After some investment advice

Lord_beerman

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. She didn't want the government to tax her again on her hard earned money. 
She is 65+, renting and there is £20k+ to play with. Note, us kids don't care about her leaving anything for us.
Any advice is greatly appreciated!

wmb194

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. She didn't want the government to tax her again on her hard earned money. 
She is 65+, renting and there is £20k+ to play with. Note, us kids don't care about her leaving anything for us.
Any advice is greatly appreciated!

With scant information, a savings account paying reasonable interest would be a place to start. 

If due, she'd only pay tax on the interest, not the principal. Better to pay some tax than watch your cash erode even more to inflation.

How much does she earn? If a low earner there may be no tax to pay on an income up to c.£18k: personal allowance + £5k 0% savings starter rate + £1k 0% personal savings allowance. You can transfer a marriage allowance from one spouse to another as well. 

You should pay attention to net returns after tax but you can avoid this issue completely with Isas: all gains are tax free. Premium Bond prizes are also tax free but returns on those are variable.

https://moneyfactscompare.co.uk/savings-accounts/

MEM62

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. 

What sum are we talking about here?

Lord_beerman said:

She didn't want the government to tax her again on her hard earned money. 

What made her think that?  If it is sitting in a pension it is not going to be taxed.  In fact, it would have been taxed in the first place let alone taxed 'again'.  

It would be useful to know what you mother is trying to achieve.  (Also, wherever / whoever she got her advice from - it would be prudent for you to persuade her to ignore this source in future)  

Linton

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. She didn't want the government to tax her again on her hard earned money. 
She is 65+, renting and there is £20k+ to play with. Note, us kids don't care about her leaving anything for us.
Any advice is greatly appreciated!

Is she still working?  If so is she still a member of the pension scheme - It is important that she continues as a member.

Only £20K-ish from the whole of her pension at 65?  I am afraid that is not going to make a great difference to her retirement. It seems to me that safety must be the primary concern.  This means cash or similar - eg savings accounts, possibly Premium Bonds for a bit of fun each month. Perhaps £19K there for a bit of interest and £1K each year in her current account for easy access for small treats would be a sensible option.

At 65-ish she should be able to make her own decisions and her children should be very careful about interfering.

dunstonh

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. She didn't want the government to tax her again on her hard earned money. 

No judgment, but just highlighting the irony that your mum paid tax on that transaction to avoid paying tax.

She could make pension contributions each year.  tax relief on the way in, tax free whilst in the pension and the tax paid on withdrawal is less than the tax relief she gets at the start.

InvesterJones

Fidelity wrote an article for those who took their tax free lump sum based on rumours, about what to do next, some of which might be useful here:

https://www.fidelity.co.uk/markets-insights/personal-finance/personal-finance/youve-taken-your-tax-free-cash-now-what/

Lord_beerman

MEM62 said:

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. 

What sum are we talking about here?

Lord_beerman said:

She didn't want the government to tax her again on her hard earned money. 

What made her think that?  If it is sitting in a pension it is not going to be taxed.  In fact, it would have been taxed in the first place let alone taxed 'again'.  

It would be useful to know what you mother is trying to achieve.  (Also, wherever / whoever she got her advice from - it would be prudent for you to persuade her to ignore this source in future)  

I'm pretty sure she didn't get advice, hence why I'm here. I'll double check though.

I did manage to get her to come around to the idea of moving at least some of it and managed to survive so that's a positive.

As to what she's trying to achieve, I think just being able to make it last as long as possible on top of state pension. She is still working, though now on reduced hours and reduced salary. Lower tax bracket.

Lord_beerman

wmb194 said:

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. She didn't want the government to tax her again on her hard earned money. 
She is 65+, renting and there is £20k+ to play with. Note, us kids don't care about her leaving anything for us.
Any advice is greatly appreciated!

With scant information, a savings account paying reasonable interest would be a place to start. 

If due, she'd only pay tax on the interest, not the principal. Better to pay some tax than watch your cash erode even more to inflation.

How much does she earn? If a low earner there may be no tax to pay on an income up to c.£18k: personal allowance + £5k 0% savings starter rate + £1k 0% personal savings allowance. You can transfer a marriage allowance from one spouse to another as well. 

You should pay attention to net returns after tax but you can avoid this issue completely with Isas: all gains are tax free. Premium Bond prizes are also tax free but returns on those are variable.

I'll get her an easy access saver setup to start with that way she doesn't have to worry about "not being able to touch her own money".
She is still working. I'm not sure of her salary as I don't want to be too nosey, but she is a lower tax bracket I'd estimate 25k not including state pension.

Lord_beerman

Linton said:

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. She didn't want the government to tax her again on her hard earned money. 
She is 65+, renting and there is £20k+ to play with. Note, us kids don't care about her leaving anything for us.
Any advice is greatly appreciated!

Is she still working?  If so is she still a member of the pension scheme - It is important that she continues as a member.

Only £20K-ish from the whole of her pension at 65?  I am afraid that is not going to make a great difference to her retirement. It seems to me that safety must be the primary concern.  This means cash or similar - eg savings accounts, possibly Premium Bonds for a bit of fun each month. Perhaps £19K there for a bit of interest and £1K each year in her current account for easy access for small treats would be a sensible option.

At 65-ish she should be able to make her own decisions and her children should be very careful about interfering.

Unfortunately she isn't that money savvy and I live 200 miles away so don't get to see her as much as I'd like. I'll offer up the idea of premium bonds but I don't think she'd like the idea of having the money "tied-up". So perhaps an easy access saver up to the higher interest limit.

I promise I am careful about interfering that's why I'm here. 

jimjames

Lord_beerman said:

Linton said:

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. She didn't want the government to tax her again on her hard earned money. 
She is 65+, renting and there is £20k+ to play with. Note, us kids don't care about her leaving anything for us.
Any advice is greatly appreciated!

Is she still working?  If so is she still a member of the pension scheme - It is important that she continues as a member.

Only £20K-ish from the whole of her pension at 65?  I am afraid that is not going to make a great difference to her retirement. It seems to me that safety must be the primary concern.  This means cash or similar - eg savings accounts, possibly Premium Bonds for a bit of fun each month. Perhaps £19K there for a bit of interest and £1K each year in her current account for easy access for small treats would be a sensible option.

At 65-ish she should be able to make her own decisions and her children should be very careful about interfering.

I promise I am careful about interfering that's why I'm here. 

With that caveat I would definitely suggest you make her aware of the negative implications of reacting rashly without due consideration of suggestions she receives. She might be lucky in this situation if her salary is £25k and the pension was £20k but it is entirely possible that if either of those numbers are higher that she has un-necessarily paid 40% tax on the money she has withdrawn. So essentially doing the opposite of her aim to avoid being taxed again, with better planning that could have been avoided.

Albermarle

MEM62 said:

Lord_beerman said:

No judgement but my dear old mum has taken all of her workplace pension and stuck it in her current account. 

What sum are we talking about here?

Lord_beerman said:

She didn't want the government to tax her again on her hard earned money. 

What made her think that?  If it is sitting in a pension it is not going to be taxed.  In fact, it would have been taxed in the first place let alone taxed 'again'.  

It would be useful to know what you mother is trying to achieve.  (Also, wherever / whoever she got her advice from - it would be prudent for you to persuade her to ignore this source in future)  

As a guess, she probably got her 'advice' from irresponsible scaremongering headlines in certain newspapers/internet media outlets .