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Well, F me...
3% every year?
as someone who had absolutely no idea of what to expect, i didnt question anything at this point. i did think to myself that 3% appeared to be well above the 1% that pension 1 was accruing, so where was my gain, but thought im probs being financially ignorant, and its 'what they all charge'.
i maybe misheard/misunderstood, ill see what occurs on next visit.
If you are paying 3% fees, you need a 6% investment return just to keep up with inflation. My companynpension scheme charges are between 0.1% and 0.9% depending on funds.
My funds have risen by 15-20% per year for the last 3 years, so 1% is atrocious.
what the bloody hell do you invest in to get that return?? 😀
Sadx make sure you ve paid any gap years in your state pension entitlement if u have any. I pay voluntarily because i can and its a really good deal. Each year costs c 750 gbp. 4 to go and i m maxed out.
A load of guys I work with seem to be cashing in DB pensions for the SIPPs,I am holding off for now it would appear that the guy advising them has not told one yet to keep the cash where it is yet one colleague who has a relative in pensions has advised them to keep it where it is (DB). I personally cannot see the rush to transfer out (although the company is offering cash enhancements to transfer out).
matey explained the difference between DC and DB quite well, basically DB is paid for life, DC is a finite pot, invest it how you like and when its gone its gone.
Not exactly: with a DC pension, you can (and until recently, had to) buy an annuity which turns your finite pot of money into a guaranteed income for the rest of your life.
The real difference between DB and DC is that the amount that you get with a DB scheme is guaranteed: if you pay in X every month, when you retire you will get Y. i.e. the benefit you get is defined, and doesn't depend on the performance of investments. If your employer's pension fund performs badly, that's their problem, not yours.
With DC you pay in, and what you get out depends on how well your investments perform between now and retirement. If your investments perform badly, you get a smaller pot at the end, and if you use it to buy an annuity, you get a smaller annual income.
Sadx make sure you ve paid any gap years in your state pension entitlement if u have any.
no gap years mate, have been permanently employed since school. he did say id probably get a reduced state pension due to contracting out for a period and id need to fill in a B19 form or somethings to find out what my entitlement would be,
it would appear that the guy advising them has not told one yet to keep the cash where it is yet one colleague who has a relative in pensions has advised them to keep it where it is (DB).
ah that reminds me, he did say that theyre giving bumper transfer values at the moment for DB because they [i]want[/i] you to transfer out cos itll be cheaper for them in the long run.
pdw, thanks for that. yeah he did explain it like that, its just id shortened it.
ive emailed him asking for a proper breakdown of his fees.
Surely it was 0.3%
wise STW'ers, what's the situation with my wife - she worked after leaving school right up until my daughter was born so has paid her NI up to that point.
She was then on maternity leave, and didn't return to the labour pool until the kids went off to school so has a few years where she was a stay at home mum.
I believe that women have an allowance so a 'full' set of years isn't as long as for a man? Is this right or did it go with equality. And how do we find out how many years she's short and how to make them up?
SadexP - my funds are a mix of US equities and Emerging markets, with a bit also in U.K./global tracker funds.
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The top one is my biggest fund.
as someone who had absolutely no idea of what to expect, i didnt question anything at this point. i did think to myself that 3% appeared to be well above the 1% that pension 1 was accruing, so where was my gain, but thought im probs being financially ignorant, and its 'what they all charge'.
Not that surprising, before Stakeholder pensions, fees for company pensions weren't capped, so you can have a fee of several %. As you've left the company, no one is managing or looking out for your pension so they just let in languish in an underperforming fund, creaming off the management percentage each year. Totally immoral, but fairly standard practice.
Stakeholder pensions are capped at 1% (after the first year, which is capped at 1.5%).
dan, cant see that pic, think its the photobucket changes that mean you cant show pics unless you pay these days.....
btw, can you be my financial adviser please? 😉
Other jon - ask her to get a statement from ni. It will show the years accrued at nil cost child rearing, caring or studying. Check they are correct as they messed up mine on several occasions and keep the paper statement as proof.
Then buy back any years she can, its far cheaper buying these years than any other product. I ve been buying years voluntarily for 15 years now and the price has c doubled, so when i m maxed out its all paid for.
what the bloody hell do you invest in to get that return??
Over the past few years, just about anything!
click on a sector name and it will show you what the best/ worst performing funds have been making over each timescale. It may open your eyes...
just had mateys t&c's.....
its 3% of funds invested as an initial charge, then 1% of funds invested as a rolling charge annually. does that sound reasonable? got to say, its not an unsubstantial figure when i add it up, it seems tempting to have a bash meself to try and better my old pension than have to pay all of what its currently doing each year to someone else. but..... they may save me thousands more than they cost, so hmm ha hmm ha *strokes chin thoughtfully
That's a pretty standard charging structure I think, certainly nothing out of the ordinary.
its 3% of funds invested as an initial charge, then 1% of funds invested as a rolling charge annually. does that sound reasonable?
What do you get for that in terms of advice?
Just one session at the start? Regular reviews?
Is the 1% annual charge on top of the platform fees / fund fees? If so, you'll be paying about 2-2.5% per annum, so with inflation at say 3%, you'd need to make 5-6% just to keep the fund's value. The 1% rolling charge is the expensive bit as you're paying it year on year.
got to say, its not an unsubstantial figure when i add it up, it seems tempting to have a bash meself to try and better my old pension than have to pay all of what its currently doing each year to someone else. but.
Have a bash. It's not rocket surgery. Invest in varied tracker funds and you can't go far wrong. Read the weekend papers' money sections, monevator.com etc, and you'll soon get a grasp of things.
What returns have your pensions been making?
If you meet the eligibility criteria applied by DC pension funds and are able to withdraw cash, you will be taxed on an emergency code which then means you need to sort with HMRC at or before tax year end.
