INDEPENDENT FINANCIAL ADVICE CENTRE
Authorised and Regulated by the Financial Conduct Authority
97 High Street
Your Home is at risk if you do not keep up any mortgage or payments secured upon it!
You should remember that past performance is not necessarily a guide to the future. Market and currency movements may cause the value of units, and the value derived from them, to fall as well as rise and you may get back less than you invested when you decide to sell your units. The tax treatment of investments and pensions is not guaranteed and may change in the future.
Well you have to reduce your pension in order to get the cash so is it good value for money? If you have a non-guaranteed personal pension then the answer is invariably yes as even if you need more income you can most times get a higher NET income by buying an annuity outside the pension scheme, thanks to a tax concession.
Why take cash if you already have enough for your needs and are likely to live for a long time and hence could do with the highest pension.
If it’s a company scheme see what income you lose before taking cash and what income you can get from it. There is no point taking cash to generate a lower income than you already had especially if you need the income to balance the budget.
Also keep in mind increases, your bills will rise so make sure your pension and/or capital can keep up. So it’s always better to have a slightly higher initial income than you need so do consider a compromise.
For example suppose on your Company scheme they offer you £11 of cash for every £1 pension you give up and you have these choices £10,000 p.a. pension or £33,000 tax free cash and £7,000 p.a. pension.
Let’s say your expenditure is £8,000 a year (forget tax for the moment to make it simple) and you only have say £20,000 already saved with no debts are aged 60 and married.
Well £20,000 may not be enough to last the rest of your life. Your Kitchen “white goods” will need replacing as the years go by let alone the car etc.
However if you take the full cash you would need to generate income from your savings in order to make ends meet, which is taking a risk.
Why not compromise and take say £8,500 pension and (£1,500 x 11) £16,500 cash giving you savings of £36,500 and you don’t need income from it so it can be left to grow until required.
Remember once made pension decisions cannot be changed!
You must get this one right and it is simply not possible, without a detailed discussion of individual circumstances, to offer advice.
Why not discuss early retirement with us? We have dealt with your situation before and can guide you through the options decision and what to do with the money once you have it. Simply call us.