Re-investing Monthly CS Pension ill Health

TheMillions

I did mention in the post that I was considering and looking to put it into a pension, but actually it was only upon reading some of the replies that I then took into consideration my age and time that the money in the pension would be held for, so I need to think more about this reflecting upon my health care requirements.

xylophone

You mention that your lump sum and pension have been saved for the past three years.

I assume that this means that the money is held in savings accounts.

Had you considered using your ISA allowance to invest rather than to save?

What is your time scale for needing to access your money?

Albermarle

Not sure if it is relevant, but if you did build up a pension pot and unfortunately passed away before you could take it, then the pot can be left as a tax friendly  inheritance for any beneficiaries. You need to name any beneficiaries to the pension provider, not in your will.

TheMillions

xylophone said:

You mention that your lump sum and pension have been saved for the past three years.

I assume that this means that the money is held in savings accounts.

Had you considered using your ISA allowance to invest rather than to save?

What is your time scale for needing to access your money?

Yes, thats correct saved in savings account.

No, I had not considered this - Your are referring to a stocks and shares ISA?

Time scale would be in a few years time maybe 5? With the savings and regular additional monthly saving I would not likely need all of the money but may need some of this for healthcare requirements long term. I think the 55/56/57 age on a pension may be too long away to have the funds tied up. I am trying to save all of this now to build up a pot to help make my needs more comfortable and have the funds down the line.

TheMillions

Albermarle said:

Not sure if it is relevant, but if you did build up a pension pot and unfortunately passed away before you could take it, then the pot can be left as a tax friendly  inheritance for any beneficiaries. You need to name any beneficiaries to the pension provider, not in your will.

Hi, Thanks for the information, this is not something I knew.

 I was aware of the CS spouse pension payable at 50% 

Dazed_and_C0nfused

You can nearly always invest in the same things via a S&S ISA or a (DC) pension but the tax benefit on a relief at source pension is significant.

£4,000 added to a S&S ISA gives you a fund of £4,000.

£4,000 added to the pension will have £1,000 added in tax relief giving you a fund of £5,000, an immediate 25% boost.

Even if you eventually took money out of the pension you are still better off as a basic rate payer as 25% is taken tax free (£1,250) and £3,750 is taxable income so 20% tax would leave £3,000.  So your £4,000 had become £4,250 even if basic rate tax has to be paid, a 6.25% return.

xylophone

It seems that the OP is now aged around 48  and has a health problem significant enough to have warranted the payment of her CS pension at the age of 45.

She has been saving her PCLS and regular pension income on the basis that she could  need  to access funds before she reaches age 55 in order to make life with her disability more comfortable.

That said, depending on how much is available, she could consider keeping a certain amount on deposit, investing a certain amount in a stocks and shares ISA and contributing as much as her modest income allows to a pension.

Albermarle

No, I had not considered this - Your are referring to a stocks and shares ISA?
Time scale would be in a few years time maybe 5? 

If not investing in a pension, then investing via a S&S ISA is usually the way to go. Although it does not have the direct tax benefit of a pension, it does protect the investments from potential other taxes and makes the admin of investing much easier.

However investing is really a long term activity. This is because investments go up and down in the short/medium term, but historically have always gone up long term. Exactly what is short/medium/long term is open to some debate, but typically anything less than 5 years is short term , 7 to 10 Years medium term and > 10 years long term. 
Although if you were for example to start withdrawing money after 5 years, but most would in fact be invested for longer, then this could be a possible route forward. Especially if you only invest some of the money and keep some as cash , as Xylophone suggests. A kind of hedging your bets strategy.

TheMillions

xylophone said:

It seems that the OP is now aged around 48  and has a health problem significant enough to have warranted the payment of her CS pension at the age of 45.

She has been saving her PCLS and regular pension income on the basis that she could  need  to access funds before she reaches age 55 in order to make life with her disability more comfortable.

That said, depending on how much is available, she could consider keeping a certain amount on deposit, investing a certain amount in a stocks and shares ISA and contributing as much as her modest income allows to a pension.

Great advice and clarification, thanks

TheMillions

Albermarle said:

No, I had not considered this - Your are referring to a stocks and shares ISA?
Time scale would be in a few years time maybe 5? 

If not investing in a pension, then investing via a S&S ISA is usually the way to go. Although it does not have the direct tax benefit of a pension, it does protect the investments from potential other taxes and makes the admin of investing much easier.

However investing is really a long term activity. This is because investments go up and down in the short/medium term, but historically have always gone up long term. Exactly what is short/medium/long term is open to some debate, but typically anything less than 5 years is short term , 7 to 10 Years medium term and > 10 years long term. 
Although if you were for example to start withdrawing money after 5 years, but most would in fact be invested for longer, then this could be a possible route forward. Especially if you only invest some of the money and keep some as cash , as Xylophone suggests. A kind of hedging your bets strategy.

Thanks for the input and advice - lots for me to consider