If your DB scheme - item 3 on your list - has a transfer value >£30k you will not be allowed, by law, to transfer out unless you have taken advice from an IFA with the required specialist experience (the majority don't have this) AND the advice from the IFA is that a transfer out is appropriate for your circumstances. The pension provider will not make a transfer unless these criteria have been met.
Doesn't matter what you want - if their advice is 'no' you either swallow it or find one who will be more amenable.
If you are able to transfer this ^^^ DB pension into a SIPP, be aware that any cash withdrawal from the SIPP is not tax-free.
So, transfer into SIPP with fund totally invested; decide you want to withdraw some cash - say £5k net; tax efficient way is to transfer £20k into a different a/c within the same investment wrapper and then withdraw the 25% tax free sum you are allowed which will give you £5k.
If you're serious, I suggest you search IFAs in your area and then arrange to meet (say) 3 to discuss your aims and objectives; they will all give you an initial consultation free - they won't get into specifics but will want to understand your circumstances, your reasons, your financial status, attitude to financial risk. You get the chance to interrogate their experience, investment strategies - which wrappers/platforms, fee structures, performance reviews etc. Make sure you choose based on their experience, qualifications, client testimonials (check how recent they are), length of time in business - all available online but ask when you call to set-up free consultation.
You could use this a means of getting free advice and then freelancing but, remember, they won't give much away in a free consultation.
There have been some good returns in recent years but relatively flat growth, political & economic uncertainty, currency volatility, Trump, Brexit, slowing demand in China will - I think - dampen returns for the 3-5 years.
I could be miles off the mark - and hope I am!
Pension planning is all about risk management. In your situation, to balance risk I would:
1. Keep the 2 defined benefits schemes. They are a known quantity, with guaranteed payouts. Add these to your state pension you have a reasonable back stop - Low risk guaranteed pension.
2. Set up an Online SIPP and transfer in your DC schemes. Initially they will go as cash until you decide which funds to invest in. Slightly riskier than the DB schemes, but no different to what they are already doing - and it sounds like their returns are rubbish.
Find a platform you like the look of, and can navigate easily, make sure the platform fees are low. Something like Hargreaves Lansdown (I dont know which platform is best, as I use my company scheme platform) . Trackers/passive funds have low charges, whereas actively managed will attract higher fees, hence needing better returns to beat the passive funds.
Obviously, I am not a FA, if you are not comfortable managing it yourself then pay an FA. As you have found though, this will cost you. With a (Theoretical) £100k pot, he will charge you £3k upfront plus £1k per year (probably £1500 with fund charges).
What do you get for that in terms of advice?Just one session at the start? Regular reviews?
looks like its a yearly review....
[i]Once a year, around the anniversary of your plan being implemented, we will send you a report. This
report will be structured to complement the report we have previously provided and will also contain
recommendations for the next period. A typical recommendation could include maximising your ISA
allowance (if sufficient funds are available) or drawing money from your investments in the most tax
efficient manner.
In order to generate this report, we will need you to inform us of any changes in your personal
circumstances, including any new or changed financial goals. We will use this information, along with
details of your investments, to generate any new recommendations.
You are always able to speak to a Flying Colours financial adviser to discuss any queries you may have
regarding the recommendations in your report.
Our Annual Fee
If you agree to engage our Ongoing Advisory Services, we will charge you an ongoing fee. This fee is 1% with a minimum
of £499 pa.[/i]
What returns have your pensions been making?
not sure how to glean this info from the statements, ill have another look and see if anythings obvious. from memory of our conversation, the 'pension 1' returns 1% and 'pension 2', the SERPSy bit is doing 4% with aviva which he said was quite good. not sure bout the others.....
If your DB scheme - item 3 on your list - has a transfer value >£30k you will not be allowed, by law, to transfer out unless you have taken advice from an IFA
not sure how much the transfer value of that is, am i right in thinking i have to contact the company for that info as its not on the statement, only a 'yearly pension' value?
this leads me to another question. i think i read somewhere you can ask for a valuation, and you have to act on it within 3 months or its not valid any more, but you can only have one per year. if matey asks for those values himself, and then says "i have the values, i have a plan, pay up and we'll get everything in motion" and i then decide nahhh ill have a bash meself, would i have to wait another year to get them myself?
gut feeling now is ill end up doing it myself, i dont like those yearly payouts to someone else. is it a good idea to put my values up here for perusal, or should that be confidential? cant see it gives any sensitive info away, and youd have an opportunity to laugh at how poor ill be when i retire 😀
thanks for the substantial and informative posts frank and dan, ill have a good read of those now.....
not sure how much the transfer value of that is, am i right in thinking i have to contact the company for that info as its not on the statement, only a 'yearly pension' value?
Yes, you normally have to ask for a transfer value, but you don't need an IFA for that, just phone them up or write to them.
this leads me to another question. i think i read somewhere you can ask for a valuation, and you have to act on it within 3 months or its not valid any more
Quite possibly, could depend on the scheme. But you should be able to see different IFAs within the 3 months.
gut feeling now is ill end up doing it myself, i dont like those yearly payouts to someone else.
I agree, loads of useful info in the public domain. Sunday broadsheets are full of pension advice / info in their Money sections (Sunday Times, Sunday Telegraph).
is it a good idea to put my values up here for perusal, or should that be confidential? cant see it gives any sensitive info away, and youd have an opportunity to laugh at how poor ill be when i retire
Yes and no, yes you get good advice on here from several different people. On the other hand, if you are identifiable from your email address etc (in profile), you're basically advertising how much money you have for someone to try and con you out of.
