Is it time to empty the pot?

By THIS IS MONEY
Updated:

 

I WORKED for Lloyds Bank for 13 years and in two months' time I will be entitled to a pension at age 50. If I draw this now it will be £4,500 pa, but each year it is not touched it will increase by 4-5% to £8,500 at age 60.

For the last five years I have worked for the Post Office and intend to stay there until retirement at 60. My partner also works for Lloyds, pays into a non-contributory pension and is ten years younger than me. We plan to draw the pension now and invest max £200 per month in SAYE indefinitely, plus £100 per month in, say, a building society savings plan.

Is this a good idea or should we leave the pension to accrue and not touch it? We are both basic rate taxpayers. TJ.

Lee Robertson, independent financial advisor at Investment Quorum, says: If you and your partner are both still working is there any real need to take the pension fund now?

By waiting until the normal retirement age of the scheme you will almost double your pension in retirement. The investments that you make by drawing on the pension will not generate enough interest to match this level of income.

Further, by leaving your pension untouched there will be the scope for discretionary increases in payment from your pension, which further reinforces the decision not to draw benefits. I?d strongly consider leaving it in place.

Most watched Money videos