Stakeholder pension - trivial commute or wait

footman123

Hi all and greetings from a newby on this or any other forum. I am a person of a certain age so am entitled to commute at age 60 this year (May). This is the only private pension plan I have and it is under the old commutation limit (18k). My query is; would I be better off to just leave it in operation now and add to it up to the new trivial limit of £30k. Or indeed, is it better to leave it add infinitum until I really need the money in view of the new regulations. The scheme is performing really well, I just thought that I could invest the money in my business to get a better return than waiting for a paltry annual pay out via annuity etc. I am able to pay quite large amounts into the scheme (£150pm+). All responses gratefully received.

bigadaj

Unfortunately £150 per month into a pension isn't a large amount.

Commutation in pension terms is the movement of money between a one off lump sum and a regular pension payment, or vice versa, so I don't think that's what you mean, it appears that you are referring to triviality in your second statement and crystallising in your first.

If you have a business it's often efficient to contribute to teh pension from your business, at least if it's a limited company, as you can reduce profits in teh business this way. Probably best to initially speak to your accountant and then maybe an ifa to determine the best option for you.

Linton

I feel diversification is important especially when you are at an age where you dont have much time to make up for any mistakes. If you invest your pension money in your business and things went badly you could lose both your job and your chance of a better than very basic life in retirement.

So I think getting your business to increase your pension pot is a better way forward.

footman123

Many thanks for responses. I should have been more specific. I could now pop a couple or more k into the pot monthly. My query was; would it be advisable, in view of the new rules, to throw as much as poss into the scheme. As this is a really effective Stakeholder, (I managed to make very good choices of commodities for investments); should I then allow the pot to build for the next few years. This would be as opposed to excellent returns from our highly stable and profitable business. Thinking it through; all I guess I should do is run a slide rule across the earning on contributions since inception and then extrapolate what monies would earn in business over next few years versus potential earnings in scheme over same period. I know I have 'bashed on' a bit but its good to formulate the thought processes on paper to make considered choices. Any other comments would be gratefully received.


Regards


Footman