Yes and no, yes you get good advice on here from several different people. On the other hand, if you are identifiable from your email address etc (in profile), you're basically advertising how much money you have for someone to try and con you out of.
lets go for it then, im only a humble working class bod 🙂 theres always someone out to scam you however much youve got and i think im cynical enough not to fall for owt daft. hey, im even trying to not pay an IFA who may be able to [i]make[/i] me money! 😀
1. an underperforming DC engineering pension (1%) from my first job, changed hands a few times and currently with zurich, bout 7 years of payments. [i]current value £43,000[/i]
2. an aviva DC pension made up from government payments when i opted out of SERPS, not doing too bad (4%?). [i]current value £34,000[/i]
3. a DB pension from engineering job no 2, 10 years worth of payments doing nowt special. [i]unknown value, says it should pay £5,400 per annum[/i]
4. a small friends life/provident pot from some AVCs at the time of pension 3. [i]current value £2000[/i]
5. a small scottish widows DC pot from when engineering job no2 stopped DB and started new DC pension. had it a year then left for current job. [i]current value £2500[/i]
6. current DB firefighters pension, not much i can change with that, if i retire at 60 itll be nowt to get excited about. [i]again, unknown value and current projection at 60 is £9400 per year, or lump sum £28,200 and £7,000 p.a.[/i]
think all of them are proposed to run til im 65 (12 years time) except the FF pension which knocks off 5 years earlier.
interested on opinions and advice. obviously im not expecting proper IFA advice on here, just generic 'thats a bit sh1t, id shift it/thats not bad id keep it' etc, bit like dans post ^^^
thanks chaps
EDIT: just to confuse me a bit more, Pension 1 have written to me with a transfer value and the bumph says 'holding value - £28,000 and transfer value - £43,000'. does that mean its only worth that if i move it, keep it where it is its only worth £28,000?
the next page states 'weve estimated when you retire, non-protected rights worth the equivalent of £24,000 today' and a yearly pension of £531
former protected rights worth equivalent £17,000, equivalent to yearly income of £392.
those figures are dire arent they? id really only get £800ish per year from my first engineering pension? a significant part of my working life?
those figures are dire arent they?
No really.
You get £8k / year state pension and your two DB will give you £5,400 and £9,400, so that's a pension of £22,800, which isn't bad at all ( a lot more than most). The DB will both be index linked, so will rise with inflation (need to see the details for whether its RPI and if the % is capped etc).
You've then got £80k ish in DC pension on top of that, which you could use for paying one off items eg new boiler, new car etc during retirement (via a draw down scheme).
Hopefully you'll have paid off the mortgage by the time you retire, so your running costs reduce. You also won't be saving into a pension etc, so your annual burn rate will be less.
To put it in context the [url= http://www.thisismoney.co.uk/money/pensions/article-4379326/Average-pension-pot-swells-72-50k-just-two-years.html ]average UK pension pot[/url] is something like £50k total. So you're well above average.
My advice would be:
1. Leave DB alone
2. Move all DC into one fund, eg with HL, and invest in a mix of three trackers eg US, UK and EU.
[url= http://www.sharingpensions.co.uk/annuity_rates.htm#text5 ]Current annuity rates[/url] (at 65) are roughly £3-£5k/year per £100k invested (depending on whether joint and the % increase). So to buy your DB would cost at least £300k, probably more as I bet those DB also have a 50% pension for you wife if you die first and are index linked at RPI (my DB pension is).
DB schemes will provide a free transfer value once in a one or two year period.
If you ask for another they will charge - between about £200 & £500.
Any transfer value they provide is valid for 3 months only.
Annuity rates are currently very poor due to historically low bond/gilt rates. This means "pension predictions " from DC pots sound really poor. Drawdown should allow 4% per year from your pension pot, so £3.5k pa on top of your DB pensions. Could you live on £26k per year in retirement?
My plan is to take the maximum tax free lump sum from my pot, then use it to top up my RAF pension/state pension to just under the Higher Rate tax band.
Sadex 23k pension is far more than most. On the r4 retirement podcasts this summer i m sure i heard 70% current pensioners rely on the state pension alone.
I d start thinking about what sort of lifestyle you want to enjoy when you retire. Base living costs of say 5k, food drink etc, the luxuries like travel. I think a luxury retirement lifestyle was priced at 39k pa but it did include a lot of expensive holidays.
My advice would be:1. Leave DB alone
2. Move all DC into one fund, eg with HL, and invest in a mix of three trackers eg US, UK and EU.
seems sensible to leave the DBs as DBs then. so not even worth thinking about merging DBs, transferring a DB to a better performing DB no?
and by moving all the DCs into an HL fund....... how does one go about doing that? open a HL account, then contact all providers to say please transfer the pension into this HL fund please? so then i have an HL balance of £80,000 which i play about with online? move stuff about as and when i like? how much would HL charge for using them? and is there a difference between paying HL to invest, or putting the £80,000 in my bank and investing from there? is it a tax thing? sorry for the probably dumb questions, the answers will all make me understand investing better 🙂
Current annuity rates (at 65) are roughly £3-£5k/year per £100k invested (depending on whether joint and the % increase). So to buy your DB would cost at least £300k, probably more as I bet those DB also have a 50% pension for you wife if you die first and are index linked at RPI (my DB pension is).
im sure i read somewhere about 50% to spouse, yes. and am i right in thinking annuity rates are what i mentioned in my last post, around £800 per year for mine that i thought was crap? so why am i getting quotes of £800 p/a on my £80,000 when you say 'roughly £3-£5k/year per £100k'?
DB schemes will provide a free transfer value once in a one or two year period.
If you ask for another they will charge - between about £200 & £500.
Any transfer value they provide is valid for 3 months only.
so 3 months to transfer a DB or forget about it for a year, and transfer whenever i like with a DC yep?
