Finance & Investments

[Moby Dick]

But if you had £1M in your pension then 5% takes you to £50,000 pa and state pension is another £12,000 on top, so you'd be into the 40% income tax bracket. Keep under £52,000 and you're only paying 25% tax. If your pension investment grows 5% a year then your £50,000 drawdown is pretty much covered by the growth and your pension is back to £997,000 after 12 months.

Inflation is the silent assassin here - the pot in real terms is getting smaller - but yes that was my thinking before Reeves changed IHT on pensions.

Having “ too much” creates an inefficient tax burden.
If income TAX was my main concern :
With £1M I would retire before state retirement age.
Draw down £50k pa from 55 (or 57) to 67.
Put unspent money (if I have any) into ISAs. Remember Further 25%, £250k is tax free, so additional £20k pa for 12 years going into ISA’s - fun money.
At 67 reduce draw down to £38k due to state £12k state pension (assuming allowance don’t go up)

I would still look at a small annuity for safety / security / IHT.

[Moby Dick]

Annuities 18year high:

External Link/Members Only

Trumps tariffs helped Gilts.

[Massagemanmr]

What do people do for 'low risk'?  (At least a managed risk)

I put a wedge of cash in an AJBell SIPP account into IE000WNEYKM1/GBPO and while it does give just shy of 2bp per day, its a small fund and the spread to purchase was relatively wide.

If I'm reading things correctly, bonds have been positively correlated to stocks in crashes recently.

I have (quite) a lot of diversity and lean away from American large cap, but a global stock crunch for an extended period would be uncomfortable.

AJ bell is good. i use short term money market funds
Royal London Short Term Money Market - but do your own research

[Moby Dick]

I haven't invested in any stocks since January in anticipation of a crash at some point. I usually invest unspent salary every couple of months and this year my bonus took me over the £60K tax free pension contribution so I took a chunk as cash and it is stressing me out a bit seeing the market go up and a good chunk of money doing nothing. Kind of wish I'd just invested it and not worry about it, but potentially it could be a good decision.

Did you max out previous years pension contribution allowances?
Once you get to £60k (including tax relief and contributions from your employer) you can use unused allowances from the 3 previous years provided it is less than this / current years income.

[Rick2468]

Did you max out previous years pension contribution allowances?
Once you get to £60k (including tax relief and contributions from your employer) you can use unused allowances from the 3 previous years provided it is less than this / current years income.

I was afraid you were going to recommend that I maxed out my credit cards for a moment there.

Yes I used bonus payment to max 3 years of payments. Employer maxed 20% of contributions too which was an added bonus.

[RandomGuy99]

Inflation is the silent assassin here - the pot in real terms is getting smaller - but yes that was my thinking before Reeves changed IHT on pensions.

Having “ too much” creates an inefficient tax burden.
If income TAX was my main concern :
With £1M I would retire before state retirement age.
Draw down £50k pa from 55 (or 57) to 67.
Put unspent money (if I have any) into ISAs. Remember Further 25%, £250k is tax free, so additional £20k pa for 12 years going into ISA’s - fun money.
At 67 reduce draw down to £38k due to state £12k state pension (assuming allowance don’t go up)

I would still look at a small annuity for safety / security / IHT.

I did some crunching of numbers, if you take £58,000 each year spreading your tax free 25% over 31 years, you get £3,600 net per month and by the time you're 90 your pension pot is still worth £922,000. That's pretty good. Assuming you get 5% growth on your pension fund.

[Moby Dick]

I did some crunching of numbers, if you take £58,000 each year spreading your tax free 25% over 31 years, you get £3,600 net per month and by the time you're 90 your pension pot is still worth £922,000. That's pretty good. Assuming you get 5% growth on your pension fund.

Take home on £58k will increase to £3947 (England) £3800 (Scotland) per month when you reach state pension age,  Stop paying NI contributions.

External Link/Members Only

but what will this be worth? What will a pint cost if inflation hits 5%? Will the government continue to freeze income tax allowances?

Too many variables, risk of market crashes, withdrawing £58k on a bad year could prevent recovery of the pot, hence why pension companies calculate lower draw down rates promoting the fear of running out of money (after all they are parasites living off a percentage of the balance). Hence you spend your most active years (55 to 70) worrying if you have enough money, working a few more years constantly checking the markets.

