What to do Now

AllRed66

Hi...

Thanks for adding me to these forums.

I have recently took early retirement and will be receiving a lump sum from my workplace pension.

Any advice on the best ways to maximise the above without paying no/very little tax.

I,m over reading on all that offer Saving/Investment accounts.

Any help will be greatly appreciated.

TIA

Bostonerimus1

You might want to give the forum a little more information about your circumstances and goals.

jimjames

You might also find the pension board of relevance with others in the same position

LHW99

https://forums.moneysavingexpert.com/discussion/comment/82114750#Comment_82114750

Such as approximately how much you will receive, if this year's ISA is full, do you have a spouse / partner, have you any other pensions due, how much are you looking at pa when you are retired, how old are you and how do you plan to fund the gap between early retirement and SP…….

dunstonh

I have recently took early retirement and will be receiving a lump sum from my workplace pension.

What type of workplace pension?

Some types, it makes perfect sense to take the maximum tax-free cash. However, other types taking the tax-free cash are not the most efficient method.

Any advice on the best ways to maximise the above without paying no/very little tax.

Focusing on tax is not the best way. For example, one of the most efficient and financially beneficial options will increase your tax. Although it will reduce your net effective tax.

You should be focusing on your objectives first and then matching the solutions to those objectives.

InvesterJones

The pensions board is definitely a great place to get help.

On tax, whilst I know it's psychologically hard to pay, I think one might be better off if looking at the bigger picture - for starters options which involve paying tax might be financially better even in the short term, and in the longer term, the less tax the govt receives the more they have to recover from something else that you might not be able to avoid (e.g. changes to the state pension). So given the position of the same net income, but one after more tax, that one would be the preferable one ultimately.

AllRed66

Hi Sorry if I have been a bit vague in my initial post.

I,ve just turned 60 last month and retired due to Ill Health, with 40yrs service with the one company. I received Tier 2 from my LGPS but still waiting for this to complete as I have a small AVC with the Pru.

I will receive a Lump Sum plus a Monthly pension but unsure as to what is the best policy for the LS. I will open an ISA, Open another in the OH,s name and maybe purchase Premium Bonds. Open another bank account with emergency funds and keep my monthly pension in my current account for everyday expenses. The OH is still working part time.

Question on ISA,s…Does the interest reset every financial year? I know the limit is 20k..But can I put another 10k into the same ISA Account the following year?

I have so many questions and I know I,m only one month into retirement but enjoying doing stuff at my own pace, at whatever time.

eskbanker

Question on ISA,s…Does the interest reset every financial year? I know the limit is 20k..But can I put another 10k into the same ISA Account the following year?

No, interest from cash ISAs is treated the same as any other savings account - the only annual reset is the contribution limit.

It is indeed currently £20K, but from April 2027, under-65s can only pay up to £12K into cash ISAs annually, although can pay in up to £20K in total by using other ISA types, such as stocks and shares ones…

And yes, you can keep paying into the same ISA for multiple years, unless the product terms preclude that (as most fixed rate ones do).

Albermarle

ISAs & tax-free savings — MoneySavingExpert Forum

If you read through this forum, you will soon be an expert on ISAs !