Savings options for pension lump sum

Aspatria

I have recently retired and am considering how I want to use the lump sum part of my pension. I would like to put the money somewhere that attracts some interest whilst I decide.
What are the best current options for larger amounts?

dunstonh

How about not taking the pension lump sum and leaving it in the pension? (if money purchase).

Or if a DB scheme, how about taking the larger income? (often the best financial option)

garrob

Over the years I have worked with 2 people who have retired with a DB Pension, both of them never took the lump sum and 1 has passed away after 5yrs of retirement. The money he could have had is gone. It's a game of chance. I for one will be taking my lump sum.

shinytop

Aspatria wrote: »

I have recently retired and am considering how I want to use the lump sum part of my pension. I would like to put the money somewhere that attracts some interest whilst I decide.
What are the best current options for larger amounts?

I use Marcus for cash - 1.5% and instant access. I also have a Paragon Bank cash ISA (1.3% I think). There are other options but the differences are minimal.

As for taking PCLS or not I'll have to think about it. For one of my DB pensions the commutation rate is 9x, so definitely not. For the other, it's 20x so that's not so clear cut.

Flugelhorn

I put mine in National Savings Direct Saver - only 1% interest but at least fully protected

ukdw

How about Secure Trust 90 day notice - 1.92% variable - should help stop impulse purchases, whilst giving reasonably quick access to cash?

As far as taking lump sums from DB pensions is concerned I wouldn't consider it personally unless the commutation rate was 20x or more - as that after 20% tax would end up being the equivalent of 25x - which could be used to replicate the lost income at a 4% withdrawal rate if the lump sum is appropriately invested.

AnotherJoe

garrob wrote: »

Over the years I have worked with 2 people who have retired with a DB Pension, both of them never took the lump sum and 1 has passed away after 5yrs of retirement. The money he could have had is gone. It's a game of chance. I for one will be taking my lump sum.

Why bother with a pension at all on that logic ?

I'll also say your post is somewhat misleading, as it doesn't refer to a DB pension.I took the view it was a DC pension and you were looking at yanking out the 25% TFLS for no reason other than you could. You wouldnt be the first to do that.

atush

garrob wrote: »

Over the years I have worked with 2 people who have retired with a DB Pension, both of them never took the lump sum and 1 has passed away after 5yrs of retirement. The money he could have had is gone. It's a game of chance. I for one will be taking my lump sum.

Did you have the same health and lifestyle factors as your 2 acquaintances? Have the same faulty genes?

How many people do you know that lived far longer? Or at least their parents as perhaps you dont hang out with 90 yr olds?

If not, this is not the basis for a rational decision.

xylophone

The poster may have had to take a lump sum on a compulsory basis?

hyperhypo

I'm one of those who has yanked the full 25% out of my DC pension, so to speak, at age 60 and after having transferred in an old SERPS scheme too to consolidate my SIPP.

My justification was to realise some cash to support a year off from work which i'd been offered at short notice, and needed to supplement a greatly reduced salary with some extra money for one year henceforth at least. This opportunity to stop and reflect came pretty much out of the blue and very timely.

It's like having climbed into a retirement simulator.

The taxable 75% will remain untouched. Amounts to c. £160k at present.

My other justification was that i was only effectively taking out what i'd saved (through contributions via salary sacrifice) over the past 6 months, at least in terms of cash spent, over the coming year.

The cash will go into an online savings account and comprise my new emergency fund , ie available to spend er now.

But i did wonder rights or wrongs of crystallising the entire 25% of the combined DC pots beyond what i needed over coming year.

Will use the DC 25% and possibly some income drawdown from the taxable side over next 3 years until a DB scheme kicks in. Residue will be used to provide a annual supplement to DB / SP.

Then, another tricky "shall i take the PCLS cash" at multiplier of c. X 19.5...my current thinking is to take it ....if i do so the residual pension will be approx at the UK tax allowance level and i'd like to defer having to pay any more tax until SP kicks in. Or at least take some of it as cash.

I am comfortable with this approach too, i'd saved hard into the SIPP to create it and being able to make use of it now in a managed way seems right to me.

I'm going to start a separate post on DIY flexi drawdown funds as well, as need to now give my SIPP allocation a review, as i fear it's a little half baked as it stands.

Brynsam

How about this: https://www.pruadviser.co.uk/pdf/PIIBK10000.pdf?icid=pdf

Pays interest, allows tax efficient withdrawals and can provide an element of life cover.