Lump sum to invest

toots25

I am looking for some advice regarding pensions and a lump sum. My ex-employer has wound up its pension scheme and I requested that the money be paid back to me so that I can decide what to do with it.

I have £10,000 or so coming back to me in the next week, and would like to know what's the best way to invest it. Do I:

• put it into my new stakeholder pension that I now have so that I will have it in 20+years when I retire
• invest in premium bonds/high interest savings account - basically somewhere where I can get at it if I need it
• some other option, other than spend it (which is what I would probably like to do if my sensible head wasn't on!)

Any advice would be most appreciated

dunstonh

My ex-employer has wound up its pension scheme and I requested that the money be paid back to me so that I can decide what to do with it.

Normally, the administrator/employer arranges deals with an insurance company to take the transfer value to pay into stakeholder/personal pension or section 32 buy out bond. These usually have higher values than taking the money yourself. Is that the case for you?

Do I:

• put it into my new stakeholder pension that I now have so that I will have it in 20+years when I retire
• invest in premium bonds/high interest savings account - basically somewhere where I can get at it if I need it
• some other option, other than spend it (which is what I would probably like to do if my sensible head wasn't on!)

option 1 is the basic, simple option. Not usually the best, not usually the worst. You could call it the neutral option.
option 2 for premium bonds is wasteful. Savings accounts for a 20+ year term is also wasteful, inefficient and almost certainly going to give you less in retirement than alternatives.
option 3 with ISAs and personal pensions is likely to be the better option. Although as I mentioned higher up, a section 32 buy out bond may be better.