Where to put my lump sum and use monthly

marmite101

I will shortly be taking 25% tax free from my final salary pension and also have a monthly amount going into my bank.i will need to draw off my 25% lump every month to add to my monthly amount.
Where is the best place to put my lump sum? Ideally earning a bit of interest. I have looked and am getting dizzy,it's a minefield,so many deals and I don't want to make the wrong decision.
Any help would be greatly appreciated.
Thank you.

jimi_man

It's a little sketchy in terms of details - a lot depends on the figures involved, how much you need, your attitude to risk, your tax situation, what other savings you have, for how long you need to keep doing this for etc. 
Interesting that you need to take the 25% lump sum from a Final Salary pension (usually a poor idea) and you need to draw off it to continue to live. Do you have to take it or is there an option where you get increased pension if you don't take it?

83705628

I'm not clear on what you're trying to do. Are you saying that you're about to start claiming the pension, you're going to take the 25% lump sum and then you want to put that in a savings account (best deals here https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/) and then top up your pension income from the lump sum savings?
Because that's probably pointless.
How  much lump sum does sacrificing £1 of pension income get you? I'm guessing 12, in which case it very probably isn't worth it.

xylophone

Do you have to take the lump sum?
Are no options offered? 

marmite101

i dont have to but it works out over 12 years {state pension} a lot more money if i do it this way plus if anything happened to me its cash in the bank

marmite101

tcallaghan93
every £1 of pension a year of pension i exchange it will provide a cash lump sum of £24.52.
if i use my lump sum until state  pension kicks in plus my monthly allowance i can survive.
if i do not take the lump sum i get about an extra £1673 per annum

marmite101

jimi_man
tcallaghan93
every £1 of pension a year of pension i exchange it will provide a cash lump sum of £24.52.
if i use my lump sum until state  pension kicks in plus my monthly allowance i can survive.
if i do not take the lump sum i get about an extra £1673 per annum

83705628

That's actually an excellent rate, basically means if you're going to live at least another 24.52 years keep the higher pension, if you have a lower life expectancy due to any health conditions than you may be better off with the lump sum.

If you are going to take the lump sum, and you aren't confident investing it yourself, then keep it in the best fully FSCS backed savings account you can get (https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/)

I am worried about the phrase "I can survive" until getting your state pension. Have you obtained a state pension forecast and are you going to get the full state pension? If £1,673 is 25% of your pension until you get you get state pension, then your income without the lump would be £6.7k, or £5k with the lump sum.

I would see if you can get in touch with someone from the Pension scheme and have a conversation with them, also citizens advice, pension advisory service, money advice service about the lump sum, and HMRC DWP to see if you could qualify for any benefits or pension credit.

xylophone

You should check your state pension situation.
https://www.gov.uk/check-state-pension

marmite101

jimi_man
£1673 is the amount that i would get extra per annum if i dont take the lump, i worked it out that it would be 33 years before i caught up if i took the lump sum. does this sound ok to you.
55000 lump 8000 per annum or 95000 without lump

83705628

marmite101 said:

jimi_man
£1673 is the amount that i would get extra per annum if i dont take the lump, i worked it out that it would be 33 years before i caught up if i took the lump sum. does this sound ok to you.
55000 lump 8000 per annum or 95000 without lump

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It's a good deal on the lump sum but I think you should definitely speak to the scheme, and https://www.pensionsadvisoryservice.org.uk, and HMRC/DWP to ask about your state pension and if you can get any extra income to help you out between now and state pension age.