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‘I blew my £55k tax-free pension on a sports car – I’ve never felt hard-up’

Roger and Pat
Roger and Pat live comfortably off their state pensions and an additional £18,000 a year between them - Tony Buckingham

In this new series, Telegraph Money finds out how people are spending their tax-free lump sums. If you accessed your pension in your 50s, we’d love to hear how you used the money – please email rob.white@telegraph.co.uk to get in touch.

Mention the word “pensions”, and many people’s thoughts will drift to their tax-free lump sum.

After years of hard work, that brand new sports car, Caribbean holiday or early retirement can move from dream to reality overnight. Others might see a chance to finally help their children financially, or make those home improvements they’ve been waiting years for.

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For Roger Hipwell and Pat Walker, it was all five.

The couple started investing in the late 1980s when James, a colleague and now family friend, started a business as a financial adviser – they were his first clients.

“I had some cash and I think I sold a flat in old Windsor. Bear in mind this was 1987, three months before the big crash. We invested in unit trusts,” says Roger.

“Within three months, I think I lost half of it. However, within 12 months it had come back up. My intention was to retire earlier than my father did because he never enjoyed his retirement.”

Roger stopped work in 1995, aged 50. He took a small pension, alongside his lump sum of around £45,000, and bought a boat for £9,000. He also took up lobster fishing, although he says appetites within the household made that hard to monetise.

Pat adds: “It was my Friday night treat.”

He’s now 79 and Pat is 77. They’ve been together for 40 years and married for 10, meeting on an IT sales training course while working at rival companies.

Pat says: “Roger was a sales manager, so his sales guys were in competition with me. There were often conversations first thing in the morning: ‘Where are you off to today?’, ‘None of your business’.”

After that first investment, they used James’s advice to take advantage of the new products like self-invested personal pensions (Sipps) and Isas that emerged during the 1990s.

Originally, they lived in Reading and owned a holiday home. When Roger retired, they bought a cottage in Orford, Suffolk, eventually selling the other two properties. Some more of his lump sum went into substantial building work needed on their “dilapidated” new purchase.

Before long, it was Pat’s turn to retire, and fulfil a lifelong dream with her own £55,000 lump sum.

“My cars had all been Minis, and I’d always wanted a sports car. We hummed and hawed about which sports car to get, and just as we were going through that process MG announced the MG F – so I bought one of the first, in racing green. I absolutely loved it. A nice little two seater, no room for any luggage.”

Having both “hung up their briefcases”, they decided to spend more of their lump sum on moving to an unusual location – the other side of the garden.

Pat says: “One of my interests in life is architecture. We needed to move from the cottage because it was very small. I was driving back to Guildford and I thought, we’ve got a huge plot of land. Why don’t we look to see if we can build a house there?”

Roger adds: “When we bought the cottage, the estate agent negotiated for us to have two thirds of the garden from the cottage next door. We went for planning permission and surprised everyone by getting it, and built the house.”

Around 10 years later, they reached an age where it was time to downsize. They sold up, bought a new property and rented elsewhere while more renovations were completed.

Pat says: “We always knew we’d have to move because it was a very non-old-people-friendly house. When a bungalow came up, we decided that if we didn’t do it then, we might get too old to move.

“We had this one renovated. I suppose you could say our lump sum went into builders’ pockets. It’s good we’ve been able to do this. We’ve never felt hard-up.”

The proceeds from downsizing also freed up money to give to Pat’s son and daughter.

Stationary
The couple now run a letterpress company and sell a wide range of hand-set, hand-printed, high quality stationery - Tony Buckingham

Roger explains: “Indirectly, it’s a benefit of the lump sum. We used some of the lump sum for the building work, so effectively when we sold [the house] they benefited from it.”

These days, they live off their state pensions and an additional £18,000 a year between them, which is drawn from Sipps and Isas and is mainly investment income.

It makes life fairly relaxed. They holiday for free at friends’ houses in Crete and Barbados, visiting every year or two. They helped another friend start a bakery business by driving the van, working in the shop and putting their sales experience to good use. However, they don’t give all of their business acumen away.

“We now run a letterpress stationery company,” Pat says. “I’ve always had a great interest in lettering and printing and paper et cetera.

“We sell through stockists a wide range of hand-set, hand-printed, high quality stationery. We don’t make enough to pay anything back into our pension. I do it because I just love it.”