Drawdown should allow 4% per year from your pension pot, so £3.5k pa on top of your DB pensions. Could you live on £26k per year in retirement?
yes, we could live on £26k, but thatd only be from age 67 or 68 wouldnt it? i started looking at all this pension malarkey to see if theres any viability in retiring at 60. i dont think id be able to would i?
dont really understand drawdown, IFA mentioned it in our meeting but i didnt quite get it. i think im right in understanding my DBs will get me £15,000 pa, are we saying my £80,000 pot, invested with HL say, and using 'drawdown', should give me a return of another £3.5k per year? and is that £3.5k just taking the 'interest' each year if you like, and my pot would always stay at £80,000, or would it be depleting all the time? again, sorry if im asking the obvious, its just not obvious to [i]me[/i] yet 😀
I d start thinking about what sort of lifestyle you want to enjoy when you retire. Base living costs of say 5k, food drink etc, the luxuries like travel.
my ideal scenario would be to retire abroad at 60, when current DB starts paying out. as mentioned above, i dont think id be able to would i? DB2 (current) starts paying £9000 pa at 60, but DB1 i dont think starts paying another £5400 until im 65. and my £80,000 DC pot would get me £3.5k (invested with HL) starting at 65 too wouldnt it? i cant transfer that to HL now and start taking it at 60 can i?
thanks for all the info chaps, im trying to take it all in and process it all 🙂
just don't fiddle with the defined benefits pensions. They are 'money in the bank'. Unless the fund goes belly up. and even then there are safeguards.
so not even worth thinking about merging DBs, transferring a DB to a better performing DB no?
You can't do this. Each DB is different in terms T&Cs and they don't accept transfers in, just cash transfers out into DC.
. how does one go about doing that? open a HL account, then contact all providers to say please transfer the pension into this HL fund please?
Very simple. You open a SIPP with, say HL (I use them and it's a good platform). You then download the transfer form, from HL, fill in the details of your other DC pensions and post the form back to HL. They then contact the other pension companies and arrange the transfer for you (you never see the money, it just moves from one pension to the other). The DC pension company might contact you to ask if you're happy with any exit penalties. Generally very simple, I've moved several (mine and my wifes) this way.
so then i have an HL balance of £80,000 which i play about with online? move stuff about as and when i like?
Yep. That simple.
how much would HL charge for using them?
The fees break down in several ways. They charge an annual percentage for having a SIPP (less than 0.5% off top of my head). When you buy into an investment fund they charge a transaction fee (tiny). The fund will have an annual management fee (say 1%), but HL generally get a discount, so it becomes say 0.7%. Thus the total annual fee is 0.5% HL fee + 0.7% fund fee = 1.2% (as an example).
and is there a difference between paying HL to invest, or putting the £80,000 in my bank and investing from there?
You can't put the money in a bank account as it's a pension fund. You could open a SIPP with a bank and do the same, but banks are notoriously expensive for this sort of thing.
is it a tax thing?
Yes, a pension is a tax protected vehicle and has strict rules about how you access the money. Up until your nominal retirement age less 10 years, you can't touch it. At Retirement - 10 (normally 55) you can take 25% tax free as a lump sum. At retirement age (normally 65) you have various options for how to access the fund, some are tax efficient (eg annuity), some are not (take the cash).
I would expect the options to have changed a bit by the time you can retire, we had a major change only recently and they'll probably tighten the rules a bit to stop people being stupid / being ripped off.
dont really understand drawdown, IFA mentioned it in our meeting but i didnt quite get it.
Drawdown means you leave the money invested in the stock market after you retire. The fund may go, it may go down, all depends on the market.
You then decide how much and how often you withdraw money from the fund. The more you take out, the less there is left in. Take too much out too regularly and the fund will run out and you'll be left with nought and still alive. Take too little and your children might get an inheritance, but you could have had a nicer retirement.
People quote a figure of 4% as being the upper end of what you can withdraw each year and keep the fund going indefinitely. So with £80k you might be able to take £3.2k each year from the £80k. If the markets crash and the fund halves, this will drop to say £1.6k, so it's not guaranteed....
my ideal scenario would be to retire abroad at 60, when current DB starts paying out.
You won't have the state pension, just the one DB, so not a lot of money.
and my £80,000 DC pot would get me £3.5k (invested with HL) starting at 65 too wouldnt it? i cant transfer that to HL now and start taking it at 60 can i?
You can definitely take 25% tax free at 55. I don't think you can touch the rest till you're 65 (might be wrong about that).
At retirement age (normally 65) you have various options for how to access the fund, some are tax efficient (eg annuity), some are not (take the cash).
Is that right? I'm pretty sure you can take the 25% at 55 and then start to take money via drawdown or but an annuity. If you can't access the 75% until 65 then my retiring at 55 plans are ******
Is that right? I'm pretty sure you can take the 25% at 55 and then start to take money via drawdown or but an annuity. If you can't access the 75% until 65 then my retiring at 55 plans are ******
I could be wrong, I'm only 46 so not looked at that in detail yet, plus the rules will have changed by the time I get there...
EDIT: Looks like it changed last year and you can now access the other 75% from 55, still only withdraw 25% tax free though.
At any time after the SIPP holder reaches early retirement age (55 from April 2010) they may elect to take a pension from some or all of their fund. After taking up to 25% as a tax-free Pension Commencement Lump Sum, the remaining money can either be moved into 'drawdown' (where it remains invested) or used to purchase an annuity. Drawdown income may be "capped", typically limited to that obtainable with an annuity according to the Government Actuary's Department (GAD). This is reviewed every 3 years until age 75 and annually thereafter. This limit does not apply to plan holders in "Flexi Access Drawdown", who may take any amount from their fund from age 55. Pension income is taxed as if it is earned income at the member's highest marginal rate.[8]Rules exist to prevent the Pension Commencement Lump Sum being recycled back into the SIPP (and neither drawdown nor annuity payments count as earned income for the purpose of making SIPP contributions).
