Drawdown pension investment

blokes2

Hi all
I have just turned 55 and can now unlock my small (£16000) pension pot with Scottish Widows
I want to take the 25% tax free to get a car which i need for work (am not retired yet)
The balance will be £12000

Should i leave this balance where it is as i am told it could go down and as its such a small amount already i obviously dont want that
I was thinking premium bonds as i know my money will be there but as the say time may pay dividends
Any thoughts?
Thanks

MEM62

Is this your only pension provision? Taking money from your future (retired) self to buy a car now is likely to be amongst the worst financial decisions you will ever make.

Silvertabby

blokes2 wrote: »

Hi all
I have just turned 55 and can now unlock my small (£16000) pension pot with Scottish Widows
I want to take the 25% tax free to get a car which i need for work (am not retired yet)
The balance will be £12000

Should i leave this balance where it is as i am told it could go down and as its such a small amount already i obviously dont want that
I was thinking premium bonds as i know my money will be there but as the say time may pay dividends
Any thoughts?
Thanks

As you are still working, your remaining 75% will be taxable. That's £2,400 straight down the pan if you are a 20% rate tax payer, more if it would tip you into the 40% bracket. Plus taking anything other than the 25% tax free cash will severely limit your current/future pension contributions.

AnotherJoe

blokes2 wrote: »

Hi all
I have just turned 55 and can now unlock my small (£16000) pension pot with Scottish Widows
I want to take the 25% tax free to get a car which i need for work (am not retired yet)
The balance will be £12000

Should i leave this balance where it is as i am told it could go down and as its such a small amount already i obviously dont want that
I was thinking premium bonds as i know my money will be there but as the say time may pay dividends
Any thoughts?
Thanks

Your 16k pension pot "could have gone down" at any time over the past umpteen years but i suspect in general its grown? You didnt let that thought deter you when you were saving it? Because you dont need the money now, and since if you took it it would immediately go down for sure by virtue of the tax you'd pay on it, and unless you got remarkably lucky with PB's it would for sure decrease by around the rate of inflation every year, I 'd say leave it where it is until you need it. If you have a "gap year" between retirement and taking company and state pension, where you have no earnings you could then take it all out without paying any tax on it.



And by all means take the TFLS to buy a car, those who are saying you shouldn't, its only £4k, its not like you are buying a ferrari, it is indeed needed for work, so its an investment looked at in that respect, and at the end of the day the money in your pension is no good to you if you dont use it.

Albermarle

Should i leave this balance where it is as i am told it could go down

The money is most likely invested in a fund that is to some extent linked to the stock market. Therefore it could go down or up or stay the same , and whoever told you it will go down is trying to predict the unpredictable .
Normally it should go slowly up over a long period of time and at a quicker rate than Premium bonds would do but in the short term it might move around

xylophone

I have just turned 55 and can now unlock my small (£16000) pension pot with Scottish Widows

You may commence taking benefits from this pension (rather than "unlock it").

You indicate that you are employed - you are currently contributing to your employer's scheme?

If so, what type of pension scheme is it? (DC/DB).

Does the pension with SW permit drawdown?

blokes2

Thanks for the advice
I am self employed and have no company pension this is my only one
I need the car 100% for work and will have no income without it so it is an investment in itself
You all seem to concur that the balance is best left where it is

Albermarle

You all seem to concur that the balance is best left where it is

Yes and best left there as long as possible to grow a little hopefully.

kangoora

blokes2 wrote: »

Thanks for the advice
I am self employed and have no company pension this is my only one
I need the car 100% for work and will have no income without it so it is an investment in itself
You all seem to concur that the balance is best left where it is

If that is your only pension then you need to seriously consider how you are going to be able to retire unless you have other savings not mentioned? As you are 55 now you only have 12/13 years to increase your pension which isn't a very long time at all.

If you have full NI contributions the current state pension is £168.60/week (£8,767/year).

Would you be able to live on that? Maybe something to consider?

atush

Albermarle wrote: »

Yes and best left there as long as possible to grow a little hopefully.

And you rely need to add to the pension.

Are ou sure you cant get a car loan? which will be a deductible expense?

blokes2

Yes i will have to keep working until i drop i wont really be able to afford to retire. It will help though
A car loan is impossible as i am on a large DMP