Advice re pension/ stocks and shares ISA/ cash ISA

[lots33]

I would welcome advice regarding significant changes to my finances.

I have been earning well in a self employed capacity for some years. I have had to give up work due to ill health. I have no idea when or if I will be able to work again.

I have been awarded PIP but currently have no other income.

I am mid forties; my partner is older and retired with a public sector pension of 1400 pm.

I have 11 years in a Local Authority pension that has been frozen since I left the LA to go SE a few years ago.

I have a personal pension pot of about 50k accrued over the past 4 years.

I have about 80,000 left from my SE earnings. As I may not be able to work again, I am nervous about tying up some/all of it into my pension. Is this right? If so, what can I do with it to keep it accessible and hopefully work for me? S and S ISA/ cash isa, premium bonds?

Other relevant info is that I have 2 primary age children and we are lucky to have paid off out mortgage and run one old banger! No other debt. We are going to try to live off my partner’s pension and my PIP, to keep the savings intact but it would be tight and would certainly need savings if, say, a new boiler was needed.

Advice welcome please!

Can you get any other benefits? Universal credit? Child Benefit? As your children are young I would have thought you would get a bit more support if your income is fixed.

Apologies for not having any current useful advice as the benefits system has changed so much, but a sudden drop in health is a horrible thing to deal with.

Apologies, have seen you have a savings pot - I think you need proper financial advice, as I would imagine your savings would need to be used to a certain level until you could claim additional benefits.

Yes that’s the issue. I may be eligible for new style esa but certainly not UC or anything like that.

I’ve worked so hard to reach this point of financial stability, it is horrid to suddenly feel unstable .

Thanks for replying.

Sorry you've had this change of circumstances. Personally if it was me I would invest a chunk of it into a stocks and shares ISA, as I wouldn't want it all locked away in a pension until 57. For this chunk I'd pick a fund (rather than individual stocks) and one with low fees. Stocks and shares ISA should keep pace with a stocks and shares pension, so it'd grow on a par roughly.

You can put in £20k a year per ISA per person, so this year £20k in your ISA and £20k in your husbands ISA. If you're putting large sums in, its recommended to drip feed it in, across a few months rather than one lump sum in case the market drops.

I would probably consider a chunk into pension also, because you will get the 20% tax relief, and also can take a 25% lump sum out at 57/58 which you can then invest in s stocks and shares ISA yourself.

You're mid 40s so you don't need to decide right away about putting money into your pension although you will be limited to £3600(?) a year if you're not earning anything so might need to drip feed money in. Personally I would keep £20,000 in cash savings and put the rest into S&S, using your ISA allowance each year. You need to decide your own attitude to risk though and how much money you would like to have access to at short notice.

Thanks both, I didn’t know about the drip feeding, that’s useful. I’ll look in more detail at s and s is A’s.

Any recommendations for specific ones gratefully received! I do read money saving expert but find it all a bit confusing! Not a natural with finances!

My work benefits included a financial planner / pensions planner, otherwise I wouldn't know about this stuff either.

You'll want to have a look around and do some research, but I'd suggest looking into an index tracker fund. Look for low fees to you - it should be under 0.2% pa for this type of thing.

Personally I use Nutmeg also, its a bit more expensive (0.35% pa fees) but its an easy platform to use, you select a risk level, and they invest it for you in various funds. You can take it out anytime and the money clears within five days. There aren't buying and selling costs. I've just checked mine now, and risk level 9 has returned 18% in the last year and a bit.

S&P Aristocrats Dividends could be one to look into also - pays out dividends but doesn't have aggressive (riskier) growth

Consider low cost tracker funds as these have the lowest management fees and it's the management fees that eat into the returns.

If you want to keep it simple, you could look at Vanguard Lifestyle Strategy funds for example. Or if you want to pick your own basket of funds, I like Fidelity as a fund platform,

I had a meeting today with my IFA coincidentally,
One thing he raised (which I wasn't aware of previously) is fixed term annuities, whereby you use your savings/pension pot to provide a guaranteed monthly income for fixed period.
Do an internet search for it, but if you do decide on this route, make sure you get proper advice from an IFA before you confirm

@LeuvenMan annuities have their downsides, I personally wouldn't get one, but it could be suitable for some.

@lots33

Thanks both, I didn’t know about the drip feeding, that’s useful. I’ll look in more detail at s and s is A’s.

Any recommendations for specific ones gratefully received! I do read money saving expert but find it all a bit confusing! Not a natural with finances!

Vanguard are really popular for low cost index trackers - and for good reason. Pick one of their Life Strategy funds :)

Thanks everyone, really fab advice

Is there any chance of you being able to do a few hours working from home. I dont think this would affect your PIP payments. Or could your DH work some hours. I certainly wouldn't advise premium bonds in your circumstances. And interest rates are very very low at the moment.

PIP isn't means or income tested

I really can’t work at the moment, DW may be able to later down the line. I hope I’ll be able to work again but cannot predict it at the moment.

Yes interests rates are low, it’s balancing risk versus stability with the money isn’t it.

Maybe I should just stick it in the bank and review, according to my health, in 6 months.