What do people do with their pension tax free lump sums?

skycatcher

If you are in the fortunate position to get a tax free lump sum of say around £100k at 60 that you have no immediate/short term plans to use, have no debts etc where do you put it?

Should you be putting it into a low cost tracker in a S&S ISA or a bond ladder or Ernie?

Just interested in the variuos routes people have gine down to try and protect its value.

Clive_Woody

Leave it invested in the pension (you don't have to take it and could move a portion of your pot to a lower risk fund)

Prism

I will likely use this to help establish the cash/fixed term account part of my retirement pool - so basically a 1-5 year bond ladder. Maybe a bit of P2P if its still viable.

ffacoffipawb

Full crystallisation at age 55 to avoid future LTA issues - 70% LTA used up.

Paid off mortgage.
Bought a new car. Not a Lamborghini.
This year's ISA.
Next year's ISA.
Getting the kitchen redone.
Premium Bonds.
Fun money (£5k)

Defined Benefits from age 60 likely to use up most of the remaining LTA.

skycatcher

Perhaps I should have mentioned that it is a DB pension and the commutation rate isn't great!

Seabee42

It is not to hard to do some guess work on whether you would get more from cash even if you say live to 90 than pensions. Tax free makes a lot more difference if for instance you would be a higher rate tax payer on that extra pension (even with poor commutation rates). Note if you scheme has poor rates do complain, it might not change for you but might have an effect over all.

ffacoffipawb

skycatcher wrote: »

Perhaps I should have mentioned that it is a DB pension and the commutation rate isn't great!

I dont intend to take any tax free cash from my defined benefit, unless the commutation factor is over 25. More likely to be 18 I suspect.

Boleyn19

I have small local government pension with a tiny lump sum which will go into savings. I won't be taking a lump sum from my SIPP but drawing down the 25% tax free over the years (IFA recommended and sorting this).

Murphy_The_Cat

Whilst not for me, plenty of people seem to be using their 25% tax free lump sum to buy motorhomes
Maybe a losy investment in terms of £ & %, but an excelleant investment for memories and doing what you've always wanted to do, now that you have the time to do it and whilst you're still able to.

cogito

Murphy_The_Cat wrote: »

Whilst not for me, pleanty of people seem to be using their 25% tax free lump sum to buy motorhomes
Maybe a losy investment in terms of £ & %, but an excelleant investment for memories and doing what you've always wanted to do, now that you have the time to do it and whilst you're still able to.

Buy a motor home and use it for years, get most of your money back when you sell it - not a bad investment at all. Wish I'd done it when I think about how much I've spent in hotels.

worried_jim

Murphy_The_Cat wrote: »

Whilst not for me, pleanty of people seem to be using their 25% tax free lump sum to buy motorhomes
Maybe a losy investment in terms of £ & %, but an excelleant investment for memories and doing what you've always wanted to do, now that you have the time to do it and whilst you're still able to.

This I like! It's not all about the interest rate. I'm currently sitting on the terrace overlooking the Med thinking about accessing my 25% when the time comes so I can spend more time here enjoying this view and lovely sunshine.