So I er, have a 44yo friend whose not one to get interested in the detail, but who has 3 minor pensions like £15, £25 and £50 a month from the age of 18, and one major pension with is 5% contributory & matched by his employer.

He’s not a financial wiz, so if you were him, what would think to do to maximise retirement funds? His first thought btw was to consolidate the 3 small ones in to the bigger one. He has a family so medium to low risk is preferable.

?

He should find a financial advisor and ask them, not a mountain bike forum.

If your “friend” is still contributing to those pensions then it would be a good idea to find out if there are guaranteed benefits associated with them. If there are then they are probably best left where they are, if not then transferring into his or her employers pension fund would probably simplify things. If all the investments are similar then choosing the one with the lowest fees will provide the best returns.

^That is of course the best advice even if it costs.

” lowest fees will provide the best returns.” this is not always true.

Red

Assuming all money purchase find a SIPP and shove it all in there and choose a few unit trusts. I like HL for lower value pots and II for larger ones.

Well, the big one contribute by the employer is HL. So they could all be consolidated into thier of a new HL SIPP. But wise to put all the eggs in one basket though?

So they could all be consolidated into thier of a new HL SIPP

They could be but unless “your friend” wants to take an active part in the investment part of things I’m not sure if this would be of benefit.

But wise to put all the eggs in one basket though?

If you have diversity within the investment portfolio then you haven’t put your eggs in one basket even if it is invested through one company. Remember you are investing a good number of different companies and other things. It’s not like all you investments are in your employing company; they’re not are they?

Yep – put it all into HL and decide on some unit trusts. But then that’s the trick really! Lots of advice out there.

Sorry to be a miserable sod, but a pension with a contribution rate of 10% (assuming your employer is putting on the same as your friend) of salary is not a ‘major’ pension.

Rule of thumb – halve your age, that’s the percentage of your gross salary that you should be allocating to retirement planning of some sort.

So your friend ideally needs to find another 10%ish.

IHN – as indicated thats not the only contribution. But it has been going on for 10 years, the other 20+ years.

There are also other nest eggs (Premium bonds, company shares) so there is a load being spread. Its just maximum the performance of these pensions he’s interested in.

It’s not like all you investments are in your employing company; they’re not are they

Nope!

Yep – put it all into HL and decide on some unit trusts.

Ok sounds like he needs to spend an evening logged into HL and having a read of things, thanks.

Worth checking this before committing to HL as it shows the fees associated with various SIPPs:

http://www.telegraph.co.uk/finance/personalfinance/investing/sipps/11700655/Do-you-have-money-in-a-Sipp-This-table-shows-you-could-pay-94pc-less.html

Fees look good. So it turns out the big one is a Vantage SIPP.

Q: can he have 2 SIPPS? Or is it best to consolidate into the one?

Also, it appears there’s a “cash” amount in the Vantage SIPP – how did that get there? It says it can be invested – in what, or should it be left as cash? Why aren’t they investing it automatically?

You can have as many SIPPS as you want but there’s no real advantage. The SIPP is just a wrapper, your money isn’t invested in a SIPP its invested in funds that you buy using a SIPP. remember that that these funds may charge fees that are in addition to the SIPP management fee.

aren’t they investing it automatically?

The whole point of a SIPP is that you have to decide what to invest in, no one is going to do it for you. Leaving it as cash isn’t a great idea so decide what you want to invest in and make the purchase.

ok, useful, thanks.

Some SIPPs have fixed fees so definite cost disadvantage in having more than one, far easier to keep in one place anyway.

My SIPP (II) gives me the option to reinvest dividends automatically but I prefer to choose where I invest funds, I’m more proactive than most I’m sure.

This is a minefield. so I have to choose how to invest money, on the basis of many funds, shares, stocks etc I know nothing about.

The easiest way seems to be to pick on for HL’s recommended funds and shove the money in it, or perhaps invest in “Apple” shares. I guess then I have to choose when to sell.

75% of it is in a fund chosen when the SIPP was opened for me from a previous stakeholder, the rest seems to be the cash being paid by me/my company and I need to choose where to put it.

I was kind of hoping I could just leave it all somewhere for 20 years and withdraw it later.

So, when I retire, can I sell up and take all the cash? I don’t get monthly “pension” payments any more?

*struggles*

this has carcrash written all over it.

