Helping my Pensioner Mum

TheRootOfAllEvil_2

Hello All,

On behalf of my Mum, I'd like your advice on what what to do with £5k.

My Mum is retired and relies on the State Pension for income. She recently benefitted from a £5,000.00 lump sum and I am not quite sure what type of account to keep this in!

She would need access to the money so locking it away for 5 or so years is not an option. Also, it'd be nice if the lump sum could somehow boost her monthly income.

At the moment I'm thinking an ISA would be good especialy one that allows flexible access and pays interest monthly. My concern is that I don't see any attractive rates for ISA Accounts that meet the requirement.

Can anyone offer any other options?

Many thanks,
Shay

Mikeyorks

TheRootOfAllEvil wrote: »

My Mum is retired and relies on the State Pension for income. ................................................................... At the moment I'm thinking an ISA would be good

How old is she and what is the annual rate of pension?

As ..... if she doesn't pay tax then the ISA is probably not a good idea. If she has some online access and a current account .... the PO account at 2.9% is the best around at the moment. If it needs to be a 'High Street' account ......... regrettably Santander (very poor Customer Service) is next best at 2.75% with an ATM facility. Some limited options here:

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

bigfreddiel

TheRootOfAllEvil wrote: »

Hello All,

On behalf of my Mum, I'd like your advice on what what to do with £5k.

My Mum is retired and relies on the State Pension for income. She recently benefitted from a £5,000.00 lump sum and I am not quite sure what type of account to keep this in!

She would need access to the money so locking it away for 5 or so years is not an option. Also, it'd be nice if the lump sum could somehow boost her monthly income.

At the moment I'm thinking an ISA would be good especialy one that allows flexible access and pays interest monthly. My concern is that I don't see any attractive rates for ISA Accounts that meet the requirement.

Can anyone offer any other options?

Many thanks,
Shay

LTSB Vantage account - pays 4% easy access - no penalties for withdrawing.

But she must keep at least £5000 balance to get the 4%.

fj

ultrawomble

bigfreddiel wrote: »

LTSB Vantage account - pays 4% easy access - no penalties for withdrawing.

But she must keep at least £5000 balance to get the 4%.

fj

And credit it with £1K/month to receive the interest.......

psychic_teabag

bigfreddiel wrote: »

LTSB Vantage account - pays 4% easy access - no penalties for withdrawing.

But she must keep at least £5000 balance to get the 4%.

As long as she doesn't pay tax, dropping below £5k isn't the end of the world, since it still pays 3% if balance stays above £3k and that's about as good as you can get instant-access anyway. (Don't forget to register for the tax to be paid gross.)

But if she does pay tax, an instant-access ISA pays around 3% tax-free, which is obviously better than 3% taxable (but not as good as 4% less tax).

As ultrawomble says, need to move 1k out and in each month to qualify for the interest : could bounce it to a Halifax Reward current account which will pay an extra £5/month. Can automate the shuffle to remove the manual intervention, but it is a bit of a pain.

I don't know if it's relevant here, but I've seen someone mention that interest from an ISA is sometimes "invisible" as far as some benefits are concerned. That may or may not be something to consider.

TheRootOfAllEvil_2

Hi,

Sorry for the delay while I got the specifics from my Mum.
My mum is 63 and state pension breaks down as follows per month:
State Pension: 449.76
Pension Credit: 80.64
TOTAL: 530.40

Regarding the question of her paying tax, as far as I can tell she does not.

Hope this helps,

G_M

As said above, Lloyds Vantage current account. Use a form R85 to register as a non tax payer. She'll get 4% tax free if:

1) she keeps more than £5000 in there (and not more than £7000) AND
2) credits the account with £1000 each month (it can immediately be moved out again - so she could do this from her income if enough, or indeed, YOU could put in £1000 and she could give it straight back! - you could even set up Standing Orders to do this each month)

As it's a current account, she could withdraw the interest each month, and if necessary could withdraw the capital too, though the interest rate drops if there's less than £5000 left in the account.