If the fund value exceeds the Lifetime Allowance, the amount above the lifetime allowance will be taxed at 55%. The lifetime allowance was £1.8 million in the 2010-11 and 2011-12 tax years. From April 2012 the Lifetime Allowance fell to £1.5 million but there are provisions for those previously relying on the higher limit. In the Chancellor's 2012 Autumn Statement, it was confirmed that the Lifetime Allowance would fall further, to £1.25 million from 6 April 2014[6] (again with the option of certain individuals being able to claim the previous level of Lifetime Allowance). In March 2015, a further reduction to £1 million was announced from 6th April 2016, with the allowance to be adjusted for inflation, based on the consumer price index, starting in 2018.[9]
https://en.wikipedia.org/wiki/Self-invested_personal_pension#Tax_treatment
From the pensions advisory service website. I've never read anything that says you can't access the rest of your fund until you're 55.
I'm 50, its important 🙂
[b]Taking money from your pension[/b]
[i]Whether you have a defined benefit or defined contribution pension scheme, you can normally start taking money from the age of 55. You could use this to help top up your salary if you are still working, to enable you to work fewer hours or to retire early. You may also be able to release a cash sum from your pension too.
If you’re a member of a workplace pension scheme, you generally require the consent of the employer or ex-employer to take benefits early. In some instances, you may also need the consent of the pension scheme trustees.
If you have a private pension, you don’t need the consent of an employer or the pension provider to take benefits early, if the terms and conditions of your contract allow you to do this.[/i]
To be fair it's very difficult to find clear information on drawdown. There's a lot of 'you may be able to'
excellent info guys, much appreciated, in fact [i]very[/i] much appreciated.
Each DB is different in terms T&Cs and they don't accept transfers in, just cash transfers out into DC.
im sure my current firefighter DB pension will allow me to transfer DC into it, as i looked into it a good few years ago and was told it would buy me so many years and days. does that sound right? and if so would it be worth looking into again to bump up my current DB instead of a SIPP?
The DC pension company might contact you to ask if you're happy with any exit penalties. Generally very simple, I've moved several (mine and my wifes) this way.
ahhh exit penalties, forgot about those. are my current DC jobbies likely to have such steep penalties as to make it not worthwhile putting into a SIPP?
and is it just a case of ringing the company and asking them?
Thus the total annual fee is 0.5% HL fee + 0.7% fund fee = 1.2% (as an example).
so a higher rate than these current IFA bods would charge to manage my money for me?
Drawdown means you leave the money invested in the stock market after you retire. The fund may go, it may go down, all depends on the market.
im not sure whether pensions are invested in stocks and shares anyway, so not sure of the context of that statement. do you mean 'move the pension from HL into stocks and shares instead and play with it' or 'just leave the pension with HL (who invest in stocks and shares anyway) at retirement age and play about with it'?
You won't have the state pension, just the one DB, so not a lot of money.
aye, not a fat sight to live on is it 😀 ok, state pensions fixed, will the other DB plus the £80,000 be accessible at any time from 55-65 then, but at lower figures, (so less than £80,000 as thats the projected figure at 65) not even sure if that makes sense reading it back, hope you understand what im getting at 😀
and if that statement makes sense, that current £80,000 (or less if early) DC pot...... i assume then at 55 i can access it, 'cream' the (hopefully) £3.5k per year from it for ever and ever if i so wish. but, if i havent been able to afford to retire yet, i may as well [i]not[/i] cream it and let it build along with another 5 or 10 years of smallish gains per year and then when i do retire, the 'cream' will be larger?
just typed that lot in random order as ive been thinking about different questions, the last two may be asking the same thing or contradicting each other, im not sure, so please bear with me 😀
thanks
so a higher rate than these current IFA bods would charge to manage my money for me?
No, he will charge his 1% on top the fund fees. His fund fee discount probably won't be as good as HL, so you have a larger wrapper / mgmt fee and a larger fund fee.
im not sure whether pensions are invested in stocks and shares anyway, so not sure of the context of that statement. do you mean 'move the pension from HL into stocks and shares instead and play with it' or 'just leave the pension with HL (who invest in stocks and shares anyway) at retirement age and play about with it'?
A pension is a tax wrapper for a financial vehicle. The money inside the pension could be invested in cash, stocks and shares or bonds / guilts or a mix of all three.
Generally, best growth is had from stocks and shares, so the bulk of most pensions are invested there.
When you open a SIPP and transfer the DC schemes into it, initially the money is just held as cash and gets no interest, so doesn't grow. You then pick funds and get HL to buy into those funds using the cash in your account. Hopefully those funds then grow. With drawdown, you decide you want to take some money out, so instruct HL to sell, say, £3k of stocks, which they then do and put £3k into your account. You then withdraw that £3k as cash...
and if that statement makes sense, that current £80,000 (or less if early) DC pot...... i assume then at 55 i can access it, 'cream' the (hopefully) £3.5k per year from it for ever and ever if i so wish. but, if i havent been able to afford to retire yet, i may as well not cream it and let it build along with another 5 or 10 years of smallish gains per year and then when i do retire, the 'cream' will be larger?
Yes, generally delay retirement if you can as you will accumulate more wealth and any annuities / DB schemes will give you a better rate as you are older, so probably won't live so long.
The flip side, is you have to work longer.
thanks again. just contacted my 4 DC providers, asking about exit fees and theyre all free. so..... nothing to stop me opening a SIPP and sticking them all in there now is there? and ill have to do that within 3 months yep?
just a quick question, chopping and changing your investments within the HL SIPP. does it cost you more the more you fiddle with it, so for each change? i imagine itd be quick addictive looking online, thinking this or that would be better etc.... so is it a bad idea to do this, you should just find somethings youre happy with and leave it there as long as poss?
and ill have to do that within 3 months yep?