I think you should write a blog.

I was kind of hoping I could just leave it all somewhere for 20 years and withdraw it later

would indicate that a SIPP isnt for you , and it isnt for everyone.

FWIW and IANAFE – i rarely invest in individual company’s

this has carcrash written all over it.

Tell me about it. 😐

I think I’ll give HL a call, but as I said I think sticking it in a recommmended managed fund is probably best for me.

Are their any other male humans out there who, like me, cannot manage to find any of this stuff even vaguely interesting enough to learn – even the most basic bits about it?

I should take some sort of a personal interest in this financial stuff, but I really can’t find even the slightest smidgen of motivation in myself to do so.

Hence, why at 39 I don’t even have a pension of any sort and am rinsing over £1200 a month on rent and mortgage payments… my finances are probably in disarray.. 😆

Bikes are waaaay more interesting though.

HL’s Wealth 150 funds are worth looking at but the way that list is put together is a bit suspect – performance isn’t that great overall. Really you just need solid funds – A few of the big ones really, say one for each of the major geographical markets – Europe, UK, US.

Some guidance on past performance here:

http://www.fundexpert.co.uk/best-investment-funds/by-sector.htm

Are their any other male humans out there who, like me, cannot manage to find any of this stuff even vaguely interesting enough to learn – even the most basic bits about it?

Hand up. I know I should and I do try but I get half way through an article and give up. I do have a managed fund which seems to be doing OK without me but no more than that. I do however have a few quid in property which I find much more interesting (commercial units before the hand wringers get involved 🙂 ).

Tell me about it.

I think I’ll give HL a call, but as I said I think sticking it in a recommmended managed fund is probably best for me.As above I really struggle to find it engaging so I have stuck a few quid, probably back of the sofa money to the average STWer, into a managed fund. You can up to £15k into a managed fund inside an ISA which seems like a good compromise to me.

no_eyed_deer – Member

Are their any other male humans out there who, like me, cannot manage to find any of this stuff even vaguely interesting enough to learn – even the most basic bits about it?

I should take some sort of a personal interest in this financial stuff, but I really can’t find even the slightest smidgen of motivation in myself to do so.

Hence, why at 39 I don’t even have a pension of any sort and am rinsing over £1200 a month on rent and mortgage payments… my finances are probably in disarray..

Bikes are waaaay more interesting though.

Yep, I’m 37 and I worked in banking and finance for over a decade but I just can’t bring myself to look into pensions, they’re just soulless.

I take some comfort from the fact my wife’s NHS pension, whilst horrifically expensive should be good when she retires and I’ve been told that my RBS staff final salary pension is “better than anything current available on the market” – but I left there 5 years ago and won’t start another pension until my employer is forced to soon*, but really I haven’t got clue #1 what any of it is worth and whether I’d be retiring at 55 to live in Monaco, or more likely being spunking our pension on value bread and baked beans to fight off starvation when I’m finally too broken and worn out to push a broom.

I keep telling my Son that the money we spend on his maths tutor isn’t just for him, it’s our pension pot ha ha.

Still, none of my friends have any pension at all, none, nothing, not a thing – 20ish year into our working like, 25ish years left to go and nothing.

I just can’t bring myself to look into pensions, they’re just soulless.

It’s the same as any investment to me – hence my preference to shove anything into my SIPP when I get the chance – such as when moving jobs. I studied investment from 16 and was interested but mostly decided not interested in equities and it’s just about choosing good funds for me.

Have a look at Fundsmith.Their fund tends to be big name companies with very little buying and selling which means less charges off your profit( if there is any).Website is really simple to follow.

The HL Wealth 150 is entirely about HL attempting to maximise their fees, not a basis for a shortlist of potential funds. It’s a real mixture of a few genuinely good ones, mostly ordinary stuff that talks a good game but pretty much tracks its benchmark index, and a few duffers. Much like the fund market in general, in fact. If you can’t/won’t search out the few good options then stick to trackers, at least then you won’t be getting screwed on the fees.

Ah, its making sense now.

So my er, friend uses the SIPP to make (wise) investment choices/regular contribution to increase the value of the SIPP.

When he decides to retire he may choose to take 25% tax free, and with the remaining balance he buys and annuity. An annuity provides regular taxable income on top of the state pension. The example given was £5k gross per month for £100k annuity purchased.

