Pension - Inheritance

[ohpumpkinseeds]

I am extremely fortunate to have inherited a really significant amount of money - £300k. I am going to see an IFA but I wondered if you wise lot could give me your opinions.

I currently don't have a pension. If I was to whack the whole lot in a pension, could I just leave it in there and not add to it from my wages and have a decent pension by the time I retire?? I'm 36.

I would be aiming to retire at 60, and I'd have no mortgage by then so it would just be other living costs etc. We could also downsize and release cash that way when retiring. My kids are very young but already have savings funds that will amount to enough for support through uni, first cars, a contribution to house deposit etc.

I know it's a bit of a "how long is a piece of string" question! But interested in opinions! Thanks so much.

People aren’t reading this correctly.
OP has INHERITED a pension, yearly allowances / tax relief etc. don’t come into it.
She can either take the whole lot tax free as a lump sum or have it transferred into her own pension, invest it and have tax free income from it at any time, assuming the deceased was under 75.
If over 75 then it’s taxable at OP’s marginal rate.

https://www.ajbell.co.uk/retirement/sipps-and-death

Surely receiving tax free as a lump sum it can then still be invested subject to annual allowances and with tax efficiency (ie topped up by the government). I struggle to see why you would invest straight into a pension when you could do it over a few years and get an extra 25% top up (at least). Unless I'm missing something.

Also that detail wasn't in the OP, it was a later post so it's hardly surprising that it was missed.

Well yes, it could be done but there would be a lot of tax to pay on £15k savings interest, OP could only get £40k in an ISA (before and after April 5th this year) and it would take many years to feed into a Sipp, dependant on earnings.
Fine if she earns over £60k and can use carry forward, that would get a big chunk in with the resulting tax relief, otherwise it’s a bad idea, a pension is protected from IHT for one thing.
If OP had £300k in savings and died tomorrow, she may have other assets that go over the IHT limit depending on if she’s married of course.
You have to look at the whole picture.
An IFA is a good investment for someone not sure of the ins and outs.

Do you have a good salary level and employer contributions?

In future if you are not a higher taxpayer now might you be in the future? Paying into a pension from higher taxed salary, any salary, is good because if the tax contribution etc. So over the next 25 years you don’t want to be overpaying into your pension (that you can’t access til you are 57, most likely by then) but not living the life you could be living now!

I can’t see a downside to having it all in a pension from the start, if it were me, I’d invest at least 2/3rds in a simple global index tracker and either keep the rest in cash ( it earns interest ) or a short term money market fund for ‘savings’ that can be used whenever needed - you don’t have to be 55 to draw from an inherited pension. Think of it more as a large long term savings account.
Has OP said if the person who left them the pension was over 75?

It needs sorting in the most tax efficient way.