Pension or savings account

[daisylou466]

I have about £30k that I need to do something with. And I hope to invest/save/contribute £500 a month going forward.

I’m 49 and a teacher. I hoped to retire at 55 and do something else but I’ve found out if I take my final salary pension I’ll have quite a big penalty to pay on it and I’d have to take my average salary pension at the same time with a greater penalty. If I leave my FS pension until 60 I can then choose not to take my AS pension until 67.

I have no idea how to work out if my money would be better being invested into my workplace pension, a personal pension or into a savings account.

it’s not a huge amount so don’t think it’s worthwhile speaking to a financial advisor.

I have an 8 year old that I will be financially responsible for for quite a while yet. She has £12k in a normal children’s bank account. I’m a single mum.

I think you do need to see a financial advisor - not just about what to do with the £30k, but about your retirement plan.

If you don't intend to draw that pension straightaway, you need proper advice about whether you're better off making AVCs into the pension, or having the money each month and investing it so that it's there to tide you over between retirement and drawing the pension.

If you add it to the main workpace pension (I'm not familiar with the teachers scheme but I assume there's an option to buy either extra years or an extra amount) it will be on the same terms - and will be reduced if you take it early. You will probably be able to claim a tax rebate on the payment.

If you put it into AVCs attached to your workplace pension you will get more flexibility about when and how you take it - although you won't be able to access it (even with reductions) before 57. Same if you open a SIPP privately and pay it into that. Either way you'll get a boost to the amount from the tax rebate. You'll need to be careful not to exceed the annual allowance (a little tricky to calculate with your other pension), so you would probably need to pay it in across a couple of years. Annual allowance problem also applies to the main pension option above.

In a savings account (or ISA, so you're not taxed on interest) you have immediate access at any age, but no tax boost. And if youbkeep it as cash savings you're likely to have difficulty keeping pace with inflation, whereas in any of the pension options it should grow at least in line with inflation and possibly more.

Do you have other savings? If not you should keep at least some outside a pension so you can access it in an emergency.

There is probably a sliding scale of reductions for taking your teachers pension early, so I recommend doing the sums for each year between 55 and 60.

If you're on Facebook, the Pengage public sector pension group is really helpful for understanding your options.

Not enough information.

Do you have any cash savings now? Do you have an emergency fund? If no then I'd calculate whatever 6 months of expenses are and put that in the best paying savings/Cash ISA you can.

As for the rest, are you a basic or higher rate tax payer? Paying into a pension you will get some tax relief benefit but the earliest you will be able to access the pension at the moment will be 57.

You could look at a S&S ISA which would allow you to invest but give you more flexibility.

Whether you choose pension or S&S ISA a low cost global index fund is something worth looking at. You ideally need to be looking at this for 10 years+ though as investing does put your money at risk.

Wesleyan provide advice on the Teachers’ Pension Scheme.

https://www.wesleyan.co.uk/campaigns/teachers-retirement-planning?gad_source=1&gclid=EAIaIQobChMIyPSv4o78hQMVHJtQBh0R4gE_EAAYASAAEgIx7PD_BwE