Should I move to Pension Cash Deposit Fund?

JK2

Wnen I reached retirement age my Personal Retirement Plan (invested in equities)-with Allied Dunbar - was looking quite low so I left it untouched. Now 2.5 years later it is looking much healthier. I have to decide whether to leave it where it is (I don't need to use it at present) and take the risk that it could go down again - on the other hand it may go up - or whether to move it into a pension cash deposit fund for safety where it will earn around 4% and won't be at risk.

I think I know what I'm going to do but would like to know what others think the market will do in the next year or two please.

EdInvestor

What to do now really depends on what you plan to do with the money later.

Do you intend to buy an annuity and if so when?

Or will you choose income drawdown?

JK2

I haven't got that far yet. I probably will not do anything for a couple of years as I am still working part-time and will kick in the pension when I decide to stop. Having seen how much it dropped before I'm just not sure whether to play safe now until I'm ready to use it or to take the chance with the market & keep it where it is for longer.

david78

There are only four possiblities.

If one of the first two happens you will be pleased.

(1) You move to cash and the market falls
(2) You stay in equities and the market rises

But if one of the second two happens you will be upset

(3) You move to cash and the market rises
(4) You stay in equities and the market falls.

You need to base you decision on which of (3) and (4) would
be least upsetting to you. If you don't like risk, assume (3) will
happen and move to cash -- if it doesn't happen (1) will happen
and you will be pleased.

Debt_Free_Chick

david78 wrote: »

There are only four possiblities.

I think there's another one. He moves 25% of the value of the fund to the cash deposit fund and the remaining 75% to a gilt-based fund (assuming he intends to buy an annuity).

When he finally takes his pension & cash, the value then will be broadly the same as the value now.

wotsthat

Why not try and extract as much cash from the fund as possible?

You could take 25% now tax free and then take the maximum drawdown amount allowed.

If you don't need it why not try and squirrel as much as you can into ISA's so you have control of the capital?

Drawdown is perfect for those people who don't need the absolute certainty of an annuity. (in my opinion of course).

QUATTRO

You dont say how old you are or if you are married and have children/grand children. If you (as you sound) are close to retirement I would move most it not all into a more secure portfolio and consolodate. Markets have surprises especially during times of conflict and oil price rises. The current main news topic in the Middle East may or may not be good for investment - so I would consolodate. I would also consider the fact to take the income drawdown option if you have a partner or children/grand children. My understanding of this against an annuity is that what ever happens to you regarding your life expectancy the remaining fund in your pension would go to them. Chosing an annuity could mean they get nothing unless you opt for a lower montly pension take in favour of that pension continuing to a spouse after your death. Finally - changing from Allied Dunbar would not be a good option unless over the past years they have been more favourable in their transfer rates which used to be shocking.

Im no expert but thats whats recently been explained to me.