Pension Lump Sum - Best options

Albermarle

kassy64 said:

k3lvc said:

kassy64 said:

dunstonh said:

Thanks, I'm basically looking for the best return on £85k with 0 'zero' risk, 

No such product exists for your objective.

I was just hoping for some bank/building society recommendations for great savings rates that others are using.

use the tables on this site.

I have also commuted this to increase the lump sum which is tax free, and gives me the option to live my life to the full for next 10-15 years.

That part doesn't make sense.   You have taken reduced income on the pension to get a larger lump sum to allow you to put in a savings account to draw the interest which will almost certainly result in a lower income than had you not taken the higher income on the pension.

Ok, I will use the tables, maybe was just looking for recommendations, other than that I'm not after any financial advice thanks. As I mentioned earlier it is short term (12 months) so does make sense and without knowing my full circumstances and pension details you shouldn't be making comments about what does and doesn't make sense.

A tad harsh on probably the most respected/helpful poster on here 

Sorry if it came across like that, but the first reply to my initial post was condescending and not really relevant to my initial question. Maybe I phrased it wrongly but others have given relevant advice to my initial post. As I say sorry if I have offended anyone !

The issue is that many new posters pose what seems a simple question, but they have often missed what can be important points. That is why often to a seemingly simple question, the reply is more complicated/questioning. Many posters are thankful for this as it opens their eyes to more possibilities than they had thought of, and/or stops them making big mistakes that they had not even considered.
In some cases like yours, you only wanted a simple answer and not a discussion about the rights and wrongs of taking the lump sum, however valid they may be. But you got one anyway as in most peoples eyes taking the lump sum does not seem the best idea, although open for debate of course. 

ljayljay

Albermarle said:

The issue is that many new posters pose what seems a simple question, but they have often missed what can be important points. That is why often to a seemingly simple question, the reply is more complicated/questioning. Many posters are thankful for this as it opens their eyes to more possibilities than they had thought of, and/or stops them making big mistakes that they had not even considered.
In some cases like yours, you only wanted a simple answer and not a discussion about the rights and wrongs of taking the lump sum, however valid they may be. But you got one anyway as in most peoples eyes taking the lump sum does not seem the best idea, although open for debate of course. 

Agree with above...

You appear to be in a financially healthy position so certainly don’t need any lectures from a relative financial novice like me.

However, I believe that most of the replies have been valid for many other visitors to this forum, even if you are not interested in going down the route advised. Plus, as you appear to have already taken the lump sum, I guess it would now be too late in any case.

Pension wise both myself & wife were recently in a similar position to yourself. We both retired a year or two early & carefully considered whether to take or even increase our lump sums. I was in the Civil Service Premium scheme which did not automatically pay a lump sum but did consider commuting some of my pension. My wife was automatically going to receive a lump sum & had the option to commute more for a bigger lump sum or do an inverse commutation for a higher pension, but not at particularly favourable rates.

However, it was only after studying the numerous responses on this board that I realised from a ‘financial’ perspective that having the maximum inflation proof pension by far outweighed the other options. So, we chose the middle ground, take my wife’s automatic lump sum but leave the income accrued in the pensions well alone. My wife’s automatic lump sum has given us a healthy emergency cash fund plus we already have other monies in both savings & investments. We are currently struggling to get a decent return on what we already have, whereas both of our pensions could well rise by 10% next year if inflation stays as it is (of course assuming that the government doesn’t intervene). Sure, a lower pension will also get the same percentage increase but the compounding effects & buying power over a number of years of high inflation could make a big difference in the future.

To summarise, I think the responses you received will help the many other visitors to this board, like me, consider very carefully what they do when comparing the undoubted draw of a big bucks lump sum to a long-term secure income. I for one am glad that I paid attention to what many of the posters have been saying on this topic & that we didn’t go for all the lump sums available. Taking the maximum lump sums would have clearly been the wrong choice for us if all we wanted to do was add it to the rest of our savings & stuff it in a low return ‘safe’ savings account.

ljayljay

ljayljay said: Plus, as you appear to have already taken the lump sum, I guess it would now be too late in any case.

I now note from your original post that you have not yet taken the lump sum but assume that will not change so good luck with your decision.

kassy64

ljayljay said:

ljayljay said: Plus, as you appear to have already taken the lump sum, I guess it would now be too late in any case.

I now note from your original post that you have not yet taken the lump sum but assume that will not change so good luck with your decision.

