Small DC pension pot, 2 months until retirement date

[clockworks]

I've just had a pension statement, telling me it's time to think about my options.

Pension is managed by Legal & General, valued at just shy of £9.5k.
If I take an annuity, it'll be worth next to nothing at current rates, around £20pcm IIRC.

I already draw a couple of DB pensions, currently paying £650pcm, and should be increasing to around £950pcm in a couple of months when I'm 65.
I'll qualify for pretty much a full state pension in 14 months, around £690pcm.

I'm self-employed, and will carry on working for a few more years, but take on less work. Probably another £1000pcm.

Mortgage is paid off, no debts, 2 reasonable cars, £40k in the bank.

Current outgoings on "essentials" is £1k a month.


I really don't know what to do with this £9.5k pension pot.

Would I be best just leaving it where it is, relying on L&G getting a better return on it than I could, and having it as a "rainy day" fund if I get faced with a big house repair bill?

[BoRED S2upid]

Can you cash it in? Stick it in a S&S isa as a rainy day emergency leave and forget type thing?

[clockworks]

BoRED S2upid said:

Can you cash it in? Stick it in a S&S isa as a rainy day emergency leave and forget type thing?

I could cash it in, worth £8100 after tax.

Is it likely to get me a better return than leaving it where it is though?

[Register1]

clockworks said:

BoRED S2upid said:

Can you cash it in? Stick it in a S&S isa as a rainy day emergency leave and forget type thing?

I could cash it in, worth £8100 after tax.

Is it likely to get me a better return than leaving it where it is though?

Similar,
Mine pot is about £10600

You can have 25% tax free, the rest you pay basic rate on, assuming basic rate tax payer.

This is what I will do.

[BoRED S2upid]

clockworks said:

BoRED S2upid said:

Can you cash it in? Stick it in a S&S isa as a rainy day emergency leave and forget type thing?

I could cash it in, worth £8100 after tax.

Is it likely to get me a better return than leaving it where it is though?

That’s the million dollar question.

What’s it increased by over the years? Nothing or a few percent a year?

[clockworks]

BoRED S2upid said:

That’s the million dollar question.

What’s it increased by over the years? Nothing or a few percent a year?

I'll see if I can find some previous statements.....

[clockworks]

The last 4 statements valued the pot at:

2019 £8749
2020 £9126
2021 £9727
2022 £9453

Looks like it was doing quite well, until the last 12 months. Around 8% growth over 4 years. How does that compare to a S&S ISA?

[BoRED S2upid]

Similar to mine. Most have taken a hit recently. But what’s your long term strategy for it? The £20pcm is pointless.

What are the fees? As you will be paying fees on a S&SIsa.

[anonymous-user]

clockworks said:

The last 4 statements valued the pot at:

2019 £8749
2020 £9126
2021 £9727
2022 £9453

Looks like it was doing quite well, until the last 12 months. Around 8% growth over 4 years. How does that compare to a S&S ISA?

That depends entirely on what you invest in with your isa. It is merely a tax wrapper not a fund.

[clockworks]

In reality, I suppose the best thing to do with it would be to spend it now. Inflation looks like it'll outstrip anything that I could invest in without taking a big risk.

I can't think of anything I really want though - apart from sorting my house out. Maybe I'll just spend some of my savings on some building work, and cash in the pension.

Long term, my other pension income should be more than enough to live on, even when I finally pack in work.

[PistonHead007]

Why can't you just leave it alone if you don't need it now...?

If the investment range is rubbish then transfer it to another pension. Almost certainly won't cost you anything to transfer and you can draw 25% tax free cash at any age. In the meantime it stays free of capital gains, income and inheritance tax.

[Mr Pointy]

clockworks said:

The last 4 statements valued the pot at:

2019 £8749
2020 £9126
2021 £9727
2022 £9453

Looks like it was doing quite well, until the last 12 months. Around 8% growth over 4 years. How does that compare to a S&S ISA?

Vanguard Lifestrategy 100:
31/03/2019 it was £215.35
31/03/2022 it was £296.37

That's up 37.8%. If it were me I wouldn't be leaving it where it is.

[Hotrodytype]

hi
this is probably the worst opinion ( not advice )on what to do, i retired 2 years ago, i would withdraw it all ( yes pay the tax) its never going to accrue a fortune , stick it in premium bonds and have it for treats for yourself & missus or your kids , you cant take it with you! LOL

[BenB91]

As an IFA, I would say unless you need the money, keep it where it is.

Why pay tax if you don't need to?

Within the pension, it benefits from tax free growth and is not subject to IHT.

You could consider a fund switch to something more suitable to your risk profile and time horizon.

[Hotrodytype]

like i said worst opinion, but you are sorted with other income why just leave it , there are no pockets in shrouds , my IFA hates me spending mine LOL

[xeny]

Mr Pointy said:

Vanguard Lifestrategy 100:
31/03/2019 it was £215.35
31/03/2022 it was £296.37

That's up 37.8%. If it were me I wouldn't be leaving it where it is.

Depends what it is meant to be doing - you're looking at 100% equities during a period great for equities - I'd guess this is a more conservative set of investments, quite possibly lifestyled as it was coming towards the date a pension was likely to be drawn.

[Mr Pointy]

xeny said:

Mr Pointy said:

Vanguard Lifestrategy 100:
31/03/2019 it was £215.35
31/03/2022 it was £296.37

That's up 37.8%. If it were me I wouldn't be leaving it where it is.

Depends what it is meant to be doing - you're looking at 100% equities during a period great for equities - I'd guess this is a more conservative set of investments, quite possibly lifestyled as it was coming towards the date a pension was likely to be drawn.

Maybe, it would be interesting to know. LS20 did 9% over the same period.

It does demonstrate that it's unwise to simply let pensions dribble on without assessing them every six months. The OP doesn't seem to be relying much on this pension so it should have been working a lot harder, on the basis that if it went south then it didn't really matter.

[xeny]

Mr Pointy said:

It does demonstrate that it's unwise to simply let pensions dribble on without assessing them every six months. The OP doesn't seem to be relying much on this pension so it should have been working a lot harder, on the basis that if it went south then it didn't really matter.

I'd cross out pensions and write investments, but with the caveat that you need quite a bit of perspective in that assessment.

It is far too easy for people to panic sell when equities fall, then panic buy after they've risen. Essentially the process discussed in this video:https://www.youtube.com/watch?v=h44qiGtjYI8

You perhaps need to consider your chosen asset allocation in the context of any changes in your goals, but I think that it is almost better to do without assessing performance to avoid the investing equivalent of pilot induced oscillations.

[BenB91]

anonymous said:

[redacted]

Your comments seem based on a DB pension. The OPs pension is a DC pension and 100% will be passed to his beneficiary.

The internet can be a dangerous place when it comes to financial advice.

[PistonHead007]

And that's before you stop and consider if death benefits can only be paid as a lump sum to the estate or if beneficiary drawdown is available...