Pension lump sum - what to do with it

FranP

Calendargirl

I used my lump sum to buy premium bonds for DH and me.

We have done well with them, but I know it’s not guaranteed to win and no interest.

But it’s government backed and you can always cash them in if required.

I have had a stash of premium bonds for nearly 40 years and never won a penny

How much do you mean by a stash, FranP?

My husband and I each have the max £50k and averaged £5000pa between us in the last year of the Tories when interest rates were higher. For the last 12 months this has fallen to just over £1,500 under Labour even though the rates aren't that much lower. I know it's not guaranteed but you do need a significant amount of bonds to increase your chances of getting the bigger prizes.

Georgesgran

You could put the other £15K into an ISA in your name? When DH worked, we had most of our savings in my name, (for tax reasons) and kept it that way after he took early retirement. The major expense for his lump sum was to buy a suitable vehicle, as he’d always had company cars and mine was totally unsuitable for his needs.

Martin Lewis latest info is that there are fixed rate instant access accounts paying 4.5%.

Yes, two stocks and shares ISAs are probably the way to go, you need to pay for yours from your own account, but he can transfer the money to you beforehand. If you're likely to need cash soon you can use a cash ISA for some of it, though rates are better if you're prepared to tie the money up for several years.

Calendargirl

I used my lump sum to buy premium bonds for DH and me.

We have done well with them, but I know it’s not guaranteed to win and no interest.

But it’s government backed and you can always cash them in if required.

I have had a stash of premium bonds for nearly 40 years and never won a penny

I don't think we need to worry. The current maximum is nearly £300k. They only plan to reduce the amount. A piece in one of the quality papers recently features info from finance experts. They are advising the normal people not to do anything without some advice. We risk of losing future interest etc.

Echoing those who have used a financial adviser. I had thought that we didn't really have enough money to make this worth while, but ours helped us identify what our ideal retirement looked like and then worked out with us how to make it happen. It was all very reassuring, as are the annual reviews.

Just so happens that I read the article below (from Fidelity) with the title "5 good reasons to take your tax-free cash - and 5 bad ones":

www.fidelity.co.uk/markets-insights/personal-finance/saving-for-retirement/5-good-reasons-to-take-your-tax-free-cash/

I hope this helps...

Good luck, Elizabeth.

I put my lump sum into a Stocks & Shares ISA. Fees of £144.80 were charged every six months. After fourteen years my original £30,000 had shrunk. Took my money out and put it in a cash ISA. I will never do a Stocks & shares ISA again.
IMO RR want us all to take out S&S ISAs because the brokers will receive fees twice each year!

Hi,
I can recommend Chase having recently opened their easy access savings account. It attracts an interest rate of 4.5% AER, 4.41% gross for a year.

You have to open a current account first (didn’t need to put any money in) then you are able to open the easy access account. There is a time limit in which to open the easy access account after opening the bank account.
It’s app based, but very easy and straightforward.
I did this last month when I was undecided whether to tie money into a fixed term account. Also, I wanted the security of an assistant taking me through the process of opening the account and transferring the money in. The employee was friendly and helpful.

This sort of account gives you thinking time without fixing you in.

Good luck.

I invested my lump sum three ways in single purchase assurance bonds with the Pru and two others. They have done well and I can take an income from them. My OH split the sum between index linked NS&I bonds and two investment trusts, one of which produced a large capital growth due to its having invested early in Tesla. All in all a good result. I used a further lump sum to buy an indexed annuity.

NS&I are offering a fixed rate bond for one year with 4.00% interest. Banks also have similar options. At the end of the year you can add the money to your ISA, or open another one. I had a session with my bank’s financial adviser recently. With regard to investment, they were only interested if I was willing to invest £49,000 or more.

I was in this position a few years ago.
As confirmed by my accountant and my accountant b-in -law anything under at least 500,000 is of no interest to a Financial Advisor. Most won't consider leads than a million.
I'd agree with advice of ISA's and possibly NS&I. Best of luck.

Financial Adviser would be most sensible advice. We spent a bit, spread a bit in different pots and have some in high interest but available access accounts.

I was in this position a few years ago.
The advice about ISA's etc seems sensible.
But! A Financial Advisor will not be interested in much under £500,000 .
I found this and my accountant and accountant Brother in law confirmed this.
Best of luck though, I'd look at National Savings and Interest or a good ISA,

Have you taken the tax implications into account? Unless you don't need to, of course!

Rachael in accounts wants us all to buy stocks and shares ISAs.
I think she thinks it’s better for the country and the pay back could be more advantageous.
I’m not giving my opinion here but just saying….
Don’t you have a FA already, we’ve had one for ages but I suppose that’s because we have never had a works pension, we did it ourselves with a bit, OK a lot, of help from ours.

My DH is just taking his 25% and leaving the rest. Not because of what may happen in the next budget but because of his age.
I’m leaving mine for another couple of years.
We have always had a relaxed attitude to risk and so, over the years we have had good growth over all. Mine not so good because I wanted to go down the ethical route.

I used my lump sum to buy premium bonds for DH and me.

We have done well with them, but I know it’s not guaranteed to win and no interest.

But it’s government backed and you can always cash them in if required.

He got advice on whether or not to take an annuity, but in the end wanted certainty that he would get a guaranteed income for life. It probably isn't the saviest decision, but he values the certainty. It does mean he can take some risk with the lump sum, but doesn't want to risk too much.

Thanks for the comments. I am still working so he could wait a bit, but he is too worried about the budget having an adverse impact and the stock market going down, so I don't think he will change his mind.

My husband retired around 18 months ago I would definitely look at talking to a independent financial advisor. My husbands pension pot is still intact as we still have sufficient funds without touching it so it has been invested to grow We certainly will not be buying an annuity but drawing down his pension as and when we need it

Do you have access to an FA? I know everyone is different, but ours said not to consider an annuity until DH was in his 70s. Sadly DH died at 70 and I have since decided against buying an annuity with what was left, leaving the fund to be managed and taking a monthly draw down instead.

You could put the other £15K into an ISA in your name? When DH worked, we had most of our savings in my name, (for tax reasons) and kept it that way after he took early retirement. The major expense for his lump sum was to buy a suitable vehicle, as he’d always had company cars and mine was totally unsuitable for his needs.

Martin Lewis latest info is that there are fixed rate instant access accounts paying 4.5%.

The main advice seems to be about using your full isa allowance. After that, lock some in a fixed rate account if you can manage without it for a specific period. So you seem to be going down the normal route.