I have signed the paperwork and sent it off, but presume I could change my mind if I felt it was the correct decision. I’m meeting some old colleagues later and will also discuss with them. I fully understand all the points and on a purely £ to £ basis taking the extra monthly is probably the right thing to do, however I am looking at things slightly differently, once my wife and I reach state pension age and have my civil service pension and she has hers we will have more than enough money once we’re in our mid 70’s and I don’t expect we will need any more than that then. My theory is take the £120k lump sum now plus £2k monthly pension and enjoy the next 10-15 years we have whilst we are still healthy (travel etc etc). I really don’t see the point in having additional income (that won’t be needed) in our late 70s and beyond. We also have £900k equity in our property so at some point we will downsize and that opens up even more doors. Everyone will have their own opinions but I want the next 15 years to be the best of our lives and that extra lump sum will help us achieve that. If I was looking to accumulate as much £ as possible by the time I leave this world then yes taking the extra monthly pension would be the right way to go. Will give it some more thought and make a final decision. Thanks everyone for their input it is much appreciated and has made me hopefully make the right decision.

Pompeydave1967

Sounds like you have a good plan Kassy , good on you. As you said you HAVE to enjoy yourselves as we are all getting older. I’ve semi retired at 55 , paid house etc and enjoy life . Careful with £££ and you won’t go wrong.

kassy64

Pompeydave1967 said:

Sounds like you have a good plan Kassy , good on you. As you said you HAVE to enjoy yourselves as we are all getting older. I’ve semi retired at 55 , paid house etc and enjoy life . Careful with £££ and you won’t go wrong.

Exactly, if it was all about the money I would not be retiring early (2 years) and taking a hit on the pension of about 9%. I would carry on working until 60 or beyond (shiftwork as well which I am finding even tougher than when I was younger). Each person will have their own retirement plan and I believe this works for me and my wife. I don’t need to worry about my kids their doing alright on their own and will hopefully have a property to inherit when we go (as long as it’s not all gone on care home costs but that’s another issue). I’ve worked for 41 years - time to start enjoying life again, now where did I leave that yacht !!!

Albermarle

We also have £900k equity in our property so at some point we will downsize and that opens up even more doors.

Downsizing is not quite as easy as it seems, as often the desire to have a nice property in a nice location ( sea view etc ) for your 'forever home' at least partly outweighs the move to a smaller property. However with £900K you have quite a lot to play with. This article may be of interest.

Downsizing: why the dream rarely matches reality (fidelity.co.uk)

kassy64

Albermarle said:

We also have £900k equity in our property so at some point we will downsize and that opens up even more doors.

Downsizing is not quite as easy as it seems, as often the desire to have a nice property in a nice location ( sea view etc ) for your 'forever home' at least partly outweighs the move to a smaller property. However with £900K you have quite a lot to play with. This article may be of interest.

Downsizing: why the dream rarely matches reality (fidelity.co.uk)

Thanks, I will have a read when I have time. We’ve always known we would need to leave our current house in retirement at some point, it’s far to big now for our needs and the costs are unnecessary now there’s just the two of us at home (council tax/LPG gas/non mains sewerage). We will look at it as another retirement adventure!

Cressida100

kassy64 said:

dunstonh said:

Thanks, I'm basically looking for the best return on £85k with 0 'zero' risk, 

No such product exists for your objective.

I was just hoping for some bank/building society recommendations for great savings rates that others are using.

use the tables on this site.

I have also commuted this to increase the lump sum which is tax free, and gives me the option to live my life to the full for next 10-15 years.

That part doesn't make sense.   You have taken reduced income on the pension to get a larger lump sum to allow you to put in a savings account to draw the interest which will almost certainly result in a lower income than had you not taken the higher income on the pension.

Ok, I will use the tables, maybe was just looking for recommendations, other than that I'm not after any financial advice thanks. As I mentioned earlier it is short term (12 months) so does make sense and without knowing my full circumstances and pension details you shouldn't be making comments about what does and doesn't make sense.

So rude, you came on here asking for advice ....

EthicsGradient

I think a bit of confusion may have occurred because your first post seemed to emphasise monthly income for the next year - which many thought was the primary purpose. If, as it seems from your later posts, it's more like "I'll put up to £85k in savings for this year, but might use a significant part of it in the next years, and if I'm getting interest, I may as well get it now than wait for a year", then doing that through the lump sum does make sense.

If you want a "name" for security, and the requirement for the interest to be paid monthly isn't vital, perhaps Investec could be worth a look. They have a 90 day notice account paying 2.1% (that more or less matches the best notice account from anyone), and a 1 year fixed rate bond at 2.55% - which some smaller providers can beat (OakNorth at 2.85%). Investec is a FTSE 250 company (it's about the 125th largest company on the LSE - market capitalisation about £3 billion, slight larger than, say, ITV or Marks & Spencer), so that might be reassuring. But neither account offers monthly interest.

Having said that, the Bank of England is making another base interest rate decision tomorrow, and there's speculation on whether that will be a 0.25% or 0.5% rise. Depending on which happens, banks may revise their offered rates again in the next week or two, so any specific recommendation to you now may be out-of-date by the time your lump sum is available. I'm sure this forum will have discussion on the movements.