With DC the 3 month valuation doesn't apply, you just get the fund value on the day.
just a quick question, chopping and changing your investments within the HL SIPP. does it cost you more the more you fiddle with it, so for each change? i imagine itd be quick addictive looking online, thinking this or that would be better etc.... so is it a bad idea to do this, you should just find somethings youre happy with and leave it there as long as poss?
Yes, don't chop and change. You pay a transaction charge to buy and sell, plus the unit selling price will be lower than the unit buying price. Just pick 3-4 main funds or trackers, split your money evenly amongst them and leave it.
I would suggest starting with
25% in US tracker,
25% in UK smaller companies managed fund,
25% in FTSE 100 tracker,
25% in EU managed fund.
Pick funds which have low % annual fees eg Tracker funds should have annual % fee of less than 0.2%, managed funds less than 1%.
HL have a top 150 fund list they rate, look through these as a starting point.
NB Do be aware that we've nearly had a 10 year bull run (rising market), so the odds of it continuing without a correction at some point is pretty slim.
great advice thanks.
NB Do be aware that we've nearly had a 10 year bull run (rising market), so the odds of it continuing without a correction at some point is pretty slim.
its alright being aware of that, but ive no idea what to do about it! 😀
would that alter my thoughts on what youve advised to split? ^^^
if what you mean is that investments worldwide may be about to take a hit, then would it be a hit across the board, or would some of those 4 investments you list come out of it better than others?
Sadx we are due a correction so usually its across the board. Dont whatever u do crystalise your loss as some do, just keep reinvesting dividends. Best investment period is post crash. Just be brave, its like flying just after an air disaster, generally the safest time to fly.
Good luck, stay diversified
if what you mean is that investments worldwide may be about to take a hit, then would it be a hit across the board, or would some of those 4 investments you list come out of it better than others?
No one knows when, where or how...
Good luck, stay diversified
+1
25% in US tracker,
25% in UK smaller companies managed fund,
25% in FTSE 100 tracker,
25% in EU managed fund.
Or 20% for each of these and add 20% Emerging Markets ( China, India, Taiwan, Korea, South America etc).
i know theres no crystal ball, but how much does stuff like brexit and trump as president affect things like US and UK pension investments? a lot? hardly anything?
them and leave it.
This.
[url= http://www.telegraph.co.uk/investing/shares/terry-smith-stay-focused-on-the-known-knowns/ ]Terry Smith in the Telegraph[/url]
i know theres no crystal ball, but how much does stuff like brexit and trump as president affect things like US and UK pension investments? a lot? hardly anything?
Trump not much so far.
Brexit hasn't happened yet. Won't be good for the UK full stop, somewhere between not much and [url= http://www.independent.co.uk/news/business/news/hard-brexit-financial-crisis-europe-world-eu-deutsche-bank-economy-uk-a7959496.html ]kicking off the next financial crisis[/url]....
o-kaaaaay...... laid in bed this morning thinking about pensions as you do......
looks like i sort of know where im going with mine now, and got me thinking bout mrs ex-p with no pension. worked for the co-op for 20 years or so with no pension, just started a company pension a few weeks before leaving to go self-employed so in effect shes got nowt. well, apart from shares in mine of course 🙂
am i right in thinking that at present, if i die, she gets 50% of my DB pension and all of the DC/SIPP jobbie as thats an invested pot that passes to wife/kids etc?
and if divorced i assume ex wives take 50% of any pension too? so in effect whatever happens, she does have a pension?
now as i said, shes self-employed (part-time, maybe 15-20hrs p/w at £10 p/h) so if she was to start a SIPP or somethings shes not getting anyone else to match payments and the only plus is its tax-free but isnt that also the case with ISAs and the like?
so, spose im asking if theres any real worth in her starting something going now? btw shes 10 years younger at 43, so a bit more time to pay into one, altho i spose if we did end up abroad she'd obviously be packing in work when i do.
also wondering that if she did, are there any pluses/minuses in either doing her own thing or 'passing some money over to me' to bump mine up? cant see any real benefit to that but its worth asking the experts 🙂
thanks
Pension is tax free on the way in, isa tax free on the way out. For a high rate tax payer that usually makes a pension the best option, especially if an employer is chipping in. It sounds like your wife isn't paying tax on those wages. Couple that with no employer contributions then a pension is much less beneficial. An isa may well be a better option. It also acts like an insurance policy to a self employed person. You can pay in more than you would pay into a pension because you can dip into it and take some out at any time should you need it in lean times or in an emergency.shes self-employed (part-time, maybe 15-20hrs p/w at £10 p/h) so if she was to start a SIPP or somethings shes not getting anyone else to match payments and the only plus is its tax-free but isnt that also the case with ISAs and the like?
You're getting close to 'overthinking' this.
Earlier post of mine ^^^ advised contacting your pension providers to confirm status of dependants; you should for clarity and for any IFA discussions.
In divorce transfer value of pension is taken into account but divvying ups either by agreement or imposed by judge.
Sadx listen to more or less r4 podcast re trump, v little substance behind his claims. Guys a showman.
Re yr wife make sure shes maxed out her state entitlement and bought back her gap years. Its far better value than any private non employer subsidised pension.
The 3.6k pension contribution pa will cost her 2.8k with tax relief even if she has zero income. Its an 800 gbp gift from the govt so take it. Not sure if it can be backdated.
I m just going through my pension entitlements now, surprised noone on here is talking about how retirement income you need. I m aiming to achieve national avg uk salary, c 27k.
I m aiming to achieve national avg uk salary, c 27k
Which is a very tidy sum however people often overestimate how much they will need. Your outgoings will decrease as hopefully your mortgage will be paid off, you will likely only need 1 car as oppose to 2 and your "work" costs including commuting will be zero.
