Pension At 50

MightyMouse_3

Annalisa wrote: »

While pensions do seem like a good option for those that have a stable high paying job but even then, there is nothing making sure that you will be able to keep this job. Another post on this sight that I was reading he was at a high income job and decided for a pension but then that didn't work out quiet as planned!
heres the story:
http://forums.moneysavingexpert.com/showthread.html?t=949107
Also here is another negative example of pension difficulties
http://forums.moneysavingexpert.com/showthread.html?t=943183
Another factor to take into account when trying to decide is your age...this was debated here
http://forums.moneysavingexpert.com/showthread.html?t=948121
However even though there are some bad sides to the pensions, the problem with ISAs is the temptations to dip into the fund. At least with pensions you will not be able to get to them. In the case of a debt emergency this can be problematic.
There are also different types of pensions to look at such as state pensions and non-state pensions. Also you can always look into pension protections to maybe keep yourself safe. All in all it just depends on who you are and where you're at. If you want a quick summary about pensions I found this site quiet useful to enlighten myself on a retirement plan for myself.
http://uk.moneto.eu/pensions/
Hope this helps!

I saw this on another post and thought it was pretty useful, hope it helps!!

jamesd

buzz41 wrote: »

after reading replies i understand that taking what the pension company offers is the worst of all options but i tell you he is more than happy with what he is getting. duns what would you prefer???

Since he didn't look around he doesn't know what he lost. No reason for you to repeat that mistake - there's only the chance to gain by getting an IFA to get you the best deal when buying annuities, with no chance to lose out.

The drawdown option is way better than the annuity option in part because it avoids selling three quarters of the investment at current low prices.

What you should do is first go over to debt-free wannabe and see whether you can find a better option. No point in considering the pension until you've ruled out less expensive ways. The group over there is very good at wringing every drop of avoidable expense out of things and finding good deals for what you do want or need to have.

Once they have done their job, things like using an interest only mortgage for a few years are less expensive than taking money from the pension, particularly when the markets are depressed.

If you have a mortgage and made overpayments you can get back or that offers additional borrowing using any equity you have, that's probably also cheaper.

If you haven't gone shopping for the cheapest borrowing rates and moved debts around to reduce cost, that's the easiest and cheapest first thing to do.

What we're trying to get you do do is use the least expensive options first, then only consider the really costly ones if the others don't get you a solution.

If it's impossible to find any other solution and you're facing losing your home, say, then using income drawdown to get enough of the tax free lump sum to reduce your debts to a manageable level is an option to consider. You should be looking to take no more than you absolutely have to, though.

EdInvestor

With income drawdown you would need to transfer the pension to a new provider, typically one which operated a SIPP, and then put the fund into drawdown.The SIPP provider would pay you out the 25% tax free cash, which you can then use to pay off the debt.

The other 75% can then be invested (similar to the pension now) so that the fund grows until you need it to provide a pension income.You can start cashing in part of it every year to provide the income - up to 120% of what you can get with an annuity - whenever you like.

In addition, if you die before age 75, the cash in the fund can be paid out to your beneficiaies minus 35% tax. With the annuity, you lose the capital and when you die it stops paying out.

Note that from April 2010 the age at which you can take your pension will go up to 55.So you will only have a six month window of opportunity to do this.If you let it slide beyond the deadline, you will have to wait a further 5 years.

whiteflag_3

EdInvestor wrote: »

With income drawdown you would need to transfer the pension to a new provider, typically one which operated a SIPP

Well you would if you went to AWD Chase de Vere for advice:rotfl:

averageguy11

When someone has a limited retirement provision, it you put the plan into income drawdown, you are leaving it invested. They view of the FSA is that they cannot afford to have their retirement income subject to investment return fluctuations.

That is the general starting point on small fund values. However, they would accept a valid and justifiable reason for doing it on a small fund. So, its not a 100% rule.


Dunns..excuse me for being ignorant..but r u saying that the FSA would possibly not let a person take inc drawdown on a fund of say 28k?

dunstonh

Dunns..excuse me for being ignorant..but r u saying that the FSA would possibly not let a person take inc drawdown on a fund of say 28k?

No. They will let you DIY as much you like. They wont stop an IFA doing it either. However, an IFA has to justify the recommendation. If they dont and just do it then they face action being taken against them by the FSA (such as Chase de Vere as Whiteflag mentions). If an IFA can justify it (and as said, debt clearance is a valid reason often) then there is no problem.

Remember IFAs have to give best advice or face censure/fines/being struck off. If you DIY you can make as many balls ups as you like

chesky369

Buzz - I think you ought to consider debt counselling before you make any drastic decisions. When faced with debt, most people aren't able to take a long view of their situation and how to deal with it. But if they sit down calmly with someone who is used to the situation, it's amazing how they find they can cope without taking what might be disastrous action. Your local citizens' advice should be able to put you in touch with someone who will take time to work through your problems in a way to suit you.

averageguy11

duns ta for yur reply

buzz41

thanks to everyone for your advice/views
just to add my colleague who is urging me to take my pension
he had a pot of 36000 which was all contracted out payments
he took 9000 lump sum and as a monthly income of 120
is that good/bad do you all think

EdInvestor

IMHO taking an annuity at any age is risky and at aged 50 is thoroughly foolhardy.