Inherited Pension Pot

JoeCrystal

Paul_Herring said:

I suggest you find an Independent Financial Advisor to replace your Wealth Manager.

I am in full agreement! marginalone Here is the link to https://adviserbook.co.uk/ and select Confirmed Independent in the search bar on the side. That should help you in finding an IFA but make sure you can shop around. 

marginalone

I should have added this in the first post. Mother left over £1million in pension pot.

Paul_Herring

marginalone said:

I should have added this in the first post. Mother left over £1million in pension pot.

Then it's still not a 'theoretical tax,' whatever was supposed to be meant by that.
Page 3, first question: https://www.pruadviser.co.uk/pdf/PENS6656.pdf.


And I think you really need someone who's both independent, and who can explain things clearly; rather than coming across as a third party who would rather still like to be involved with this sum...

marginalone

Paul_Herring said:

marginalone said:

I should have added this in the first post. Mother left over £1million in pension pot.

Then it's still not a 'theoretical tax,' whatever was supposed to be meant by that.
Page 3, first question: https://www.pruadviser.co.uk/pdf/PENS6656.pdf.


And I think you really need someone who's both independent, and who can explain things clearly; rather than coming across as a third party who would rather still like to be involved with this sum...

Thank you for this and my thoughts exactly.  
Am i correct in now thinking I pay tax on the lump sum?

Paul_Herring

Am i correct in now thinking I pay tax on the lump sum?

My reading of it is, only a marginal tax (55%) on the bit over the lifetime allowance (£1,073,100) - up to that it's tax free.

But this is the sort of thing an IFA would be able to explain clearly

steampowered

Sorry to hear about your loss. Paying off the mortgage would make you feel good, but could be a bad idea from a financial point of view.

It's important to view clearing the mortgage as part of your long term investment planning - which will need to include investing for a decent standard of living in retirement. Most people are much better off focussing on building their retirement savings first and clearing their mortgage later, rather than the other way around. 

Paying off the mortgage early might save you 2% per year in interest. It has no tax benefits. Compare that with investments where typical returns over the long term are 6-8% per year; plus a giant whack of tax relief if you are investing through a pension; plus building up a pot which generates completely tax free returns if investing through a Stocks & Shares ISA. 

The vast majority of people are much better off boosting their pension contributions (especially higher rate tax payers),  maxing out their Stocks & Shares ISA allowance, and then going into other investments, rather than paying off the mortgage earlier than necessary.

As this is a pretty serious sum of money it is important that you really take the time to educate yourself on the investment options out there - especially, the benefits of passive multi-asset funds.

Once you have made a decision regarding whether to invest the money versus whether to sell your mother's investments and pocket the cash, the next decision is whether to retain this financial adviser or not. The first thing you should do is understand his fee structure and what he charges each year - it could be a lot !!!