I m just going through my pension entitlements now, surprised noone on here is talking about how retirement income you need. I m aiming to achieve national avg uk salary, c 27k.
It is that just for you or as part of a couyples income? I'm looking at roughly the same figure 2 of us, which going by current spending will be more than enough. But that's without starting to dip into investment capital.
surprised noone on here is talking about how retirement income you need.
All depends on what lifestyle you want!
In most cases, however, it will be a case of this is how much money we have, so we best live within our means...
You're getting close to 'overthinking' this.
true dat! 😀
Earlier post of mine ^^^ advised contacting your pension providers to confirm status of dependants; you should for clarity and for any IFA discussions.
will do. pretty sure i read on the DB statements about 50%. that IFA chappy said thats normal, and when she goes thats it, nothing for kids etc. and that as the DCs are a finite pot, its my pot and just goes to dependants.
Re yr wife make sure shes maxed out her state entitlement and bought back her gap years. Its far better value than any private non employer subsidised pension.
not entirely understanding this, but do you mean make sure shes paid whatver NI contributions she should have otherwise she wont get full state pension? if so again, shes always been in work and paid NI and is going to voluntary pay it as self-employed now. does she need to send off one of those BR19 forms to see if shes paid all she can?
The 3.6k pension contribution pa will cost her 2.8k with tax relief even if she has zero income. Its an 800 gbp gift from the govt so take it. Not sure if it can be backdated.
again, are we talking NI here? and not sure what you mean about costing her £2.8k if she has no income.....
and not sure what you mean about costing her £2.8k if she has no income.....
HMRC still gives you some tax relief even though you don't pay tax!
If you don’t pay Income TaxYou still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:
you don’t pay Income Tax, for example because you’re on a low income
your pension provider claims tax relief for you at a rate of 20% (relief at source)
https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief
thanks.
been talking to my current DB provider who say it may be possible to transfer the £80,000 DC pot into this scheme and to send em transfer values if i want a quote. before i look into whether it is actually possible, does this sound a good idea or not? diversity, spread options over DC and DB etc on the one hand vs 'DB are better pensions so worth looking into' on the other......
I m banking on 27k pa for me as thats the natl avg salary. I fess up that i preinvested in btl so get it now, so can reinvest the income till i need it.
Sadx - yr wife should qualify for the lower rate ni contributions for pensionble years if she is working, is it 3 quid a week, i have to pay the higher rate but its still good value.
Your query re tax uplift on non income earner was answered, not sure if you can backdate it. If you can and can afford it do it.
Sorry i missed yr query re the gap years. If she gets a statement of her qualifying state pensionable years, it will show any gap years and what price she can buy them at. The rate has c doubled over the 10 years i ve been doing it. If poss buy any gap years back if you can.
back from hols now and ready to get cracking with this now, but may just need a bit of hand-holding to get me underway and make sure i dont make an early booboo.
im keeping my DBs and transferring my various DC pots into a HL SIPP as recommended. im on the [url= http://www.hl.co.uk/pensions/sipp/apply-now ]HL SIPP application page[/url] and want to make sure i press the right button, as both buttons would seem to apply....
im guessing id click 'transfer an existing pension to a SIPP' rather than just 'start a SIPP now', that right?
and if i do that it takes me to an application form to apply for a Vantage SIPP. is that the one i want to be going for?
thanks.
Bumpity bump for the finance crew.....
im guessing id click 'transfer an existing pension to a SIPP' rather than just 'start a SIPP now', that right?and if i do that it takes me to an application form to apply for a Vantage SIPP. is that the one i want to be going for?
Yes and Yes.
If in doubt give HL a call. They're very good on the phone.
thank you very much. thought id be able to apply online, but looks like i print it off and send it. ill do that tomorrow.
thanks again.
okay, had the state pension forecast back......
if i carry on contributing NI til im 67 ill get £159.55 per week (£696 pm, £8325 pa)
it also explains about contracting out and says if i hadnt contracted out id have had a further £71 per week (so roughly £3600), so in effect by contracting out, im only eligible for 2/3rds what i could have had.
so...... now looking at my 'contracted out' pot, the DC pot with aviva....
2. an aviva DC pension made up from government payments when i opted out of SERPS, not doing too bad (4%?). current value £34,000
...... i spose im now comparing £71 per week for life, starting from age 67, against a pot of £34,000 to do with as i wish yes?
so in rough figures ive lost £3600 pa and have £34000 to show for it, which like for like would only last me 9 years, til age 76. doesnt seem such a good move when i look at it like that.
would you agree? are my sums out or am i missing some other considerations?
would you agree? are my sums out or am i missing some other considerations?
Yes, doesn't look like good value. Can you buy back in?
Only problem with state pension, is we have no idea what it will be when we retire. You could buy back in and then find they have to slash state pensions by 25% to pay for Brexit.....
Yes, doesn't look like good value. Can you buy back in?
i dont believe so, although i [i]will[/i] ask further....
ive just been googling away, reading that some may be able to top up, but i created one of those 'gateway' accounts which gives me access to my personal details, much the same as the statement ive just had through the post. where it shows the figures stated above it says...
£159.55 is the most you can getYou cannot improve your forecast any further, unless you choose to put off claiming.
just been onto the pensions helpline, and as feared, i cant improve the pension by buying back NI years, so it is what it is. he also stated that im currently contracted out as im with the fire service. public servants, fire, police, teachers etc are contracted out and pay lower NI. that surprised me as id then expect to have another personal pension running now, but he said its all built into the statements i receive each year.
didnt understand that at all, bit confusing really but i spose the bottom line is he says i cant do owt about it so thats that.
im currently waiting on the fire pension bods to get back to me to confirm or deny whether i can move the 4 DC pension pots into this fire DB pension. ive got all the paperwork ready to go to stick the pots into a HL SIPP, but just holding back until fire say i can or cant. if i cant then off the paperwork goes to start the SIPP, if i can, then i have to look deeper into which is the best option, invested in a HL SIPP or invested in my current fire pension.
would you agree im following the correct course of action?
whether i can move the 4 DC pension pots into this fire DB pension.