Thats £3k per month in his pocket for life plus state pension. Making some basic choices like paying of mortgages before retirement means that £3k could lead to a fairly decent income for a pensioner wanting only to potter around in the countryside on a bike and drink wine until the grim reaper arrives.

The purpose then of transferring the other minor pensions into the SIPP would be to invest then cash in a way that makes more money than they do.

tell them to also look at ufplus and drawdown (w.r.t taking out pensions – 25% per take tax free)
and check than annuity type (they vary flat/level/no inflation or rpi/or 3% etc etc etc .. rates are very different and behave in different ways)

EHHHHHH!!!!!! wtf “example given was £5k gross per month for £100k annuity purchased. ” NOOOooooooo, is that the bloody badly worded H&L page again, think about it, 5k month ,so that’s 60k a year income from only 100K invested ?????????????, I’m afraid that those incomes are per year and at 5k per year – I’m guessing that’s flat rate/level single life aged 65 (so if le lives 30 years in high inflation it will still be 5k….)

Thats not how i read it:

The table shows the best standard annuity rates currently available online, paid monthly in advance, for an annuity purchase price of £100,000. The rates are based on an average postcode and basic personal details, so you could receive more or less income when you come to find your own personal annuity rate. Postcode is an important factor affecting annuity rates so it’s essential you use your personal postcode when calculating your annuity.

Age
55 60 65 70 75
£4,313 £4,751 £5,318 £6,123 £7,346

the annunity is 5000 a year paid in monthly arrears so what you get is 5000/12.

assuming your out of context quote is from the FT.com web page.

Mainly because the 6/4% split rule for income investment means you need 100k in the back to get a 6k payout on investments

how you read it would mean pensions were a very attractive investment – when reality they are not all that or even close.

Hmm. Not so good then, although financially it didd seem too good to be true.

Its from the HL page, here: https://www.hl.co.uk/pensions/annuities/annuity-best-buy-rates

So £100k gets you about £420 a month. oh…

Rule of thumb – halve your age, that’s the percentage of your gross salary that you should be allocating to retirement planning of some sort.

Wow. Really? This may be good advice, but I wonder what percentage of the population are even coming close to this.

The example given was £5k gross per month for £100k annuity purchased.

Per month? I doubt it…

bear in mind it could be slightly worse than that as I’m (possibly incorrectly) **assuming** your looking at a single life level – beware that that amount is fixed for the rest of your life (so will not go up with inflation etc per year) – [see the RPI values for an income that will grow with RPI] – they’re a lot less

But you don’t have to take out an annuity, do you?

Yes I got that, but its 20 years before its bought though.

Now I, er I mean he needs to choose a “balanced growth” fund or HL portfolio to pay some outstanding cash into!

bear in mind it could be slightly worse than that as I’m (possibly incorrectly) **assuming** your looking at a single life level – beware that that amount is fixed for the rest of your life (so will not go up with inflation etc per year) – [see the RPI values for an income that will grow with RPI] – they’re a lot less

But unless we go through some sort of Weimarr-esque hyper inflation, is it not a fair assumption that your discretionary spending will diminish with time too, once past 80 you’re not going to need the latest 651C wheeled fusion powered Specialized Enduro E-bike are you? Jaguar F type, not a chance with your new hip, you’ll want a Hyundai i10, and you’ll still only do 25 miles a year to it’s MOT and back. Eating out in restaurants? Nope, your teeth would fall out with anything more substantial than beans on toast.

Kinda figure that by 80 and old the need for money will be a fair bit less than it is at 60 when I retire, so an option that pays out more upfront for the fun stuff, and leaves me skint to piss my last in a rest home sounds great.

agreed, but I just wanted to be sure that it was clear.

See – http://singletrackworld.com/forum/topic/pensions-advice-taking-out-not-paying-in

Why not think about putting the money in a stocks and shares isa. I know that you don’t get the initial tax relief like you do on pension contributions but it is tax free when you decide to draw some or all of it. The investment funds are going to be the same or pretty similar as offered for sipps.

In this case the money is already paid – direct from Salary – into a SIPP. I don’t think you can move it out to an ISA, although I may be wrong.

I’ve chosen an Morgan Stanley fund for half the available cash sum, conservative in terms of risk, but has yielded an average 7% over the last few years, 11% last year.

God, its like playing poker…