what would you do about a pension if you were me?

[darkspotontimber]

I am 50

When I retire at the retirement age I will have £26, 600 per year pension, including the state pension.

What would you do to buy additional pension? Ideally I would like to retire before state retirement age but I don't see how I could afford to do this. I don't really like the idea of tying more money away that I cannot access until I am at retirement age. Any ideas about what are good pension options or retirement/ savings options?

Your first port of call is often usually your work pensions scheme that comes with employer match and tax relief at source? Have you got one and if so can you maximise your contributions? Log in and use their modeller to see how much impact even a 2/3% additional voluntary contribution might have on your pot, what how much net stoppage a month?

If that is not an option, then of course you could consider a SIPP where the tax relief is added back on. You possibly wouldn't want to take too long horizon a view on the investments because you've got 17 years rather than 37 years ahead of you till you retire.

These would be the most tax-efficient routes, in that order.

If you don't fancy either of these, the third would be a standard stocks and shares ISA without direct relationships to pensions I guess.

How much more than 26k do you want?

If you don't want to tie money up in pensions, then you are looking at ISA's - ideally a stocks and shares one - for the next 10 years.

You can open a Sipp and access it at 55 if you need to.
If you are a BR taxpayer, for every £10k you save, you get £2500 tax relief. You can even leave it in cash, although the interest you get isn’t fantastic. You could also put it into a Short term money market fund currently paying around 5.5%, not completely risk free but very low risk whilst interest rates are highish.
Even if you get 6% in an ISA, it still doesn’t beat the uplift of tax relief in a Sipp.
I use Hargreaves, not the cheapest but great customer service and easy to deal with via app or website. 0.45% platform fee but no charge for holding cash.

Thanks everyone! I do find pensions confusing!

why don't you want to retire before 67?
how much do you need to live on presently?

on the pension at 67 you'll be paying tax at around £50 a week

effectively if you retire earlier, you'll get a smaller pension but less tax to pay

Do you know how much your pension would be at 55 years? 60 years? if you took it earlier?

You could put in extra for the next 5 years
put the money away in a cash `ISA or a stocks and shares ISA
buy shares that yield a decent dividend

That’s interesting. I’ll look into that. I’d retire now if I bloody could! I’m pretty sure the penalties are really harsh on my pensions for retiring early ( public sector pension).

That’s interesting. I’ll look into that. I’d retire now if I bloody could! I’m pretty sure the penalties are really harsh on my pensions for retiring early ( public sector pension).

if its public sector pension, you should be able to log online and take a look at the dates you want to retire and see what you'd get. But penalties - as you call them - may outweigh the benefits of taking the pension early. It depends on what you put away/save in the next 5-7 years - as that money could be used to live on to bridge the gap between your retirement and your old age pension. Also how much is your tax free lump sum? This can also be altered, giving you a larger lump sum and less monthly pension etc.

If it’s public sector, you can buy extra pension through either AVC’s or APC’s. Have a read on the website to decide which you prefer.

Similar position here - we have gone down the "maximise the AVC contribution" route for the next 5 years, then bridge the gap to State Pension age using the tax free lump built up at 60 (our LG AVC scheme actually allows you ALL the fund tax free - not just 25%).
Yes the LG Pension has a significant reduction - but other pensions and pots (and going at 60) make up for that - assuming we don't die of course.

Zombie. 🙄