pension dilema any advice welcome

stilldeva

I have just lost my husband and am trying to maximise my money.

I have a private pension whaich I can take at 55 (March) although I will have a penalty and it will pay a fund of 63000 instead of 74000 I need the 15000 lump sum. The monthly pension is around 228 a month which will be BR taxed I have been offered an annuity which will increase that to 297 again before tax.....

My question is as this is a flat rate inthat it is not index linked am I better to get indexed linked or shoulkd I be getting one with a guarantee so that if I die my kids will get something or should I forget the whole thing and just take a loan on the house for the lump sum

gfplux

I am not an expert but a couple of questions to help us and you.
Am I correct you will be 55 in march 2009 ?
The penalty of £11000 is this a percentage that reduce each year?
What is the fund invested in at this minute?
You NEED the £15000 lump sum. Does that mean you need some or all of the £15000 now and the only other way of getting cash is to take out a £15000 mortgage. have you actually asked if you can get a mortgage?
You say pension would be £228 per month, how is it that you have the choice of an annuity of £297. Is the cash left £63000 less lump sum £15000 = £48000. How does this give you two figures for pensions.
What other income do you have that make you a Tax payer.
Are you in poor health as you mention a guarantee for your kids to get some cash.

dunstonh

My question is as this is a flat rate inthat it is not index linked am I better to get indexed linked

If you are taking the income (which isnt a requirement) then at that age, it makes sense to get it index linked.

or shoulkd I be getting one with a guarantee

Indeed a guarantee either on conventional 5 or 10 year basis or using Value Protect is sensble if you have someone dependent on the pension. It may not be much of a cost at that age either.

should I forget the whole thing and just take a loan on the house for the lump sum

That is a possible option and could be a better option. However, its impossible to say without knowing anything about the pension.

You say you need a £15k lump usm but its going to cost you £11,000 to get it. A loan is likely to cost you less than that.

EdInvestor

stilldeva wrote: »

I have just lost my husband and am trying to maximise my money.

Sorry to hear of your loss.

I have a private pension whaich I can take at 55 (March) although I will have a penalty and it will pay a fund of 63000 instead of 74000 I need the 15000 lump sum.

Can you give more details of this pension? (Provider, funds it is invested in?).You can take private pensions from the age of 50 at the moment. Is it in a With profits fund? Is the penalty an MVR?

The monthly pension is around 228 a month which will be BR taxed I have been offered an annuity which will increase that to 297 again before tax.....

Pensions are taxed as income, so personal allowance will apply in the usual way. Don't understand the two figures for annuities. Try putting the figures in here:

https://www.fsa.gov.uk/tables

If you just need the lump sum now, not the income, you may be better suited with something called "income drawdown" than an annuity.This means you leave the other 75% of the money invested to grow and take the income when you retire later. The total remaining fund (minus 35% tax) can be left to heirs.

chesky369

Don't rush into making any decisions you may regret later. For instance, are you absolutely sure you want to leave work in March? If you have just become a widow you may actually find yourself rather lonely, after having worked - presumably quite some time. Of course, if your health isn't good, that's another matter but if you're worried about your financial future, it would seem to be better to work as long as possible.

stilldeva

sorry to clarify I am 55 in March 2009 Pension was taken with NPI total fund is 74000 but if I take at 55 there is a penalty and fund is reduced to 63000.

I have NHS pension which I took early on health grounds so incap benefit and pension take up tax allowance everything else is BR

I want to minimize outgoings so need a lump sum. I was advised that as this NPI pension will give me 228 before tax another provider might do better the one quoted is 297.

only thing is they are flat rate not subject to cost of living increase nor guaranteed not so much wanting to leave kids money as not wanting to leave it to firm if I dont live long Hope that helps

Although disabled and not perhaps most attractive prospect do have house woeth £250000 just a little unsure about borrowing on house would still have problem that pension isant indexed linked