Pension or Property?

[mattman]

Admittedly I’ve been a bit crap at planning and over the years have only had the default work pension schemes with minimum investment.

Now safely middle aged I have 7 pensions, all but the current work pension are dormant from an additional investment and the total pot value is pretty poor.
My current work pension isn’t too bad and due to my age, I’m paying more into each month than ever before.

I don’t currently have the capacity to add more each month, but I do need to do something with what I have.

So the question is, do I consolidate all of the existing pensions into 1 ( the current work pension), consolidate all but the current work one or finally cash all but the current one in and use the money to purchase a buy to let property with an interest only mortgage?

[xeny]

mattman said:

So the question is, do I consolidate all of the existing pensions into 1 ( the current work pension), consolidate all but the current work one or finally cash all but the current one in and use the money to purchase a buy to let property with an interest only mortgage?

Last one is probably against pension rules unless you're over 55.

Start by finding and comparing (so you get a feel for what kind of figure is good or bad) the fees (you want low), fund choices (if you don't know what you're looking at you probably want simple low fee share index trackers(equities) and bond funds) and returns in all the old pensions and your new one, and then consider if you're better off consolidating them all in to the current one, or all the old ones into a SIPP and leaving the current one as is.

[JulianPH]

A pension is a tax allowance/wrapper and property is an asset.

You can hold property (though not residential) within a pension and also borrow (up to 50% of your pension funds) to make a commercial property purchase, with full income tax relief and no CGT or income tax on and growth/rental income.

So it is not a case of one being better than the other, it is a case of one being massively more tax efficient than the other.

You also cannot cash a private pension in until you are 10 years away from state pension age.

Anything else then just shout!

[mikeiow]

You haven't given your age.....if you are over 55 then maybe you can access some.

IF over 10k AND no guaranteed benefits, THEN I would look to consolidate them, perhaps even to your current work one: perhaps you may more attention to that one?!

IF under 10k THEN they could *potentially* be cashed in under the small pots rule (google that)

IF they have benefits, might just be worth looking to see if they can be moved into some decent funds within the pension.

I've moved 3 smaller pensions into my current work one: very easily done, & being mid-50s with a plan to step down from the day job in 2021, I am paying far too much attention to the pot!

[mattman]

Thanks for the replies - I need to spend a lot more time looking at the details!

Currently 47 so no chance of retirement anytime soon.

2 of the pensions are under 5k the rest are over 10k bit no where near 3 figures for any of them

[TwigtheWonderkid]

JulianPH said:

You also cannot cash a private pension in until you are 10 years away from state pension age.

Can't someone whose state pension age is 67 cash in their pension now if they are 55.

Edited by TwigtheWonderkid on Sunday 25th October 17:02

[JulianPH]

TwigtheWonderkid said:

JulianPH said:

You also cannot cash a private pension in until you are 10 years away from state pension age.

Can't someone whose state pension age is 67 cash in their pension now if they are 55.

Edited by TwigtheWonderkid on Sunday 25th October 17:02

Yes, they can now, but this is very likely to change as the state pension age rises.

[xeny]

JulianPH said:

Yes, they can now, but this is very likely to change as the state pension age rises.

In September the government confirmed minimum pension age will rise to 57 by 2028 - https://citywire.co.uk/new-model-adviser/news/govt...

[Groat]

Pension?
https://www.vectorstock.com/royalty-free-vector/do...


Property?
https://www.alamy.com/stock-photo-donkey-eating-ca...

[Turn7]

Groat said:

Pension?
https://www.vectorstock.com/royalty-free-vector/do...


Property?
https://www.alamy.com/stock-photo-donkey-eating-ca...

My thoughst exactly....

[JulianPH]

Groat said:

Pension?
https://www.vectorstock.com/royalty-free-vector/do...


Property?
https://www.alamy.com/stock-photo-donkey-eating-ca...

Very good mate!

