Pension Investment (no Income)

Atoko12

Last year if I had invested my pension 'Pot' it would have lost 18% over the past 12 months.
I need an income from this fund but cannot invest due to falling markets nor can I draw down from it due to reulations.
What are my alternatives for investing to show a return and having a draw down. When these pension schemes were devised the Gov never envisaged such a down turn in the market which effectively leaves me with no income.

EdInvestor

Please give more details about this pension.What is your age? What regulations are you referring to?

dunstonh

Last year if I had invested my pension 'Pot' it would have lost 18% over the past 12 months.

Depends on where you had it invested. It could have lost a lot more or made a profit.

I need an income from this fund but cannot invest due to falling markets nor can I draw down from it due to reulations.

Investing doesnt have to mean using the stockmarket and stockmarket is not all one risk level. However, if you are not 50 yet then you cannot drawdown the pension.

When these pension schemes were devised the Gov never envisaged such a down turn in the market which effectively leaves me with no income.

Yes it did. There are plenty of options that can be used that are not impacted by movements in the stockmarket.

Gatser

dunstonh wrote: »

There are plenty of options that can be used that are not impacted by movements in the stockmarket.

Can you expand on that please ?
What options are you referring to?

EdInvestor

Corporate bonds and gilts, commercial property funds, commodities funds, cash....

gfplux

There are plenty of cash funds.
For example http://www.fidelity.co.uk/direct/research/fidelitysfunds/other_fund_types/cash.html

gfplux

Sorry just noticed those fidelity have high charges.
Have a look here http://www.winterthur-life.co.uk go to products, then investments then look at other pension funds.
About halfway down WINTERTHUR DEPOSIT open the pdf file. this fund has .25% charges
good luck

Atoko12

Thanks for your reply
I am 64 and retired 18 months ago, I have a pension with a major provider and received the tax free amount from the pension shortly after my retirement.
The ballance remains as a cash investment with the same company and gaining 4%-5% interest

My Financial adviser states that any intrest accrued on the investment since my retirement cannot be drawn down. This means that the investment continues to gain interest which I cannot touch.

My FA suggests that since the downturn in the economy it would be unwise to invest anywhere and my funds should remain in cash awaitihg an upturn in the markets. At that time we can invest and draw down on the fund and the interest.
This means that I could be waiting years before I could draw any funds from my pension.

I appreciate the advice so far received, were I to invest my pension funds in these opportunities what would the tax liabilities be in respect of investing a Pension pot on which there was no tax paid. Aparently if I drew down on the pension Pot I would be liable for tax on the total fund.

The funds are above that which would force me into an annunity

Atoko12

gfplux wrote: »

Sorry just noticed those fidelity have high charges.
Have a look here http://www.winterthur-life.co.uk go to products, then investments then look at other pension funds.
About halfway down WINTERTHUR DEPOSIT open the pdf file. this fund has .25% charges
good luck

Thanks for that, Interestingly Winterthur were one of my pension fund providers. I will contact them on Monday.

dunstonh

My Financial adviser states that any intrest accrued on the investment since my retirement cannot be drawn down. This means that the investment continues to gain interest which I cannot touch.

Thats because it sounds like the adviser isnt recommending you drawdown now. If you did drawdown now you could take it.

is means that I could be waiting years before I could draw any funds from my pension.

Is that what you want?

Aparently if I drew down on the pension Pot I would be liable for tax on the total fund.

You would fall into an anti IHT avoidance tax if you crystallised the benefits which does not happen if you havent crystallised. However, the growth on the fund is still tax free. The income paid out is subject to income tax after personal allowances.

I think you need to have another chat with your adviser as you haven't grasped it yet and its possible you are letting circumstances outside of your control impact on your decision making when there is no need to.

EdInvestor

Atoko12 wrote: »

Thanks for your reply
I am 64 and retired 18 months ago, I have a pension with a major provider and received the tax free amount from the pension shortly after my retirement.
The ballance remains as a cash investment with the same company and gaining 4%-5% interest

It must therefore be in an income drawdown plan, from which you are currently taking no income. The regulations allow you to take an income between zero and 120% of the annuoity rate for your age. So if you want to take an income you certainly can.

My Financial adviser states that any intrest accrued on the investment since my retirement cannot be drawn down.

This is not the case.One of the safer ways of managing a drawdown plan is to take just the income from the investment, not drawing on the capital.

This means that the investment continues to gain interest which I cannot touch.

You've obviously misunderstood this.

My FA suggests that since the downturn in the economy it would be unwise to invest anywhere and my funds should remain in cash awaitihg an upturn in the markets.

This seems reasonable, though some people would say that buying now is a good idea as shares are so cheap..

At that time we can invest and draw down on the fund and the interest.
This means that I could be waiting years before I could draw any funds from my pension.

Obviously your FA's advice on managing drawdeown is not in line with your needs.

[quote[I appreciate the advice so far received, were I to invest my pension funds in these opportunities what would the tax liabilities be in respect of investing a Pension pot on which there was no tax paid.[/quote]

Funds in a pension or drawdown plan grow tax free.The income paid out to you from the drawdown plan is taxable, the same as an annuity.

Aparently if I drew down on the pension Pot I would be liable for tax on the total fund.

No.

The funds are above that which would force me into an annunity

How do you mean "force you into an annuity"? Nothing forces you to buy an annuity, even reaching the age of 75 is not the barrier it once was.