What would you do with a £1million pension?
Discussion
A friends father has been offered just over £1m as a buy out from his final salary pension. He wants to take it.
He's speaking to a couple of wealth advisers about options. In an ideal world he wants £40k pa as a pension, with as little disruption to the £1m pot as possible (I feel my friend is very keen for this outcome too
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£1m working at 4% is achievable in funds at the moment, but obviously long term there will be ups and downs.
I'm more inclined to put maybe £200k into a UK based rental property as a fallback source of income should the markets dip for a period and keep at least a years cash sitting in easy accessible savings.
I believe we've all firmly missed the boat where buying an F40 would be the best option
I thought it was an interesting question. £1m used to be a lot of money, but it's definitely not when you're 65 and that's the last of your income.
He's speaking to a couple of wealth advisers about options. In an ideal world he wants £40k pa as a pension, with as little disruption to the £1m pot as possible (I feel my friend is very keen for this outcome too
)£1m working at 4% is achievable in funds at the moment, but obviously long term there will be ups and downs.
I'm more inclined to put maybe £200k into a UK based rental property as a fallback source of income should the markets dip for a period and keep at least a years cash sitting in easy accessible savings.
I believe we've all firmly missed the boat where buying an F40 would be the best option
I thought it was an interesting question. £1m used to be a lot of money, but it's definitely not when you're 65 and that's the last of your income.
VoxPops said:
How interesting, I have a broadly similar quandary at the moment. My IFA has joined St James' Place and although he's splendid value I have no particularly high regard for the new proposition.
I don't know much about, well, anything, but I do know St James Place fees are expensive.But they have really nice literature .
Defcon5 said:
What would he get from his pension if he kept it? Not only lump sum and yearly amount, but does a pension continue for his partner if they outlive him?
Now would be a 200k lump then 39k/year.The partner has sadly passed on already, hence wanting to take it out. There is no transfer to siblings should he pass on.
Thanks guys, I really appreciate every ones input and love that we have great arguments for and against withdrawing.
Looking at the markets over the last 30 years there seems to be a general trend of up, so for the withdrawal option to be a total disaster, there will need to be a total disaster with the economy.
As others have pointed out, even if you average 0% on £1M over 30 years, you could still draw down £30k/pa for 33 years before you run out of money.
No body knows the correct answer at the moment, it's an interesting time. If all goes to plan, you'll be in a MUCH better place in 20 years with the withdraw option over final salary scheme, but you certainly lose security.
Looking at the markets over the last 30 years there seems to be a general trend of up, so for the withdrawal option to be a total disaster, there will need to be a total disaster with the economy.
As others have pointed out, even if you average 0% on £1M over 30 years, you could still draw down £30k/pa for 33 years before you run out of money.
No body knows the correct answer at the moment, it's an interesting time. If all goes to plan, you'll be in a MUCH better place in 20 years with the withdraw option over final salary scheme, but you certainly lose security.
Cheib said:
OP - Do you know what multiple he's been offered to get the £1mil ? Buy out multiples vary massively but I heard of one the other day at 51 times.
And as for the bloke whose IFA just joined SJP ask him to explain in detail how there fees work. Chances are he can't.....and if he could you'd say "thanks and goodbye"
I don't, I can find out if it's interesting.And as for the bloke whose IFA just joined SJP ask him to explain in detail how there fees work. Chances are he can't.....and if he could you'd say "thanks and goodbye"
It looks increasingly likely it will be drawn down and placed to a fund manager via a SIPP (my terminology is probably bad, I've not been too in the loop!)
The biggest shock to me is the fee of the mandatory IFA. For a simple meeting and a written report he's charging 1%. £10k for nothing it seems! I'm' sure his report will be well written enough to cover his own back.
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