Annuities give a degree of certainty. Takes away some of that worry, allows you to plan / do stuff / get on with enjoying yourself knowing a pot has been ringfenced to give a guaranteed income.

[PilotMan]

but what will this be worth? What will a pint cost if inflation hits 5%?

I had exactly the same thought.

If you take the average inflation for the most recent 31 years, to keep the spending power of £1, you'll need £2.50 in 31 years time. Meaning that a straight line £58k for 31 years will end up being worth just £23k in reality.


There would be a declining table of value of £1 over that period, there'll be less and less money in that pot for punting 

@RandomGuy99 - can you redo the numbers taking in to account typical inflation and increase the yearly drawdown to keep track of inflation.

I'd be happy to spend all my money, which is what I intend to do. If there IS anything left over, it will go to charity.

[RandomGuy99]

I redid the numbers allowing 2.8% inflation per annum

Bottom line

With inflation included:

You can initially draw £67k
Then around £63k when State Pension starts
Tax-free cash runs out around 77
Total income gradually compresses because of frozen tax bands
Pot at 90 (I'm not expecting to live that long) still finishes around £886k nominal / £377k real

[PilotMan]

I redid the numbers allowing 2.8% inflation per annum

Bottom line

With inflation included:

You can initially draw £67k
Then around £63k when State Pension starts
Tax-free cash runs out around 77
Total income gradually compresses because of frozen tax bands
Pot at 90 (I'm not expecting to live that long) still finishes around £886k nominal / £377k real

 

[Massagemanmr]

I redid the numbers allowing 2.8% inflation per annum

Bottom line

With inflation included:

You can initially draw £67k
Then around £63k when State Pension starts
Tax-free cash runs out around 77
Total income gradually compresses because of frozen tax bands
Pot at 90 (I'm not expecting to live that long) still finishes around £886k nominal / £377k real

nice work

[Moby Dick]

This weeks top buy.



Hidden Image/Members Only

[Moby Dick]

Followed by this one:


Hidden Image/Members Only

[RandomGuy99]

BBC News - A financial crisis may be coming - it won't be like last time - BBC News
External Link/Members Only

[Malvolio]

External Link/Members Only

You can buy an annuity as a way of not having unspent pension fund money and depending on what you do you could then leave some value in the annuity to family or just accept that they'll be 40% IHT to pay on whatever you have left in your pension ehen you die.

And then your kids have to pay income tax on the unspent funds when they take it out - so the true tax rate is 52%, or 64% if your kids pay higher rate tax.

Making pension funds liable to IHT is a very sneaky move.  My view is that it's to get people spending more now and paying more tax now.

[Blackpool Rock]

And then your kids have to pay income tax on the unspent funds when they take it out - so the true tax rate is 52%, or 64% if your kids pay higher rate tax.

Making pension funds liable to IHT is a very sneaky move.  My view is that it's to get people spending more now and paying more tax now.

There was previously talk about removing the tax free lump sum and / or reducing the tax rebate on pension contributions but neither of those happened, in terms of it being a "sneaky move" you could be right that they have reviewed all the options and decided that this will give a broadly similar outcome in the tax take but perhaps without the same level of public outcry as it's effectively much further down the line

It's a fine balance as they do want people spending more or rather paying more tax now however they also want people to save more into pensions so that they can sustain themselves in old age rather than simply relying on the state
The minimum 8% contribution into a pension scheme was a good start to achieving this however realistically it's probably not enough plus you can opt out, I was amazed to hear how many people where I worked had opted out on the basis that they "couldn't afford it and needed the money now" however most of them seemed to go to the pub and smoke 

IMO the tax breaks on pensions were far too generous as you pay money in tax free / get the tax returned into your pension and can then take 25% of the invested pot tax free when you retire and start to cash it in, it was then sheltered from IHT too

Let's not forget that when you start drawing down the money it counts as income so you then get the 1st £12570 tax free every year plus for higher earners in the 40% tax band while they were working they can claim the tax rebate on pension contributions at 40% but then only pay basic 20% tax on withdrawals if they limit how much they take out or what their retirement income is to keep it just under the 40% threshold
Effectively getting free money from the tax payer - pump a lump sum into your pension in the last year or years of working and get tax rebated at 40% and then take a tax free lump sum of your pension (can be in 1 go or staggered over however many years), invest this cash into a stocks ISA where the returns are then tax free  and then continue to draw down on your pension pot receiving the 1st £12570 tax free each year and only paying 20% tax on money you've had invested which benefitted from a 40% tax rebate when you paid it in

[ronthebrummie]

I personally wouldn’t put a penny into pensions it’d all go into a tax free isa, with this lot in power you might be getting tax relief now but what will tax rates be when you need your cash.

