Pension and lump sum.

Tr@cker

I'll be getting this soon for taking early redundancy ( im 55 ) Im told i could put all or part of the lump sum back into the pension for more monthly income which at my age looks favourable as its index linked.

But is there a better option with the cash-about 35k ?

dunstonh

But is there a better option with the cash-about 35k ?

Depends on what you are looking to achieve, how long, what your tax position is (now and future), what your spouse/partners situation currently is (and what it will be in future), what your attitude to investment risk is and what distribution channels you will be using to buy your products. So, the answer at the moment based on what you have said is "maybe".

MikeJones_2

Hi Tr@cker,

Tr@cker wrote: »

...which at my age looks favourable as its index linked...

Dunstonh has hit the nail on the head really. So I make my comment merely as an observation and 'food for thought'. You need to consider what you believe inflation is likely to be in the future.

Consumer Price Index (CPI) is 2.3% (year to April 2009) from 2.9% in March 2009.

Retail Price Index (RPI) which is what most pension schemes and providers use as an index is -1.2% (year to April 2009) from -0.4% in March 2009.

Inflation peaks and troughs and it's a difficult call as to what it will be in the next 5-10 years. To see an interesting graph, see RPI annual average percentage changes on a year earlier: 1948 - 2008

Average Life Expectancy at age 55 is 25.25 years and 28.51 years for males and females respectively.

What we don't know is your health - or that of your family history (e.g. any hereditary health issues such as heart disease, diabetes etc).

As I said, food for thought maybe.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

Tr@cker

My health is A1 i have no partner and will have no other income. Though i might have to work part-time to make my income up-my pension is half pay.

Its anybodys guess with inflation and how long the recession will last, i was just wondering if there's something better to do by investing the cash. I know its a tricky one but im not totally risk-averse.