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Old Bird with Chicken Feed Pension Provision

:confused: Hi guys The story so far.............. hankies out ready!
I will be 60 in Jan 2007. I'm waiting for a pension forecast and it wont be pretty. Huge gaps in my NI over my working life - mainly due to health problems. Also my capital went lower than low last year so I was in dire straits & on benefits for the first (and I hope last) time in my life!
Now I have just won a considerable amount of £££s. After debts are paid off I am wondering what is the best use of my tax free :rotfl: lump sum? Its a great problem to have!
I will go for an ISA of course but what else should I be considering? Should I top up my NI? Is it too late for a stakeholder or a SIPPS - especially if I wait for next April and the new rules?
I am sure more than one of you can think outside the box and come up with a creative solution for me. I am earning part time now but will probably need to draw something regularily right away as my income is variable. Esp if the pension age is raised before then :-(
Bottle of champagne or malt whisky to the best solution giver - promise!
Jennifer
PS I will of course take advice away from the forum as well.

Comments

  • dunstonh
    dunstonh Posts: 120,198 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Is it too late for a stakeholder

    No. You can put £3600 a year gross (£2808 net) right upto 74.
    or a SIPPS - especially if I wait for next April and the new rules?

    SIPP will almost certainly be unsuitable for you at this time due to the small amounts you can do. A stakeholder would almost certainly be better value. After a number of years of using your pension allowance, you could move it to a SIPP then if you think SIPP is the best thing for you.

    There are no new rules coming in April which would change your ability to pay into a SIPP now or then. SIPPs are not a post April 2006 product. However, a load of providers are preparing new SIPP products between now and then.
    but will probably need to draw something regularily right away as my income is variable

    Immediate vesting pension may be an option in the early years. At least to give you a bit of a boost with some proper income. At age 60, you would get a equiv return of nearly 10% on your net contribution.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Thanks for your prompt and full reply. I seem to have posted this thread twice. If I delete one will be sure to keep replies from the other one.

    Immediate vesting pension may be an option in the early years. At least to give you a bit of a boost with some proper income. At age 60, you would get a equiv return of nearly 10% on your net contribution.[/QUOTE]

    Explain "vesting" please?
  • dunstonh
    dunstonh Posts: 120,198 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    vesting is the process where you commence the retirement benefits and purchase the annuity.

    An immediate vesting pension is where you make the contribution and then 24 hours later they then pay out the 25% tax free lump sum and purchase the annuity.

    You write the cheque for £2808. Its grossed up to £3600. You get £900 back, making your total commitment £1908. The annuity is purchased with the other £2700. You would get aobut 6.1% on that £2700 giving you an income of £162.36 a year. So, in percentage terms, comparable to a savings account, that 8.5%.

    If you delay it a year or two or even more, then that rate will get higher (both with the improved annuity rate and some fund growth).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    Now I have just won a considerable amount of £££s. After debts are paid off I am wondering what is the best use of my tax free lump sum? Its a great problem to have!


    Congratulations :):)

    Roughly how much are we talking about?
    Trying to keep it simple...;)
  • cheerfulcat
    cheerfulcat Posts: 3,406 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Hi Berniesgirl,

    Just a small point about the timing - should you decide to start a pension fund ( personally I think it's a good idea, but this is not advice! ) if you do it before January 31st you will be able to "carry back" a contribution for last tax year as well as contributing for this tax year.
  • EdInvestor wrote:
    Congratulations :):)

    Roughly how much are we talking about?
    Lump sum remaining after debt repayment and new car(!) roughly £70k.
    Thanks for your kind wishes.
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