[Blackpool Rock]

I personally wouldn’t put a penny into pensions it’d all go into a tax free isa, with this lot in power you might be getting tax relief now but what will tax rates be when you need your cash.

But surely the same could be said of tax free ISA's as in how long will the returns remain tax free or will the returns possibly be taxed at 5%; 10% etc in the future 
Tax rules have always changed over time

I can see the 25% tax free pot being lowered down to 20% at some point and then possibly further down to 15%; 10% etc over time, I can also see the 40% tax relief being reduced to 30% and then 25% until ending up at 20% over time

None of these will be popular moves though which is probably why we haven't seen it so far but instead there has been a freeze on the tax bands so people are paying more tax due to fiscal drag but don't necessarily notice it or shout about it in the same way that adding 1% onto tax or NI is more in your face yet the fiscal drag which will have been for 10 years when (if) it ends in 2031 will have cost most people far more after the full 10 years it's been in place

[Moby Dick]

I personally wouldn’t put a penny into pensions it’d all go into a tax free isa, with this lot in power you might be getting tax relief now but what will tax rates be when you need your cash.

Do both. Don’t put all your eggs in one basket.

Pensions currently have many advantages.
Can only put £20k per year into an ISA.
Whilst £60k pa plus previous unused years into pension.
£100k into your pension is £125k immediate investment that will grow. yes you will pay tax on withdrawal (based on your tax allowances) but you do get 25% of the total tax free.
Plus you can offset to reduce by a further 20% if you are a higher rate tax payer.
Plus 2% or 8% less NI to pay (for now)
Plus your employer may match your deposits.

Trying to second guess what this and future governments will and won’t do could be costly.

[Massagemanmr]

how does it work when you put your own money in a SIPP and get the tax top up.

for example lets say i am lower rate tax payer year 25/26 and contribue £10k into a SIPP in same tax year does this get topped up 20%

then say 26/27 i'm higher rate tax payer and contibute £10k in same tax year to SIPP does it get topped up 40%

[cunningman]

how does it work when you put your own money in a SIPP and get the tax top up.

for example lets say i am lower rate tax payer year 25/26 and contribue £10k into a SIPP in same tax year does this get topped up 20%

then say 26/27 i'm higher rate tax payer and contibute £10k in same tax year to SIPP does it get topped up 40%

The basic rate tax that you paid is added automatically - put 10k in and it will be 12.5k.
You have to claim back the extra bit of high rate if applicable in your tax return.
You don't get the NI back for voluntary contributions but currently you can effectively save that if you are contributing with salary sacrifice.

[RandomGuy99]

External Link/Members Only

[Blackpool Rock]

External Link/Members Only

Paywall

[Massagemanmr]

The basic rate tax that you paid is added automatically - put 10k in and it will be 12.5k.
You have to claim back the extra bit of high rate if applicable in your tax return.
You don't get the NI back for voluntary contributions but currently you can effectively save that if you are contributing with salary sacrifice.

thank you

[RandomGuy99]

From Money Saving Expert

External Link/Members Only

[Darren101]

From Money Saving Expert

External Link/Members Only

Am I missing something? What’s Virgin Atlantic got to do with Finance and Investments?

[RandomGuy99]

Am I missing something? What’s Virgin Atlantic got to do with Finance and Investments?

Saving money on flights

[PilotMan]

Saving money on flights

Not sure that directly correlates to finance and investments 

[Norwichwood]

I guess the more you save the more you can invest. I'm 54 and been doing salary sacrifice for the last 6 years - £40k pa into Nasdaq 100 - I ever gets the NI ee, ers and AE 3% all helps. Really pumping my net worth up for retirement. At £550k in Norwich much cheaper than London - and 20 year ago was broken zero and no job etc. I still have fun money for my hobbies :-) I see the FTSE 250 is up 2.25% - not sure what is driving that - can't be Trump this time. 