Ever tried encashing part of a property though...

[Groat]

JulianPH said:

Very good mate!

Ever tried encashing part of a property though...

Wot? Like old folks (and some young folks) do with deferred repayment loans?

Or straightforward refinancing?

Not for years.

And anyway, isn't 'encashing' for people whose investment returns don't provide enough to satisfy their needs/wants? (like pension savers invariably have to do when the poor things are eventually allowed to benefit from their long awaited savings)?

Edited by Groat on Sunday 25th October 19:12

[JulianPH]

Groat said:

JulianPH said:

Very good mate!

Ever tried encashing part of a property though...

Wot? Like old folks (and some young folks) do with deferred repayment loans?

Or straightforward refinancing?

Not for years.

And anyway, isn't 'encashing' for people whose investment returns don't provide enough to satisfy their needs/wants? (like pension savers invariably have to do when the poor things are eventually allowed to benefit from their long awaited savings)?

Edited by Groat on Sunday 25th October 19:12

The point I was trying to make was one of liquidity. Look how many property funds are locked down, again.

And if you have to apply, get approval for, and then pay a bank to access the capital in your investments, this is hardly liquid or financially efficient either.

Don't get me wrong, I have property (and land) investments too, but for other here I am just pointing out some of the issues these may bring them that they may not have been aware of.

For completeness, you can take ia taxable ncome or sell a property (and pay CGT on the profits) at any age, whereas with a pension you have to wait, but this is because you have had all of your original income tax back and decades of tax free growth and income. So a balance of investments (such as pensions and ISAs) and other assets (including property) makes a lot of sense.







Edited for my normal stupidity

Edited by JulianPH on Monday 26th October 15:13

[anonymous-user]

Looks to me as though OP might usefully,

• Get a better understanding of each specific pot that he's got
• Combine some or all, depending on what he finds
• Have an appropriate investment strategy for age, risk appetite etc.
• Avoid paying any more fees to "advisers" than is absolutely essential.

There could be no harm in a conversation with the people at Intelligent Money (Julian's outfit who sponsor this forum) to see what they might be able to suggest.

To be honest the last thing I'd be looking at in OP's situation is property. Too many costs, too many taxes, and, as Julian has already mentioned, lack of liquidity.

[Mr Pointy]

Groat said:

Pension?
https://www.vectorstock.com/royalty-free-vector/do...

Property?
https://www.alamy.com/stock-photo-donkey-eating-ca...

Pension:


Property:
https://www.telegraph.co.uk/news/2016/11/14/landlo...
https://www.telegraph.co.uk/finance/property/prope...
https://www.telegraph.co.uk/property/uk/eviction-b...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...
https://forums.landlordzone.co.uk/forum/residentia...

[Groat]

Mr Pointy said:

Pension:

Did the poor old homeless chap in charity shop clothes living on a deck chair in a park have the heart attack BEFORE he gave his untouchable lifetime's savings to the annuity company, or afterwards, when he realised what he'd done?

[andy43]

Groat said:

Mr Pointy said:

Pension:

Did the poor old homeless chap in charity shop clothes living on a deck chair in a park have the heart attack BEFORE he gave his untouchable lifetime's savings to the annuity company, or afterwards, when he realised what he'd done?

He’s just had the call from the letting agency - boilers been nicked again.

[rufmeister]

Was just about to chuck some money in a pension, and found myself questioning it yesterday...

Now you have me questioning it again you lot! Grr!!

[Groat]

andy43 said:

Groat said:

Mr Pointy said:

Pension:

Did the poor old homeless chap in charity shop clothes living on a deck chair in a park have the heart attack BEFORE he gave his untouchable lifetime's savings to the annuity company, or afterwards, when he realised what he'd done?

He’s just had the call from the letting agency - boilers been nicked again.

to which he replied " Why you phoning me? Am I a plumber now?? You know who the insurers are! And don't forget to build my next weekend in London into the claim".