Advice needed

Marges

My OH has been made redundant at 57. He is waiting for a back OP on NHS so not looking for work in short/medium term. He has a sick note from GP and filled in forms for disability benefit. I work full time and house is paid for and we have no debt.

As well as savings of about £30k in shares, premium bonds and cash he has a pension pot of £100k. He is keen to take out £25k of pension pot which he says is tax free to "live on". I am against this as I see pension pot as something to invest for income. He wants to go to IFA we have used before but I feel he will just recommend an annuity to create fees for himself and little income for OH. I think buy to let would provide a better regular income, we live in a city with 2 uni's, but also due to oil slump house prices are static and may go down longer term. Thoughts? TIA

kidmugsy

How about your own pension provision? How old are you? Are you earning at the moment?

Marges

I have been in public sector final salary schemes from the age of 21. Most of it is currently frozen in uni scheme since I stopped working for uni last year. I am now working for NHS and contributing to their scheme.

dunstonh

He is keen to take out £25k of pension pot which he says is tax free to "live on".

It can also be very useful in the provision of tax free income if taken that way instead of as a lump sum.

He wants to go to IFA we have used before but I feel he will just recommend an annuity to create fees for himself and little income for OH.

How would an annuity generate fees but the alternatives would not? I am not aware of any IFA charging style that matches what you think. It wouldnt be a good model at all.

I think buy to let would provide a better regular income, we live in a city with 2 uni's, but also due to oil slump house prices are static and may go down longer term.

its an option if you know what you are doing and can get cheap labour for maintenance. We know the Govt are taking increasing steps to make buy to let less attractive. They have been progressively hitting it with extra taxation and that is unlikely to stop. So, you have to account for tax. You may find that you just put people in the house and their rent only covers the borrowing and tax and no surplus.

A pension pot of £100k isnt going to last long for either income or for buy to lets. You would need multiple buy to lets, all with borrowing and all with very high rental yields and no dead periods and tenants with low damage risk.

xylophone

My OH has been made redundant at 57.

You can live on your income alone without difficulty?

Does his redundancy payment not provide "cash to live on" (assuming this means his personal expenses)?

Is his medical condition likely to mean that he will be unable to work in the future?

Have you both obtained new state pension statements?

https://www.gov.uk/government/publications/application-for-a-state-pension-statement

Robin9

More questions than answers for you.

Will your OH get a company pension and when ?

Does the £100k include his redundancy ?

Marges

We can get by as we are, can wait till year end to review. £100k is enough for one btl to supplement income, I know it's not enough to live on on it's own. Main question is is it the best place for his pension pot or will IFA be able to do better? He does want to get some kind of job again if/when he is able but not what he was doing before and not likely to be the same income.

Marges

No company pension for him. £30k savings includes his minimum redundancy payment.

Marges

Dunstonh, if income from one btl was less than £11k wouldn't this be below his tax allowance so no tax and no borrowing cost?

xylophone

Buy to let is essentially a business and not an easy option if your husband is unwell and you are working full time.

You and your husband should obtain new state pension statements see above.

Will he be entitled to ESA in some shape or form? Any other benefits?

https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/benefits-for-people-who-are-sick-or-disabled/

You are entitled to take your own DB benefits at age 60/65?

How many years do you need to look at before SPA for both of you?

dunstonh

£100k is enough for one btl to supplement income, I know it's not enough to live on on it's own.

Where you are getting the £100k from? The pension only provides 25k tax free. The other 75k would be taxable. If he has no other income at all, the tax would be £32,180. Leaving £67,820 available.

Main question is is it the best place for his pension pot or will IFA be able to do better?

A single buy to let in a uni town is higher risk. Can be rewarding but will suffer higher maintenance costs. You dont appear to have a lot of savings behind you to cover down periods and maintenance/repairs. So, that would be a high risk option. You wouldnt want to buy it this year either as the tax would be 40%. If there is the possiblity of benefits, then the income would affect those. The pension does not (subject to the way it is taken)