[Blackpool Rock]

Another big jump in fund values today, glad at the moment that I still haven't sold out of any funds like I was intending to

[Norwichwood]

People are talking about shares being over-priced. But I think also the Iran war, Ukraine war and Trump tariff war is also helping to keep prices down. Hopefully when the Ukraine war ends for good - for stocks & share holders I can see a over 10% jump on that one. In 10 years prices now should seem cheap. Nasdaq 100 for me. Also thinking of starting a side hustle again.......

[PilotMan]

Also thinking of starting a side hustle again.......

Does it involve cooking in an RV?

[drogoboy99]

I guess the more you save the more you can invest. I'm 54 and been doing salary sacrifice for the last 6 years - £40k pa into Nasdaq 100 - I ever gets the NI ee, ers and AE 3% all helps. Really pumping my net worth up for retirement. At £550k in Norwich much cheaper than London - and 20 year ago was broken zero and no job etc. I still have fun money for my hobbies :-) I see the FTSE 250 is up 2.25% - not sure what is driving that - can't be Trump this time.

what does "NI ee, ers and AE 3%" mean? In the future you think a broke government might try to claw back money from people's pensions?

[Blackpool Rock]

what does "NI ee, ers and AE 3%" mean? In the future you think a broke government might try to claw back money from people's pensions?

Historically the Govt of the day haven't changed rules to claw back benefits previously accrued by certain schemes / rules, the door may be closed to new people and you may not be able to add to the scheme but whatever you already have invested is effectively ring fenced.

For instance there was talk about whether people would have to start paying tax on profits from stocks ISA's but the thinking was that if anything was changed then whatever you already have invested wouldn't then be liable for tax.

I believe the thinking is that if people have structured their entire future wealth planning around whatever rules were in place at the time they invested then it's simply not fair to pull the rug from under people.
So someone may have invested in stocks ISA's on the basis that they'd already paid the tax on income but all the profit withdrawn is tax free rather than in a pension.
If it then suddenly gets taxed then the argument is that they wouldn't have invested in the ISA but would have pumped it into a pension instead so 20 or 30 years of retirement planning gets seriously affected at a brushstroke   

[Norwichwood]

"Does it involve cooking in an RV?" - shit! you got me Pilotman! Just stay out of MY territory!

Actually have a few ideas spinning over - including a website for adverting massage places....

drogoboy99 - so if an employee earning £3k per month say - you pay tax and employee insurance before getting your net wages - but your employer has to pay employer NI and your automatic enrolment pension on top - so the total cost to the employer might be £3.5k - but your net pay is under £2.5k. With salary sacrifice taking the national minimum wage you can get the full £3.5k but most of it is going into your pension pot. So and extra £12k pa saved. (I'm 54, modest spending and some ISAs to sell as needed so can do it).

Well salary sacrifice is coming to an end it seems in 3 years. I can see them in the future maybe getting rid of the 25% tax free amount if we still have a Labour government. They (a Labour government) might also take away the additional tax relief for 40% tax payers. It won't go down well - and the downside of getting rid of salary sacrifice is a lot of people and a lot of Doctors will retire within 3 years.

If I was prime minister - I would go to the Philippines and lease a large area of land for 100 years deal - set up a retirement village - and encourage people over time to move there. That is the easy way to free up (as oppose to build) 150,000 homes here. You offer men (and women) free accom, good food, and a pension so they can afford the LBFM in the sun for a fraction of the cost here. It would be heaven. And win-win for the 2 countries as would reduce pressure on our NHS as well. We would train up a large number of their people for working there but also here. At the same time would set up community kitchens to replace food banks. Offering simple vegetarian food for all (I'm a meat eater but cost wise would work better if no meat). Then I would create a city of the future here in honour of Queen Elizabeth. Work on making Secondary Education the best in the world as much as possible. And if you come here illegally - that is a crime - and treat it as such (within the ECHR rules which we largely set up to protect out people). Would make a great economic boost to the country for all.

