ready made pension advice

jimboger1

SVaz said:

If you’re retiring in a year,  presumably you’ve moved a fair chunk into cash / cashlike funds or bonds ( if buying an annuity) already?  Or are you leaving this year’s contributions in cash ready to draw for a few years? 

That’s more important than fund performance. 

really not sure how you do what you are suggesting 

SVaz

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

jimboger1

SVaz said:

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

sorry, but I have no idea what you are advising - im a novice here 

SVaz

This is all assuming that you dont have a few years worth of income in other savings, if you do then you don’t need such a large cash amount in your pension.  

I’ve worked out  how much I’ll need for 3 years and already have that in a money market fund ready for 2027 and I’m in the process of setting up a Gilt ladder for the 3 years after that, which take me to State pension age - the Gilts mature a year apart to give me the income I’ll require.   They are costing me £15k and will give me at least £23k when the time comes. 

DRS1

jimboger1 said:

SVaz said:

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

sorry, but I have no idea what you are advising - im a novice here 

Are you sure you don't want an annuity?

If you want to go down a drawdown route you are going to need to understand (and do) what he is saying.  You have a year to go so now is the time to do some reading (on here and elsewhere) watch some youtube videos and educate yourself on the subject

BikingBud

jimboger1 said:

SVaz said:

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

sorry, but I have no idea what you are advising - im a novice here 

I think the point @SVaz is trying to make is that leaving your pension pot committed to funds whilst good for the early years and the long term growth perhaps >10%, does present a short term risk.

If an event eg global financial crash, expansion of  war in Ukraine etc, were to diminish the value of those funds by say 20-30% then you would not have time to allow them to recover that loss before you were reliant upon them for your retirement.

Whereas controlled draw down into cash funds that would pay less return perhaps 3-5% would not be impacted in the same manner or to the same extent.

SVaz

jimboger1 said:

SVaz said:

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

sorry, but I have no idea what you are advising - im a novice here 

I’d suggest some reading on how to take income from a pension.
Look at the funds you hold and see what dividends the income version pays out.  

For example;  if you had £200k in a fund paying 4% dividend,  that would be £8000 income and it would be in cash within your pension. 

You haven’t said how much you intend to draw each year or whether you have large cash savings elsewhere. 

If you don’t have and dont want income funds, you would have to sell enough to provide your required income, which is risky if you leave it until you need it,  markets could crash and your funds could lose 20% of their value. 

You have to have available cash in order to draw an income.  Either from dividends or by selling funds. 

jimboger1

DRS1 said:

jimboger1 said:

SVaz said:

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

sorry, but I have no idea what you are advising - im a novice here 

Are you sure you don't want an annuity?

If you want to go down a drawdown route you are going to need to understand (and do) what he is saying.  You have a year to go so now is the time to do some reading (on here and elsewhere) watch some youtube videos and educate yourself on the subject

thanks, I do understand drawdown

jimboger1

SVaz said:

jimboger1 said:

SVaz said:

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

sorry, but I have no idea what you are advising - im a novice here 

I’d suggest some reading on how to take income from a pension.
Look at the funds you hold and see what dividends the income version pays out.  

For example;  if you had £200k in a fund paying 4% dividend,  that would be £8000 income and it would be in cash within your pension. 

You haven’t said how much you intend to draw each year or whether you have large cash savings elsewhere. 

If you don’t have and dont want income funds, you would have to sell enough to provide your required income, which is risky if you leave it until you need it,  markets could crash and your funds could lose 20% of their value. 

You have to have available cash in order to draw an income.  Either from dividends or by selling funds. 

I have 320k in the sw pension portfolio 4 and in 12 months I am looking to draw down around 25k/year 

DRS1

jimboger1 said:

DRS1 said:

jimboger1 said:

SVaz said:

You either sell funds to create a ‘cash pot’  with 2/3 years of income in it or you stop investing your ongoing contributions and leave them as cash OR put them into a short term money market fund if one is available. 

Presumably your SW pension pays interest on cash held within 
I assume you hold accumulation funds if you have no ‘cash pot’ . 

  Would the funds you hold pay enough in dividends every year to cover what you will draw?    If so then you could just switch to income funds. 

sorry, but I have no idea what you are advising - im a novice here 

Are you sure you don't want an annuity?

If you want to go down a drawdown route you are going to need to understand (and do) what he is saying.  You have a year to go so now is the time to do some reading (on here and elsewhere) watch some youtube videos and educate yourself on the subject

thanks, I do understand drawdown

Good  So you understand the need for cash if you are drawing down benefits from your pension.

Have you established that the SW pension supports the sort of drawdown you want to do?