When is it the right time to take a pension?

PaulCooper

Hermanmunster
I just had to chip into this, I was lucky enough to be lured by the previous government to crystalize all of my pension investments (underperforming funds) as I thought they would let me buy a residential property--- well they changed their mind, but it saved me a fortune, I took money out of shares when the Footsie was at 5900, in the 5 years since doing it I've earnt probably 4.5% interest on the cash within the SIPP after paying approx £1000 per year to the administrator. OK I'm now getting a straight 3% in the Ipswitch BS. I will probably buy a building plot soon to diversify a bit.
My philosophy is simple, the SIPP is a saving fund with restrictions. I pay in as much as I can and take out as much as I can tax free (every year) and usually take a pension (depends if I have debt to pay off). Money I take out, I try and utilise and put in an ISA, because it's still away from the tax man & I can get 4.25% with no fees
So thanks to labour, the best thing they did for me
Paul

PaulCooper

I meant 4.5% per annum
Paul

Hermanmunster_2

PaulCooper wrote: »

Hermanmunster
I just had to chip into this, I was lucky enough to be lured by the previous government to crystalize all of my pension investments (underperforming funds) as I thought they would let me buy a residential property--- well they changed their mind, but it saved me a fortune, I took money out of shares when the Footsie was at 5900, in the 5 years since doing it I've earnt probably 4.5% interest on the cash within the SIPP after paying approx £1000 per year to the administrator. OK I'm now getting a straight 3% in the Ipswitch BS. I will probably buy a building plot soon to diversify a bit.
My philosophy is simple, the SIPP is a saving fund with restrictions. I pay in as much as I can and take out as much as I can tax free (every year) and usually take a pension (depends if I have debt to pay off). Money I take out, I try and utilise and put in an ISA, because it's still away from the tax man & I can get 4.25% with no fees
So thanks to labour, the best thing they did for me
Paul

Very interesting thank you, so even the fact your sipp is only making a relatively small amount it is tax free and its doing loads better than my cash fund which was good to start but over the last 18 months actually looses a bit from principal.

I wonder if you bought a plot do you mean with your pension fund ?and if so don’t you still have to sell that plot and/or convert it into an annuity before you are 75?

PaulCooper

My money is in a Building Society within the Sipp, very simple totally unsophisticated, but I know what the return is and I know what the fee is.
Ref the building plot, I guess it would have to be turned back into an Annuity at 75, but that is 20 years away, what I may do is build something financed by the SIPP, it is only at the point of the planners granting a 'habitable dwelling cert' that you can no longer own this land and building within a pension. Haven't really worked out how I'd raise the money to purchase the new house from the SIPP (or of course I could just sell it on the open market), but it probably comes from my existing house
Paul

Trix2

Hi Paul, could you explain what you mean, by put as much in, then take as much as you can out of your SIPP. I'm trying to work out my husband's pensions at the moment, and this would help a lot. Is that the 'drawdown'. Sorry if I sound dense, but about this I am!

Thanks

jamesd

Trix2, when you're 55 or older you can pay money into a pension scheme then take out the 25% tax free lump sum and keep the rest invested, or use the rest to buy an annuity, or a mixture. Since paul wrote about taking a pension I think he meant buying an annuity rather than using drawdown, but either can be done.

It's not necessary to use them but there's at least one company that packages up this make a contribution, take the lump sum and buy an annuity into something called an "immediate vesting personal pension". This particular product probably isn't the bet deal, it's OK for those in good health who have fairly low pension contributions to make who also want the income immediately. But you can do the same with any other personal pension, just a few more steps. The 55 and over part still applies.