You don't need a lot to retire to the Philippines - a lot of people there live on £10 a day or so - language is much easier to learn (they use our Alphabet) - hot sunny weather - cold cheap beer - friendly women! So living on your state pension is ok as it will go up same as it does here as have agreement.

[Blackpool Rock]

"Does it involve cooking in an RV?" - shit! you got me Pilotman! Just stay out of MY territory!

Actually have a few ideas spinning over - including a website for adverting massage places....

drogoboy99 - so if an employee earning £3k per month say - you pay tax and employee insurance before getting your net wages - but your employer has to pay employer NI and your automatic enrolment pension on top - so the total cost to the employer might be £3.5k - but your net pay is under £2.5k. With salary sacrifice taking the national minimum wage you can get the full £3.5k but most of it is going into your pension pot. So and extra £12k pa saved. (I'm 54, modest spending and some ISAs to sell as needed so can do it).

Well salary sacrifice is coming to an end it seems in 3 years. I can see them in the future maybe getting rid of the 25% tax free amount if we still have a Labour government. They (a Labour government) might also take away the additional tax relief for 40% tax payers. It won't go down well - and the downside of getting rid of salary sacrifice is a lot of people and a lot of Doctors will retire within 3 years.

If I was prime minister - I would go to the Philippines and lease a large area of land for 100 years deal - set up a retirement village - and encourage people over time to move there. That is the easy way to free up (as oppose to build) 150,000 homes here. You offer men (and women) free accom, good food, and a pension so they can afford the LBFM in the sun for a fraction of the cost here. It would be heaven. And win-win for the 2 countries as would reduce pressure on our NHS as well. We would train up a large number of their people for working there but also here. At the same time would set up community kitchens to replace food banks. Offering simple vegetarian food for all (I'm a meat eater but cost wise would work better if no meat). Then I would create a city of the future here in honour of Queen Elizabeth. Work on making Secondary Education the best in the world as much as possible. And if you come here illegally - that is a crime - and treat it as such (within the ECHR rules which we largely set up to protect out people). Would make a great economic boost to the country for all.

You don't need a lot to retire to the Philippines - a lot of people there live on £10 a day or so - language is much easier to learn (they use our Alphabet) - hot sunny weather - cold cheap beer - friendly women! So living on your state pension is ok as it will go up same as it does here as have agreement.

Did you mean to post this on the politics thread 

I know it's sometimes difficult to post about tax / tax changes etc without touching on areas of politics or at least Govt policy but there's a difference between posting about what may theoretically happen in the future (as I have done a few times) and posting about what doom and gloom may happen if a specific political party is in power 

[Norwichwood]

I try to stay away from religion, politics etc. It was more trying to answer drogoboy99 "In the future you think a broke government might try to claw back money from people's pensions?" And based on the past year yes there is that possibility it will happen. For the if I was PM bit - they are mostly left wing ideas. Each government has to have some ideas / dreams to make things better. Apart from the target to build 150k starter homes not sure how we are moving forward in the UK.

[Watts.E.Dunn]

Quick query for our fiscial whizz'es here, and asking on behalf of a friend, female one!.

Shes about to come into a £200K lump sum and would like to see what she could get as income a month in a safe investiment.

Not enough for a buy to let which i think has now had its day. She isnt old enough for a state pension and i think she has got one on retirment when she does that and i expect will be very much a standard rate taxpayer.

Any suggestions please?..

Thanks..

[RandomGuy99]

Quick query for our fiscial whizz'es here, and asking on behalf of a friend, female one!.

Shes about to come into a £200K lump sum and would like to see what she could get as income a month in a safe investiment.

Not enough for a buy to let which i think has now had its day. She isnt old enough for a state pension and i think she has got one on retirment when she does that and i expect will be very much a standard rate taxpayer.

Any suggestions please?..

Thanks..

AI thinks this

If she has **£200,000** and wants **monthly income from it with relatively low risk**, the key question is **how much income she needs** and whether she wants to **preserve the £200k capital** or is willing to **gradually spend some of it down** over time.

Here are realistic ranges in the **UK**:

### 1) Cash / Fixed Savings (lowest risk)

Examples: high-interest savings accounts, fixed-term bonds, cash ISAs.

Typical gross rates in recent UK markets have often been around **3.5–5%** (varies with rates and provider).

