Pensions

Pat38493

Thatmanthatasks said:

Thank you for all your posts.
I don't have any pensions I contribute to, I have a cash ISA and part of the £200K is part of that.  I am just worried that as the years go by my Savings Pot will go to nothing without doing something.  

So as some other posters pointed out, this probably wasn't the best strategy for your long term retirement plans, but you can't really reverse that now (unless a financial adviser told you to do it in which case you might be entitled to compensation as it would be terrible advice).

As to where you are now, 

1) Have you checked your state pension forecast as a couple of other posters pointed out above?  If you have been working paying National Insurance during your working life, you have quite probably accrued a state pension entitlement.

2) Do you have an idea what your minimum spending requirements per year would be in retirement?  

As a very rough rule of thumb, if you have £200K, you should be able to draw about 3 to 3.5% of it each year and it should last at least 30 years (so £6000 to £6500) - and increase the amount you take out by the rate of inflation each year.  However that assumes that you invest at least some portion of the money in better long term investments than cash savings and ISA accounts.  If you keep the money in cash, it would probably be more like only 2% or less per year.  (having a state pension as per the point above will alter this because the state pension will fund some of your income from whatever age you are entitled to it).

So leaving aside the water under the bridge, you should check your state pension entitlement and do a bit of reading up around how to invest significant sums of money - your pensions may not have been doing very well in the last year or two, but they probably did very well in other years before that - not every year is a good year for investments.

Also keep in mind that thecurrent 6% savings rates we are seeing on cash are unusual and will not last forever, and also are still not beating inflation.

xylophone

Did you seek any guidance, even a Pension Wise interview, before cashing in your pensions?

What makes you think that you did not have control of your pensions or that  you may have had more control by taking the course of action described? It may have cost you unnecessary tax.

You do not say whether or not you have checked your state pension situation.

If you have, what exactly does the forecast show?

You are now 60 - it is not impossible that you will live into your nineties.

You might wish to consider taking some professional advice, particularly if you are considering taking an annuity.

https://adviserbook.co.uk/   Tick "confirmed independent" and other boxes as fit your requirements.

Even though you are now a non-earner, you  may still add up to £2880 to a personal pension and the provider will claim up to £720 and add it to your pot.

https://forums.moneysavingexpert.com/discussion/6435853/provider-shortlist-for-2880-per-year-pension/p1

Linton

Thatmanthatasks said:

Good afternoon all,
I have just finish work at 60 years of age and have managed to save £200,000 in ISA's and Savings Accounts and wondered what the best thing was to do to make it last me for the rest of my life?  Do I do what I am doing now or do I buy an annuity?  I am open to any suggestion?

A major problem with making the pot last your whole life is that you dont know how long that will be.  If you spend too much too soon and live an unusually long healthy life you may spend years  regretting your earlier extravagence.  

Another is that if you keep the money in cash and continually withdraw it you wont be able to match inflation in the long term.

Although most annuities are bought with money held in a pension you can buy one with with money outside a pension.  This is known as a "Purchased Life Annuity" rather than a Pension Annuity.  As I understand it Purchased Life Annuities are a niche product and are not as generous as Pension Annuities.  On the other hand since much of the money  you get from a PLA is regarded as simply returning part of the cost there is less tax

So I guess it depends on what you want to do and how desperately you need income to provide an acceptable standard of living.  If you are happy to treat your £200K as a piggy bank for treats and it wont be a disaster when it runs out then you could carry on as you are.  If you need as good a steady income as possible simply to buy the basics your best bet for a £200K pot may well be to pay for professional advice from an Independent Financial Advisor - the I is important.  An "advisor" from your bank is not a satisfactory alternative.

 An IFA would be able to discuss topics such as PLAs, investments that could match or exceed inflation, and how much money it would be sensible to withdraw each year.

SVaz

I can’t fathom the amount of tax paid to get £200k.
Surely a good proportion, if not all of it, was at 40% ?😳
Do pension companies actually let people do this without taking advice??
This seems far more serious than people wanting to transfer DBs and yet you need advice for that,  for only £30k too.  

dunstonh

Do pension companies actually let people do this without taking advice??

The law does not force advice on consumers.   
Like most things in life, you can DIY or use a professional.   This is no different.   If you DIY well, then you can save money. If you DIY badly, then it can cost you money.

This seems far more serious than people wanting to transfer DBs and yet you need advice for that, 

DB pension transfers are wrong to do in around 9 out of 10 cases.    That is why there is an advice requirement.   

What the OP did in drawing the pension out like that was the wrong thing to do.   It was a very bad mistake that was costly, and it was based on a poor understanding.  They should not have done it.   However, the providers would have issued plenty of risk warnings, and he would have been told to seek advice or at least a pensionwise meeting.  However, at the end of the day, if all of that is ignored, then the provider cannot stop it.

QrizB

At least he hasn't blown it on a Lamborghini, or a week in Vegas!

Pat38493

dunstonh said:

Do pension companies actually let people do this without taking advice??

The law does not force advice on consumers.   
Like most things in life, you can DIY or use a professional.   This is no different.   If you DIY well, then you can save money. If you DIY badly, then it can cost you money.

This seems far more serious than people wanting to transfer DBs and yet you need advice for that, 

DB pension transfers are wrong to do in around 9 out of 10 cases.    That is why there is an advice requirement.   

What the OP did in drawing the pension out like that was the wrong thing to do.   It was a very bad mistake that was costly, and it was based on a poor understanding.  They should not have done it.   However, the providers would have issued plenty of risk warnings, and he would have been told to seek advice or at least a pensionwise meeting.  However, at the end of the day, if all of that is ignored, then the provider cannot stop it.

To be fair to the OP, I don't think it was ever stated that the entire 200K was drawn out in the same year (although from the circumstantial statements given it seems likely).

Dazed_and_C0nfused

Pat38493 said:

dunstonh said:

Do pension companies actually let people do this without taking advice??

The law does not force advice on consumers.   
Like most things in life, you can DIY or use a professional.   This is no different.   If you DIY well, then you can save money. If you DIY badly, then it can cost you money.

This seems far more serious than people wanting to transfer DBs and yet you need advice for that, 

DB pension transfers are wrong to do in around 9 out of 10 cases.    That is why there is an advice requirement.   

What the OP did in drawing the pension out like that was the wrong thing to do.   It was a very bad mistake that was costly, and it was based on a poor understanding.  They should not have done it.   However, the providers would have issued plenty of risk warnings, and he would have been told to seek advice or at least a pensionwise meeting.  However, at the end of the day, if all of that is ignored, then the provider cannot stop it.

To be fair to the OP, I don't think it was ever stated that the entire 200K was drawn out in the same year (although from the circumstantial statements given it seems likely).

Agree, I suspect only a proportion of the £200k was from the pension.

I have just finish work at 60 years of age and have managed to save £200,000 in ISA's and Savings