to get back to you and thanks for your reply, the pension I am talking about is just called Royal London Personal Pension Plan, I dont know if it is a with profits pension (how can we tell) but I do know it can be taken on his 50th birthday

He does have another smaller pension £60 a quarter and that is a Royal London retirement Annuity Plan this cannot be taken until the earliest age 60. I have realised this is different.

starfish10

Dear Dunstonh

Thanks for your reply, I said in the post we do have 250k in cash savings which at the moment we are getting an income from which we are not using so this pot is growing, and we are mortgage free.

What are the benefits of keeping this pension going when you can never get the original money paid in, to do with what you want. With our savings pot we can do what we want, spend, invest, save, buy property, live off the interest hopefully if we want use before we get to old to do anything.

I suppose I just dont get the use of pensions, when you see what they will be paying back, it wont be possible to live on that.

dunstonh

What are the benefits of keeping this pension going when you can never get the original money paid in, to do with what you want.

There are pros and cons to a pension. Lack of access to 75% of the pension being a key negative. However, from an income provision point of view only, pensions provide the highest income of all options.

So, if your income is going to be short and you didnt have a lot of capital reserve then a pension can be the best option as it would give the most income.

Remember in retirement you need capital and income. If you erode the capital that is required for income, then your income goes down and you start a spiral of ever reducing capital and income. Put inflation on top of that and you can run out of money quite quickly if you are not careful.

Some older pensions (more likely on the retirement annuity contract) can have valuable guarantees that are worth keeping.

Remember that on an forum, we dont know anything about you and what you have and what you want etc so everything has to be fairly generic and we also have to consider other people reading the thread who may not be in the same position as you but think what is right for you is right for them. So, blanket statements about the suitabilty (or not) of a certain product have to avoided.