Pension lump sum - help

[Restaurantcritic]

I have £30000 as a pension lump sum and a monthly payment from a previous career. It’s because I have hit 60 and an old pension has matured.

where do I put this money??? I can pay off debts but I might still have £20 grand. ISA?

There is then the issue of monthly payment. I don’t want to get stuffed for tax but I still work part time In a different job. Should I put this in another savings account but one with easy access for when I retire from my current job???

I think I need to see a financial advisor but would appreciate a steer on what might work. WWYD?

If I remember rightly, if you are still working and paying tax, you are likely to be paying emergency tax on the 30k.
Once you have paid tax, it's all yours.

So ISA or other savings accounts would be fine.

I'd blow it on a holiday or new car!

Is it a defined benefit pension (final salary) or a defined contribution pension as that affects what you can do with it.
Definitely put up to £20k in an ISA, after paying debts, fixed rate for a year probably pays the best interest if you don't need the money immediately

Defined benefit.

The £30 grand is a tax free lump sum I understand.

There's a really good podcast on Money saving expert about this including links to free pension advisory services.
No one-size-fits all, but yes to ISA for the lump sum (the best pay over 5% easy access) and you will have to pay tax on the monthly amount whatever happens, unless you can defer taking it until you stop work, at which point it'll still be taxable but you might be in a lower tax band.

The monthly sum will just be paid anyway then, if you haven't got much other pension, it would be wise to save some while working, and look to putting more in an ISA next year.

Your lump sum will be paid tax free.
Whether you pay tax on your pension depends on how much it is and how much you earn from your PT job. As soon as you earn over your PA you will be paying tax but this could take up to a year to sort itself out.*
Putting part of your lump sum into a decent ISA is a very good place to start.

*My OH took one of his pensions early but still worked PT and for a year he was paying tax on both incomes. It wasn't until his tax codes got sorted (this happened automatically) that he received a tax rebate.

Should I put this in another savings account but one with easy access for when I retire from my current job???

What are your plans for retirement? Work until state retirement age (will that be 67 for you?) or stop earlier ?

What other pension provision do you have?

Are your NI contributions enough for full state pension?

How much is the monthly payment from this pension and how much do you earn? Do you need to spend it now to cover living costs? Would it cover "nice to have" things that would improve the quality of your life? Do you not need the extra money at this stage? As you have debts I'm guessing not the latter.

I have another smaller pension ( no lump sum) and will hopefully retire fully at 65.

i am entitled to full state pension. I’ve checked

I could easily burn through this lump sum but mindful in a few years I’ll need back up income. So want to hold on to most of it.

Thanks for replies

Pay off debts, put the rest in a savings account. It really isn't enough to risk investing in stocks and shares or anything. Just find the best interest rate depending on how easy you want access to be.

Pay off debts, including mortgage if you have one.

Use Stocks & Shares ISA for medium to long term investing. Cash ISA for short term savings. You can have combination of both but £20k allowance is the total this tax year.

Any left over, and the monthly pension income can be in a savings account and be put into ISA on 6th April 2025.

Are you single? If you are married, use their ISA as well. Also they may be able to pay into their pension depending on their earnings (if they have no earnings, they can pay in £2880 this tax year to pension).

As you are in employment you cannot avoid paying tax on the pension income. You may be able to increase a little what you currently pay into your workplace pension. Need to be careful not to fall foul of pension recycling rules, but a small increase is usually fine.

m.youtube.com/watch?v=ql_a2VMzAj8

Enjoy some of the money, give some, save some.

ISA for the lump sum and I would look at putting the monthly payment (or as much of it as takes you over the Personal Allowance as you work p/t and depending on your salary level) in a defined contribution pension because then whilst you pay tax on the money you receive, you get it back when it goes into your pension.

Why not defer? You don’t HAVE to take it. Most DB schemes offer a late retirement increase factor. Speak to the administrators and ask. You could get more later, and then pay less tax.

If you do take it, or have already agreed to, pay the money into a pension and recoup the tax.

Edit- you can only save your ‘earnings’ but whilst you work, live off pension, save your earnings into a pension

£30k

• pay off debts
• £20k in an ISA
• Remainder of £30k, so £10 k less debts = treat yourself.

Monthly pension - it partly depends on net amount:

• as it is extra money I would split into long term savings, short term savings, fun money
• set up a regular monthly saver - use money saving expert to find best rate
• after current tax year set up an ISA and pay in monthly
• have some fun - you are at the point where you should enjoy it. It’s what you have been saving for.

If you don't need the monthly money now you could reinvest into your pension again. See if you can get financial advice from your pension scheme on this as it's not for everyone - eg if you are doing a flexible drawdown it's not possible (which doesn't seem to apply to you anyway) and there is an annual contributions limit.

It will boost your later pension and allow you to access more tax free cash.

If you don’t need the money right now I would look into deferring.

I am 55 and looking at my options. If I am still employed at 60 I may defer my pension until I stop working to mitigate the amount of tax I pay. Of course if I die early this gamble may not pay off.

Yeah thought about deferring but I need to pay off credit cards that I’m servicing every month.plus there wasn’t that much difference taking it now.

i have arranged to see a FA tomorrow . I will pay off debts. Put money in an isa and the monthly pension I’ll save until I finish work completely.

my aim is to further reduce hours at current job asap.

Thanks everyone.