Tax free lump sum - pension and investment?

[StormyLandCloud]

Any advice on what people had done when you took your pension and did some investment with part of the lump sum? I will put some into our mortgage, but want to invest some, have some available for rainy days and will likely put a bit into premium bonds
thank you

But will the return be as good as if you left it in your pension?

You don't have to take the whole 25% tax free in one go. Why not just leave what you don't want to put into your mortgage in the pension? Are you only paying off part of your mortgage?

If it’s in your pension it is already invested. Taking it out of a wrapper where it can grow tax-free only to invest it in a taxable general investment account makes no sense. Investing it in an ISA may be sensible but you can only do £20k per person per year.

Premium Bonds is not an investment. It’s a bit of fun but you may win nothing.

Stocks & Shares ISA is a useful wrapper for investing.

Sometimes can pay some into pension but need to be careful of the pension recycling rules.
See flowchart image.

Some lump sums are automatic. Some you have a choice about taking. Depends on type of pension and specific scheme rules. If you don’t need it and don’t have to take it, then look at what happens if you don’t take it or take less lump sum.

Goodness! I think I need to take a training session on pensions at work! I’m retiring early on a total incapacity illl health retirement, my illnesses won’t affect my life expectancy
I think I’ll get some advice as I’m clearly not clued up at all! Thank you 🤩

I left my tax free lump sum in my pension wrapper as I didn't need it. I eventually used it to pay myself a bit more tax free for a few years. I agree, you need specialist advice.

Thanks - I’ve just checked and my employer (university) has an annual pensions day next week! Good timing so I’ll go along to that day and see what’s what! I’ve also asked for workshops and apparently we can get pension advice from Uni / our pensions company … thankful for your advice. Seems I need to think this through more and seek advice - personal finance is not my field of expertise!

To learn more about finance check out Rebel Finance School (Facebook/YouTube).

It isn’t advice but a great tool for learning more to apply to your own situation. About 10 hours of videos.

Start with books.
The Meaningful Money Retirement Guide may be useful, written by a UK financial planner.

If you have a university pension, be aware that the majority of general pension advice is for a completely different type of pension. You need specialist info on defined benefit pensions, and ideally on your particular one because they all have different rules.

Go to the Uni pensions day, and look at the free info and webinars on the Pengage website - that's specialist public sector info and I'm pretty sure includes specific sessions on university pensions.

If it is the USS then that is a hybrid scheme, so part defined benefit part defined contribution.
The USS website has a scheme modeller. Find and read up as much as you can about the scheme and attend any events put on by scheme/employer.
With hybrid schemes thinking about it as two schemes may make it easier to understand. One part is the guaranteed income and one is the flexible income.

Hi - just a quick question here, I’ll also do a separate thread on something similar to HR / legal, but my university is suggesting an end date of end March, I’d prefer year end, I’m not sure why but hoped someone with knowledge could advise.
I also need to get university uss pension financial advice, just trying to get this, so not wanting to commit to a date u til I have more information … any advice?! Thanks

You’d be batshit crazy to take money out of a pension and put it into premium bonds. Premium bonds are effectively a perpetual lottery ticket.

I don’t know that the end date matters so much other than that you might feel rushed to make a decision quickly. Don’t, is the answer… If you plan to retire anyway, then take the defined benefit element (which is a monthly payment based on your contribution years) and leave the defined contribution element (the pot) alone until you have decided IF you need any of your tax free lump sum. Educate yourself first then decide… you can leave it invested, pay off your mortgage so you have lower monthly expenses. Not sure what your circumstances are, but as others have said, there is no obligation to take any as a tax free lump sum and better not to, until you know exactly where the money is needed.