For those that will be withdrawing their pension pots

fordcapri2000

I am now up to a five figure pension pot, I have thought long and hard about this and I am probably 85% certain I am going to cash it in when I reach 55 or a couple of years after.

No way am I going to risk it on an annuity, I trust myself far more to invest it.
First thing I am going to spread it, eggs in one basket and all that. And remove it in installments over a few years trying to incorporate in a year I will be traveling a few months to avoid as much tax as possible(have my own business)..

My question is probably for those in the same boat who will be taking the money, what will you be investing it in? Do you have any clever ideas on how to take the money out while paying as little tax as possible.

dunstonh

No way am I going to risk it on an annuity, I trust myself far more to invest it.

Annuities haven't been required for almost a decade. So, no recent change has affected that. However, that doesnt explain why you would wish to draw the pension at 55.

First thing I am going to spread it, eggs in one basket and all that.

Which you can do within a pension.

My question is probably for those in the same boat who will be taking the money, what will you be investing it in?

Investing it in a pension would make sense.

fordcapri2000

dunstonh wrote: »

Annuities haven't been required for almost a decade. So, no recent change has affected that. However, that doesnt explain why you would wish to draw the pension at 55.


Which you can do within a pension.



Investing it in a pension would make sense.

Not rigid about the 55 age bit, and in no rush at all. Will not be a problem to me if this thread continues for 5 years and I learn from it while my money sits tight, or some some clever so and so can convince me to take it out on my 55th because....

Just want to get some ideas and feedback, I am not that clued up on pensions, just blindly paid into them since I was 17 one way or another(have an Army one as well), but have learnt more in the past year than ever before.

If I am right in my thinking the FTSE100 has risen a great deal in the past year, so my money where it sits right now is not a bad thing. The only thing I am certain(ish) about is that I will not want to get a annuity, I think ;-)

dunstonh

If I am right in my thinking the FTSE100 has risen a great deal in the past year, so my money where it sits right now is not a bad thing.

The FTSE100 is a very limited index and has a generally poor record over the last 20-25 years. Unless you happen to be invested in a FTSE100 tracker, the performance of the FTSE100 is not what you will be getting.

The only thing I am certain(ish) about is that I will not want to get a annuity, I think ;-)

Annuities are not bad. That was never the problem. However, the recent changes also included changes to annuities. Although I dont recall seeing one media article about the changes in legislation that applies to the new annuity options. So, they can still be retailed and can still be attractive depending on the needs of the individual. You shouldnt rule them out for some of your planning unless they dont fit your needs.

ianjean

Here's a idea herd a bloke on wake up to money (Five live radio) said he arranged to cash in his money pension.

Said he's gonner invest in a company called Pure loans think it was,they will use his money to loan out to clients

said he will get 5% interest ...

jamesd

fordcapri2000 wrote: »

If I am right in my thinking the FTSE100 has risen a great deal in the past year, so my money where it sits right now is not a bad thing.

Does this mean that yo have moved your money out of a FTSE 100 tracker because the market has now risen to around its cyclically adjusted price/earnings ratio so you think the potential for big gains is lower? Or doe it mean that you are still in a FTSE 100 tracker and are happy to be there because the prices are now higher?

fordcapri2000 wrote: »

what will you be investing it in?

Mostly the same sort of things as in a pension, though with more peer to peer lending or investing than is currently readily available in pensions.

fordcapri2000 wrote: »

I am going to cash it in when I reach 55 or a couple of years after.

That can be a good move if you want to move it from a pension pot that is subject to the possibility of higher income tax to ISA or other investments that are protected against income tax increases. it also reduces the risk of a change in the law that may reduce the ability to take the whole 25% tax free lump sum.

fordcapri2000 wrote: »

Do you have any clever ideas on how to take the money out while paying as little tax as possible.

It isn't particularly clever but people with enough money and a suitable risk tolerance can reduce or eliminate their income tax liability by buying venture capital trusts, which pay a tax refund of 30% of the purchase price, capped at the income tax actually paid during the year. Generalist VCTs also typically pay 5% or so tax free income and are free of capital gains tax. You must hold for at least five years or have to repay the initial 30% tax relief.

jamesd

ianjean wrote: »

Said he's gonner invest in a company called Pure loans think it was,they will use his money to loan out to clients ... said he will get 5% interest ...

Why did he bother for only 5%? Considerably more, say 10-12% - is available from P2P lending than that without excessive risk. 10% or more tax free is available from VCT investing (Albion VCT estimated at 7% before 30% tax refund, so 10% after). For all of this you need a suitable risk tolerance. I hope that person isn't going to use only one place, diversification is vital to protect your money.

uk1

The other topic that always seems never to be addressed explicitly is simply whether the pot is already projected as adequate or nearly adequate. Often people with "enough" do not seem to consider that low or no risk is an option and anything higher might not be required.

McKneff

I would like to know what those people will do in retirement if they take their pension pots and blow the lot on wine, women and song.


So having to rely solely on a pittance of a state pension. I presume they wont be able to apply for housing benefit, council tax relief or any thing like that.....

dunstonh

ianjean wrote: »

Here's a idea herd a bloke on wake up to money (Five live radio) said he arranged to cash in his money pension.

Said he's gonner invest in a company called Pure loans think it was,they will use his money to loan out to clients

said he will get 5% interest ...

If you take the most widely used investment fund type in pensions, they have exceeded 5% per annum after charges. So, you would have to ask why you would take money out of a pension, pay large amounts of tax on it to put it into an arrangement that pays 5% before tax and possibly carries greater risk?

ianjean

dunstonh wrote: »

If you take the most widely used investment fund type in pensions, they have exceeded 5% per annum after charges. So, you would have to ask why you would take money out of a pension, pay large amounts of tax on it to put it into an arrangement that pays 5% before tax and possibly carries greater risk?

Guess he wanted the dosh available instantly mind you think he would have to invest there for a while before he got 5%
O well the mind boggles..