Do I need a pension?

yowza

[SIZE=-1]I'm 60 years old and know nothing about pensions. There are websites that explain pension options, but they don't tell me if a pension is something I actually need.

I have a diminishing savings pot of about £65k - most of this in a pre-crash bond which matures this month.

At present I pay no income tax - but I am trying, without much success, to get re-employed. Living cheaper abroad is a possible option down the road.

Should I be putting my assets in a pension wrapper, which I now understand adds 20% to my investment? Are there tax implications or withdrawal restrictions that mean I shouldn't? Is the next Chancellor's talk of making pensions tax-free a consideration? Am I better off ignoring pensions and just managing savings/investments myself?

Any helpful thoughts are welcome.[/SIZE]

dunstonh

At 60 you are a bit late to think about pensions. Really at this stage in your life you are looking more at tax efficiency and getting the most for your money than really looking at retirement planning itself.

[SIZE=-1]There are websites that explain pension options, but they don't tell me if a pension is something I actually need.[/SIZE]

Pension advice is regulated and personal so no website is going to tell you if you need it or not. You will just get generic information.

[SIZE=-1]Should I be putting my assets in a pension wrapper, which I now understand adds 20% to my investment? [/SIZE]

Depends on what your objectives are in the future. There are pros and cons and these will depend on your situation.

[SIZE=-1]Are there tax implications[/SIZE]

yes. Some will benefit you, some may not.

[SIZE=-1]or withdrawal restrictions[/SIZE]

yes there are.

[SIZE=-1]...that mean I shouldn't?[/SIZE]

If the pension is the best option to achieve what you want then its ok. If it isnt, then you shouldnt use it.

[SIZE=-1]Is the next Chancellor's talk of making pensions tax-free a consideration? [/SIZE]

no

[SIZE=-1]Am I better off ignoring pensions and just managing savings/investments myself?[/SIZE]

A pension is just a tax wrapper. It doesnt stop you managing the investments within it.

I know my response is a bit wishy washy in detail but there isnt much to go on in your post and to be honest, what you are asking is probably a bit too specific to really cover on the internet which is fine for non regulated areas and generic information but not for providing regulated/specific advice. So many of your questions have answers that will be "maybe" or "depends" and without knowing your details, it is really impossible to say what is best.

Harry_Powell

I doubt you'd be able to put the full £65k into a pension anyway because there are contribution limits based on your income. You can either put in £3600 or 100% of your annual income, whichever is the larger. Therefore in order to put £65k into a pension in one lump sum, you'd have to earn an annual salary of £65k and given your information about looking for a job, I doubt this is the case.

If you do have an income, you could drip feed the £65k into a pension (i.e. if you earned £20k per year you could invest the £65k in a pension plan over 3 and a bit years).

The advantages of putting your £65k into a pension is that it would immediately increase its value by £13k, not an insubstantial sum. You could then take the £13k back out tax free (you're allowed to remove up to 25% from your pension plan, in your case £19,500) and leave the remainder to buy an annuity or in drawdown.

It would be a canny way to get a free £13k in your sky rocket, but the downside would be that the remaining 75% of your money must remain within the pension forever.

You need to decide how you're going to fund your retirement, if you want a guaranteed income from an annuity, you might as well put your money into a pensions wrapper and get the 20% rebate. If you intend managing your investments then you might consider drip-feeding into an ISA (it would take just over 6 years to fully protect your money from the tax man due to the £10,200 ISA investment limit).

yowza

Many thanks for your full and frank reply. It seems I need an IFA.

richardginger

You definately need a pension plan and there is still time. Go and see an IFA and get some advice. Good luck . . .

margaretclare

I hate to disagree with the experts, but I don't think 60 is too late to start thinking about your pension. Of course, 40 would have been better, or 30, but 'better late than never'.

You asked 'do I need a pension'. Well, a pension is just income to live on when you can no longer work. You'll presumably have the basic state pension plus any SERPS/S2P and I would suggest you get a pension forecast before doing anything else. You can get this from the Pensions Service website. http://www.direct.gov.uk/en/Diol1/DoItOnline/DG_4017970

I would suggest you have a look at the Hargreaves Lansdown website because there is a lot of useful information there about pensions and the whole thing. https://www.h-l.co.uk Tom McPhail has an article on there just now.

HTH

Nosht

I would concentrate on tax-free investments such as National Savings, ISA's &c. first, then consider pension planning after this.



Regards,


N.

Harry_Powell

Nosht wrote: »

I would concentrate on tax-free investments such as National Savings, ISA's &c. first, then consider pension planning after this.




Regards,


N.

Why?

cyclonebri1

yowza wrote: »

[SIZE=-1]I'm 60 years old and know nothing about pensions. There are websites that explain pension options, but they don't tell me if a pension is something I actually need.[/SIZE]

[SIZE=-1]I have a diminishing savings pot of about £65k - most of this in a pre-crash bond which matures this month.[/SIZE]

[SIZE=-1]At present I pay no income tax - but I am trying, without much success, to get re-employed. Living cheaper abroad is a possible option down the road.[/SIZE]

[SIZE=-1]Should I be putting my assets in a pension wrapper, which I now understand adds 20% to my investment? Are there tax implications or withdrawal restrictions that mean I shouldn't? Is the next Chancellor's talk of making pensions tax-free a consideration? Am I better off ignoring pensions and just managing savings/investments myself?[/SIZE]

[SIZE=-1]Any helpful thoughts are welcome.[/SIZE]

Please forgive me If i am too heartless;

Ok,


If you are 60 years old and know nothing about pensions, I think we can assume one of the following, Yes, you do need one, also probablly, you don't have one?


The chance off getting re-employed at your, (our) age is remote unless you are a shining star, but unfortunately you probably are'nt, otherwise you would be better fixed than you are.

65k is a tidy sum, but puts you over any asset related benefits etc.

You need to ask yourself what your expectancies are, how long do you expect to live, and budget for that. If you are poor after you expected to be dead, then thats great and a real bonus. Sorry, as I said, honest

margaretclare

Someone aged 60 now can easily expect to live another 20 years. Or more! The Queen now sends out many more 100th birthday cards than she did at the start of her reign.

marycharmaine

I have just reached sixty and have a small personal pension of £18992.00 - too big to take all of it as just over the limit of 17.500 - i can take 25% but need an annuity - i have done some research but would really like it all as too small for a pension - would it be worth leaving it in and hoping that one year in the future i can take it all if the fund falls or the limit rises - hope this makes sense and someone can advise - cheers charmaine