**Income from £200,000:**

* **3.5%** = **£7,000/year** → **~£583/month**
* **4.0%** = **£8,000/year** → **~£667/month**
* **5.0%** = **£10,000/year** → **~£833/month**

**Pros**

* Very safe (especially spread within Financial Services Compensation Scheme limits)
* Capital preserved
* Simple

**Cons**

* Inflation erodes spending power
* Rates can fall
* Tax on interest above allowances

---

### 2) Investment-Grade Bond / Income Fund (moderate-low risk)

Examples: gilt funds, short-duration bond funds, investment-grade corporate bond funds.

Typical yield:
**~4–6%** (not guaranteed)

**Income**

* **4%** → **~£667/month**
* **5%** → **~£833/month**
* **6%** → **~£1,000/month**

**Pros**

* Better long-term income potential than cash
* Diversified
* Can be held in ISA / pension wrapper

**Cons**

* Capital value can move up/down
* Income not guaranteed

---

### 3) Dividend / Multi-Asset Income Portfolio (moderate risk)

A diversified portfolio of global shares + bonds designed for income.

Typical sustainable withdrawal:
**~3.5–5%**

**Income**

* **4%** → **~£667/month**
* **5%** → **~£833/month**

Potential for some capital growth over time.

**Pros**

* Better inflation protection
* Tax-efficient wrappers available
* Can last decades

**Cons**

* Market swings
* Not "safe" in the same sense as cash

---

### 4) Spend Capital as Well (highest income)

If she’s comfortable drawing down capital, income can be much higher.

Example:
£200k over **20 years** at modest growth could support roughly:

**~£1,000–£1,250/month** (rough estimate)

but eventually the pot is used up.

---

## Tax angle (important)

If she’ll be a **basic-rate taxpayer**, she may have:

* **£1,000 Personal Savings Allowance** for interest
* ISA shelter options
* dividend allowances (small now)
* pension contribution opportunities depending on earnings

Tax wrapper choice matters almost as much as investment choice.

---

## My honest view on buy-to-let

Your instinct is understandable:

* higher stamp duty
* regulation
* maintenance hassle
* tenant risk
* tax less favourable than before
* concentration risk (one property)

For **£200k**, a diversified portfolio is often cleaner than one rental.

---

## What I’d want to know

To estimate properly:

1. **How old is she?** (rough range is enough)
2. **Does she need income now, or just wants it?**
3. **Does she want to keep the £200k intact for later / inheritance?**
4. **Would she accept some ups and downs in value?**

That changes the answer a lot

[Blackpool Rock]

Quick query for our fiscial whizz'es here, and asking on behalf of a friend, female one!.

Shes about to come into a £200K lump sum and would like to see what she could get as income a month in a safe investiment.

Not enough for a buy to let which i think has now had its day. She isnt old enough for a state pension and i think she has got one on retirment when she does that and i expect will be very much a standard rate taxpayer.

Any suggestions please?..

Thanks..

A few too many variables / unknowns to give an answer -

How "Safe" is safe
What sort of income is she hoping to get
Does she actually need the money now as an income or could it be invested for the longer term to give a better return
Is she working
How old is she
Is she married or single

Typically the safer options provide the worst returns whereas riskier stocks are more volatile but on average over time they have provided better overall returns than say a building society account however you then also have the issue of what stocks / funds to pick

A lot of this really depends how far off retirement she is, not just state retirement age but whether she intends to stop working before then (assuming she is working)

I'd say that she probably needs to consider multiple investments to spread things out but again it all depends whether she needs the return / income from the entire £200K or whether she could invest half longer term for better returns and take income from the other half

Safest would be simply banging it in a building society account and withdrawing a bit each month, the issue here is that she'll probably only be getting a return similar to the rate of inflation as having instant access / multiple withdrawals won't give as good a return as tying the money up a bit
Consider putting some money in an account or accounts that tie the money up so that you can access it in an emergency but gives a better return if it's not touched, you can then also have a "working" account with less in it that you take from each month
In a similar way many building societies offer Bonds which give a better return but you are tying the money up for an amount of time, you may be able to access the money in an emergency but will lose all / most / the majority of the interest so may as well have had the money in a shoe box under the bed.
She could keep back enough money for the 1st year then invest the rest in BS accounts / bonds which mature after 1; 2; 3; 4 & 5 years so she then has another smaller lump sum of penalty free money which is maturing every year, she can then take what she needs for another year and reinvest the rest again

