What to do with £100,000

mitchino

I sold some land recently for £100,000. I had planned to pay what I could of this into my pension, but my pension is an ancient with profits policy administered by Pheonix Life, and they have told me the policy is closed to new business and I can’t pay in a lump sum (even though I still pay in monthly).

I have just turned 65, my state pension date is May 2027. I’m self employed, planning to semi retire when I get the state pension.

I’m looking for advice on what to do with the £100,000.

Things I’m considering:

Open a new pension plan with another provider that will accept a lump sum, to take advantage of the 20% uplift.

Use this years ISA allowance, and also use next years when April comes around. (Currently have only £22,000 in an ISA.)

Max out my premium bonds (currently hold £25,000).

What’s the best plan? I’m guessing diversification, but keen to hear any opinions.

tacpot12

Using your ISA allowance for this year and next year is sensible. Starting a new pension might also work, but you will be limited as to how much you can pay into a pension. The limit depends on you earnings. and whether you were a member of registered pension scheme. (It seems likely that you have been a member of such a scheme, but this might needed to be checked with Phoenix Life. 

This link will tell you how you might be able to pay upto £60,000 into a new pension: 
Carry forward of pension annual allowance - Royal London for advisers 

if you can put £60,000 into a new pension and £40,000 into ISAs, that's the problem solved. 

EthicsGradient

Your gross pension contribution can be up to your self-employed earnings, in this tax year and the next. It seems the best idea to do that up to the limit, to take advantage of the uplift (and then the tax-free part of the withdrawal).

You don't say if you're currently a basic rate or higher rate taxpayer; if the latter, using the "new pension" route would certainly work out best (ideally, you'd withdraw at a rate that the state pension, your part time work, your Phoenix pension and what you withdraw are still in the basic rate band, if possible. Depending on the numbers, that might mean delaying the withdrawal until you stop work completely). 

And put what you can't put in the pension into an ISA. When you're semi-retired, you can still contribute to a pension, getting the uplift, if you haven't taken taxable income out of it. 

As to what you save or invest it in, inside the pension and/or ISA - if it's going to come out again soon (under 5 years), then equity investments are more risky - you could be investing at the top of the market now. If you think you'll keep at least some of it in there longer, then a global tracker is simple and diversified. Money market funds for the pension if you'll cash that in quickly, and/or a cash ISA; maybe a bit bond-based to spread the risk/reward from these (or one fund that combines equities and bonds to keep it even simpler).

El_Torro

Since you're not far off from semi retirement it's worth looking at how your money is invested and how you plan to use it to fund your living expenses. For example being 100% in equities is probably not a good idea at this stage in your life. This applies to your Phoenix Life pension, any new pension you open and any Stocks & Shares ISA investments.

You might have this figured out already, which would be great. If so you are in the minority though, when looking at the rest of the UK population. 

Albermarle

It is most likely that the old Phoenix pension will not be very flexible on how you withdraw it.
So regardless of your original question, it would probably be a good idea to move it anyway.

On the other hand 'with profits policies' do provide a steady if unexciting return and a new pension would almost certainly not have one available, as they fell out of fashion a long time ago. 

I would check on the withdrawal options for the Phoenix pension, as they may well be quite limited. 

dunstonh

Open a new pension plan with another provider that will accept a lump sum, to take advantage of the 20% uplift.

It isnt a 20% uplift.  It is a 20% relief (reduction in cost)

What’s the best plan?

The best plan is the one that aligns with your objectives. However, you haven't shared any details about your goals. As a result, it's challenging for anyone to provide a reliable answer regarding whether their opinion is correct or applicable to your situation.