Redundancy payment cash access

Jab64000

Hi there, I have recently taken a voluntary redundancy from my company. I am 57 and don’t want to take my pension at this time as I will be penalised. My intention is to live off my redundancy payment for the next couple of years ( before taking my company pension or transferring it out into a private pension scheme  and drawing down from it). I am looking at the best place to save my redundancy payment  so that I can pay myself a monthly wage for the next 18 months or so. The easy access bank accounts offer up to 2.2% but only on up to £1000.  Do I open up multiple accounts to get this better interest rate on more than £1000? 

Where is the best place to store this cash to give me a monthly wage  for the next 18 months to 2 years? 

eskbanker

You don't say how big the pot is but yes, you'd probably need to spread it around across multiple accounts to optimise interest return.  You could look at putting next year's money into a fixed rate account rather than easy access and/or you could put up to £50K in premium bonds, which are currently averaging better returns than most easy access products....

Alexland

Remember that if the rate is very good most institutions also have limits on how many times you can hold the same product often once individually and once as a joint account. Also is the 2.2% bank account you have found really the 2.02% virgin money account?

Jab64000

Alexland, yes it is the Virgin money account.  I was thinking about opening an account in my name and an account in my wife’s name to get double return. I think you also get 15 bottles of wine for each account as well for signing  up. 

Jab64000

eskbanker said:

You don't say how big the pot is but yes, you'd probably need to spread it around across multiple accounts to optimise interest return.  You could look at putting next year's money into a fixed rate account rather than easy access and/or you could put up to £50K in premium bonds, which are currently averaging better returns than most easy access products....

Thanks for the response. I think somewhere in the region of £90k. I did think about putting money into a fixed rate account, but they aren’t really returning much. Premium bonds I have considered, but they don’t get a good write up by Martin Lewis!! 

Alexland

Jab64000 said:

Alexland, yes it is the Virgin money account.  I was thinking about opening an account in my name and an account in my wife’s name to get double return. I think you also get 15 bottles of wine for each account as well for signing  up. 

To get the bottles of wine you (each) need to use their switching process to transfer an existing bank account with at least 2 direct debits plus some other requirements such as installing their phone app and depositing £1k in the linked 0.5% saver until they give you the wine code. My wife can't be bothered but asked me tonight when my wine was arriving. If it was for me I would try their lower value alcohol free option.
Have you considered the income tax position on your redundancy payment?