She could consider putting 50K into premium bonds but the monthly return is variable and not guaranteed, however any returns are tax free 

Personally i'd be banging £20K into a stocks ISA but i'd be looking to do that every year

Assuming she's still working and has a pension then she could live off of her savings and max out her pension, basically put all or almost all of her wage into her pension where she will get the tax refunded into the pension, it may be worth not putting all of her wages in though and still taking £12570 a year in wages as that's tax free anyway.
She may be able to put in a lump sum to top up her pension from previous years where she hasn't maxed out the contributions

IMO it's very important to take advantage of all the tax free benefits / options that are available

If she wants a genuine monthly income right now then she could actually buy an annuity that sits outside of her pension however she won't be getting the tax benefit back compared to putting it in her pension and any monthly income basically counts as earnings so it's taxable.
An annuity return will vary wildly depending on her age

[Watts.E.Dunn]

Thanks fo rthe repliews i've passed them on an am awaiting comment!

[RandomGuy99]

Thanks fo rthe repliews i've passed them on an am awaiting comment!

Don't forget that there's a £20,000 pa limit on ISAs investment, so you can't stick £200,000 into one in one go.

[Blackpool Rock]

The 10 year cost of Premium bonds, quite a difference that £5K invested in Premium bonds 10 years ago with the returns reinvested would now be worth a paltry £6190 whereas the same £5K invested into a Global tracker fund would now be worth £15869

External Link/Members Only

[PilotMan]

I think Premium Bonds were a generational thing, no longer relevant IMO.

[Munter84]

I think Premium Bonds were a generational thing, no longer relevant IMO.

They're a good option if you have 50k you want to put somewhere tax-free immediately, with a view to then transferring 20k a year into an ISA. But yeah, aside from that and a means of hedging risk they're not very attractive.

[PilotMan]

They're a good option if you have 50k you want to put somewhere tax-free immediately, with a view to then transferring 20k a year into an ISA. But yeah, aside from that and a means of hedging risk they're not very attractive.

There's no tax, but then there's no interest.

I'd rather pay interest on something guaranteed, than take a chance on getting a bonus.

[Norwichwood]

 Premium Bonds - 3.3% return on average. Boring. But worth having a £100 holding - in theory could win the £1 million. A friend recently won £25k so can happen :-)

[RandomGuy99]

There's no tax, but then there's no interest.

I'd rather pay interest on something guaranteed, than take a chance on getting a bonus.

If you have £50K in Premium Bonds then anything you win has to go elsewhere and there it might be taxable

[PepeMAGA]

They're a good option if you have 50k you want to put somewhere tax-free immediately, with a view to then transferring 20k a year into an ISA. But yeah, aside from that and a means of hedging risk they're not very attractive.

It's more worth doing if you earn over 51k a year, less so below that and you might be better off with a high interest savings account. It also depends if you've used all your ISA allowance

[Moby Dick]

The 10 year cost of Premium bonds, quite a difference that £5K invested in Premium bonds 10 years ago with the returns reinvested would now be worth a paltry £6190 whereas the same £5K invested into a Global tracker fund would now be worth £15869

External Link/Members Only

Don’t ignore:
“Of course, you might have been luckier and banked far more - like the saver who won £1m last year from a £100 holding”

“Please remember past performance is not a reliable indicator of future returns. The process may have been nerve-wracking, as some years the value of your pot would have fallen, but growth was ultimately strong.”

Hindsight is a wonderful thing. It has been a good few years to invest in the stock market and cash is clearly been eroded by inflation but I still have premium bonds since I have already used my ISA allowance and will max out my pension contributions.
I got around 5% tax free last year. Often get £300 a month or more , most I’ve got one month was £1600.
I keep them as a back up to pay off my numerous credit cards. Safest place to put borrowed money. It’s inflation proof since my loan won’t increase for the 36 months I have the credit card, meanwhile I win thousands from an interest free loan in that time.
I can access the money within a few days, rather than risk having it tied up in the stock market which i believe for my time frame will see a significant drop.