Investing Downsize Funds

jsinc

Mum likely to downsize on retirement at 70, freeing up ~£300k. This will gradually be spent (~£10k pa although much is likely to be saved again as surplus to living expenses after other retirement income) and transferred to S&S ISAs.

Are there any specific retirement products available to invest this money for growth/income?

She won't be interested in a BTL or managing an investment account and capital gains. All I can find as an alternative to cash or fixed savings are non-pension annuities. This could be an option; using downsize funds to provide an annuity rather than converting personal pension and/or taking tax free lump sum. But the purchased life annuity market seems limited and we need to read up on relative rates and taxation.

The monies won't be needed for any 70-75 pension contributions. State Pension already being deferred for 2-3 years. Helping family and/or maximising inheritance not a consideration. Future care costs an unknown but no family history to suggest more likely than average.

Any other ideas on what people do with such funds - maybe we're missing something obvious?

Marcon

The obvious suggestion is to use some of the money for an appointment with an IFA. Apart from being able to give expert personalised advice, they may have access to products which consumers (i.e. retail customers) can't access direct.

jsinc

Marcon wrote: »

The obvious suggestion is to use some of the money for an appointment with an IFA. Apart from being able to give expert personalised advice, they may have access to products which consumers (i.e. retail customers) can't access direct.

Will do that closer to the time cheers - esp re. annuity and optimising for income and tax. Still a few years away so just trying to get more general info - the recent Equitable Life takeover has led to discussion and questions about her plans.

lisyloo

If your priority is safety then consider NSI and no £85k limit.
I am using NSI income bonds.
Not a great return but depends on your priorities, but it’s a good option for safe funds.

jsinc

lisyloo wrote: »

If your priority is safety then consider NSI and no £85k limit.
I am using NSI income bonds.
Not a great return but depends on your priorities, but it’s a good option for safe funds.

Thanks. Don't think it has to be that safe, but always an option. Or maybe a ladder of fixed rate accounts under the FSCS limits (e.g. some cash aside in instant access then split the rest between a 2y, 3y and 4y account. Every year reinvest the maturing one minus income and ISA in a new 3y). Will have to do some sums.

Malthusian

Does she have Lasting Powers of Attorney in place?

jsinc wrote: »

Mum likely to downsize on retirement at 70, freeing up ~£300k. This will gradually be spent (~£10k pa although much is likely to be saved again as surplus to living expenses after other retirement income) and transferred to S&S ISAs.

She won't be interested in a BTL or managing an investment account and capital gains.

The extra admin of unwrapped investments compared to stocks & shares ISAs is trivial. Even if she didn't bother to use her capital gains allowance, growth reduced by CGT is better than no growth at all. If she sells £20,000 each year to use her ISA allowance, that could be used to crystallise some gains.

And the hassle could be made mostly someone else's problem by seeing an Independent Financial Adviser.

All I can find as an alternative to cash or fixed savings are non-pension annuities. This could be an option; using downsize funds to provide an annuity rather than converting personal pension and/or taking tax free lump sum. But the purchased life annuity market seems limited and we need to read up on relative rates and taxation.

I believe PLAs can be taken out without advice (unlike care annuities) but I would not be doing it for someone else unless they had lost capacity. The decision is permanent and you don't want her to blame you if she changes her mind about permanently losing access to her capital.

jsinc

Malthusian wrote: »

Does she have Lasting Powers of Attorney in place?

No that's a conversation we have regularly then forget about again. Need to revist.

The extra admin of unwrapped investments compared to stocks & shares ISAs is trivial. Even if she didn't bother to use her capital gains allowance, growth reduced by CGT is better than no growth at all. If she sells £20,000 each year to use her ISA allowance, that could be used to crystallise some gains.

And the hassle could be made mostly someone else's problem by seeing an Independent Financial Adviser.

There's some reticence about options that (may) require ongoing management. I hadn't considered that periodic selling into ISAs/cash could simplify things. I might open a general account myself to understand how much admin.

I believe PLAs can be taken out without advice (unlike care annuities) but I would not be doing it for someone else unless they had lost capacity. The decision is permanent and you don't want her to blame you if she changes her mind about permanently losing access to her capital.

She wants an annuity to make up the difference between essential expenditure and secure pension income. That aspect will involve an IFA and be her decision, whichever proves the best option.

Thanks