Taking my pensions at 55. Am I missing something?

mrsbun2002

Hello, I’m seriously considering taking out my pensions in September, and putting it towards a house purchase or mortgage, but am wondering if I’m missing something or being reckless.

I’m 55 in September, my husband is 43. We have a 13 year old child with Autism. Together we own three (mortgaged) houses, two which we rent to paying tenants. My husband also owns his mums property (no mortgage) where she stays as a tenant for no fee).

I have seemingly pathetic work based pensions. Two Sun Life of Canada’s (one being an executive one). I believe that these are defined benefit pensions. They are both offering to pay out about £20k in September, otherwise it’s about £500pa for each

A work based contribution pension & life assurance scheme which appears to be offering a pension of about £1,300pa, and a Council one which is currently offering about £900pa

I am considering taking all the pensions as a lump sum (I know I’ll pay income tax) and paying off the house with the smaller mortgage, or towards a new mortgage as we are moving. One of the houses is buy-to-rent. Ultimately, we want to leave our son with a home to live in, and a house or two with rental income to live on.

Does that sound feasible? My husband will still be working anyway, and it seems as though property is a better investment.

I should add that currently I get DLA and Carers for our son.

Thanks for reading.

mrsbun2002

I forgot to add I stopped working in 2012, to become carer for our son.

dunstonh

I have seemingly pathetic work based pensions. Two Sun Life of Canada!!!8217;s (one being an executive one). I believe that these are defined benefit pensions.

The sun life of canada wont be a defined benefit scheme.

They will only be pathetic if you made pathetic contributions into them. Like any savings/investments you make, if you pay in peanuts, you get back peanuts.

A work based contribution pension & life assurance scheme which appears to be offering a pension of about £1,300pa, and a Council one which is currently offering about £900pa

I suspect you will be taking a significant hit for commencing an LGPS at age 55.

I am considering taking all the pensions as a lump sum (I know I!!!8217;ll pay income tax) and paying off the house with the smaller mortgage, or towards a new mortgage as we are moving.

As a taxpayer, I would thank you for your generosity to the state.

Ultimately, we want to leave our son with a home to live in, and a house or two with rental income to live on.

Have you compared the cost of selling one of the buy to lets and keeping the pension vs what you are thinking of doing?

(also noting that LGPS cannot be taken as cash unless it is a trivial payment)

xylophone

Have you obtained a new state pension statement?

The "Council" pension is presumably LGPS - this is defined benefit and probably better left alone to Normal Pension Age.

With regard to the other pensions (which sound more like DC) assuming that there are no safeguarded benefits valued in excess of £30,000 ,would it be worth considering transferring them to a SIPP, taking the 25% PCLS and then up to your personal tax allowance each year until exhausted?

You can book an appointment with Pensionwise for guidance in respect of the DC pensions.

https://www.pensionwise.gov.uk/en

With regard to an inheritance for your autistic son, presumably you have taken advice from a solicitor in respect of your wills/ guardianship/trusts for vulnerable adults?

https://www.mencap.org.uk/advice-and-support/services-you-can-count/wills-and-trusts-service/setting-up-a-trust-faq

mrsbun2002

Thanks for your reply.

A Will and arrangements for our son are ongoing. We’ve just moved back to Scotland after a spell in England, and inheritance is slightly different. Also, we have a change of people to assist him if we die sooner rather than later together leaving him at school age.

Thanks for the actual pension info. I intend to go and get “proper” advise, but didn’t want to look a complete muppet as I don’t really understand it. Pensions weren’t even discussed when I started work, and not really given much thought after that either. Shame. There’s probably lots of folk like me without the correct provision for later in life.

Thanks for your time

atush

you are overweight on property and underweight on pensions/investments in general.

Check the benefits for both your spouse and child under the DB pensions. Esp as regards to his being a dependent even after the normal age due to his disbility.

What does your husband earn, and what are his pension arrangements?

mrsbun2002

Thanks for your reply.

A Will and arrangements for our son are ongoing. We’ve just moved back to Scotland after a spell in England, and inheritance is slightly different. Also, we have a change of people to assist him if we die sooner rather than later together leaving him at school age.

Thanks for the actual pension info. I intend to go and get “proper” advise, but didn’t want to look a complete muppet as I don’t really understand it. Pensions weren’t even discussed when I started work, and not really given much thought after that either. Shame. There’s probably lots of folk like me without the correct provision for later in life.

Thanks for your time

mrsbun2002

Husband earns £50k plus.

He’s has a frozen final salary pension with his previous company that he worked at for over twenty years. A defined contribution pension with previous company too, and now a new DC with the company he started working with from last November.

woolly_wombat

It would seem most unwise to cash in your pensions and invest in yet another property at a time when the property market is already falling in parts of the UK and tax reliefs on buy-to-let are being withdrawn.

Your pensions are there to provide income in retirement and I think you would regret it if you cashed them in now and had nothing left later. You do have some pension after all - why not build on what you have, and perhaps draw some of it down only if you need it at 55 to live on?

Do check if you could claim any NI credits due for caring for your son. If that's not possible then, once you have a State Pension forecast, consider paying additional NI to ensure you will get the full amount. You can no longer inherit a spouse's State Pension so that's important.

Even though you are no longer working you, or your husband, can still contribute £2880 per year into a pension which the government will top up to £3600. Why turn down free money?