I would go for HL myself.
If the Fire service decide to cut the benefits of the DB pension you will loose out on everything. Diversity is key. Just look at the current Postal Workers dispute over their DB scheme etc.
I've already had a big cut to one Final Salary scheme when the employer went bust...
right, so me thinking 'DB DB DB, DB is best, keep the DB, stick what you can in a DB, DC is cr@p' isnt necessarily correct then 😀
a HL SIPP with £80,000 spread out over various markets may be better than £80,000 put into a DB pension yep?
right, so me thinking 'DB DB DB, DB is best, keep the DB, stick what you can in a DB, DC is cr@p' isnt necessarily correct then
DB is best, but when you put money into a DB as an AVC (Additional Voluntary Contribution) you don't normally buy the same rights as you get from your years service. Eg when my DB pension went bust and entered the Pension protection fund, all AVCs were wiped out completely, after which they then cut the DB bit by 10% and removed index linking from contribution before a certain date (which meant I lost pretty much all the benefits of a DB scheme).
a HL SIPP with £80,000 spread out over various markets may be better than £80,000 put into a DB pension yep?
Complicated issue. It all depends on how they treat your AVC ie what does it buy you. If they just treat it as cash then it's down to how well the two funds do over the next x years (which is anyone's guess). I would expect a DB scheme to invest conservatively, so you might do better with HL and a more aggressive investment strategy. However, if we get a big crash then aggressive investments will take a bigger hit.
In this scenario I would say Diversity (don't put all your eggs in one basket), would be the main guiding principle.
didnt know AVCs were any different from any other form of pension, so that surprises me altho im a bit confused as to why you mention the AVCs? my 4 pots are roughly £76,000 say in normal company DC pensions and only 2 X £2000 DC pots from AVCs. so the bulk of my £80,000 isnt anything to do with AVCs.
also once invested elsewhere, do they not cease to become AVCs? is it not all amalgamated into one £80,000 pot either plopped into a SIPP or into a DB pension?
In this scenario I would say Diversity (don't put all your eggs in one basket), would be the main guiding principle.
ok, ill lean towards the SIPP, altho ill still wait a week to hear back whether i do indeed have a choice, i think itd be foolish to close that door without at least having a butchers at what my options would be 🙂
thanks
didnt know AVCs were any different from any other form of pension, so that surprises me altho im a bit confused as to why you mention the AVCs
With a Defined Benefit pension you accrue entitlement based on years service, often 1/60 final salary for each year's service.
When you transfer cash into a DB pension scheme it's normally known as an Additional Voluntary Contribution (AVC). What this buys you in terms of benefit will be down to the rules of that scheme.
I would [b]guess[/b] they don't buy years service, but just get added to the total pot and grow with that.
okaaaaay, had word back from fire pension about how much my old pensions would get me......
as ever, its more complicated than it need be, as theyve quoted me for 2 of my different roles within the service, but they roughly seem to be the same so here goes.....
right, my current DB pension is what it is, so theres nowt i can do about that, this is the 4 previous pots, that add up to about £80,000 that im lining up for a HL SIPP.
combining the 4 pots and rounding everything up, the £80,000 pot is worth about 6 years service, for which they give an estimated monetary value of £3418 per year.
so i have a choice of 'invest £80,000 in a SIPP' and add to my current DB on retirement, or 'no SIPP but receive an extra £3418 per annum'.
obviously i cant expect official financial advice here, but id be interested in whether you think one is far better than the other?
as footflaps (and others) have mentioned, diversity is the key, but does my diverse SIPP investment look to be worth around the same, or better than, an 'all eggs in one basket DB pension'?
thanks
With your SIPP, you can leave it invested unti you need it post retirement, so will continue to grow. £3400//yr for 80k sounds about right.
Sadx - why were you not allowed to buy back any qualifying gap years from the state? Or do you not have any gaps? I thought you could go back 7 years.
Can you buy any additional years from your employer?
I am keeping my pension pot in a mix of db, avc, state, property. It may underperform but if any of them go pear shaped i am covered.
Can you buy any additional years from your employer?
Normally you can't, but every scheme is different.
With your SIPP, you can leave it invested unti you need it post retirement, so will continue to grow. £3400//yr for 80k sounds about right.
thanks. but i spose if i chuck the £80,000 into the current DB itd still be growing too wouldnt it? so all the way til the pension ends at 60 itd be much of a muchness?
Sadx - why were you not allowed to buy back any qualifying gap years from the state? Or do you not have any gaps? I thought you could go back 7 years.
the only gaps are from when i contracted out, for which i have a separate pot now in its place. i rang them up to ask, he went round the houses a bit with the whys and wherefores, i didnt really understand what he was saying, so i just said "can i or cant i?", the answer was no, there is no option for me to buy back.
Can you buy any additional years from your employer?
if you mean my old employer, theyve ceased as a company now. if you mean my present company (fire service) then they dont do AVCs. is that what you mean?
I am keeping my pension pot in a mix of db, avc, state, property. It may underperform but if any of them go pear shaped i am covered.
so as the £80,000 seems to be a fair equal to the proposed £3400pa, would you recommend the SIPP instead to give more variation?
or is this the point i ought to pay for an IFA?
i tried to work out the difference in my head. if i were to invest £80,000 and take out £3400pa, then itd last me around 23 years. obviously the SIPP would probably be greater than that by then, but you get what i mean......
but if i were to live to a ripe old age, then the all-in DB option would be better. it really is a hmm ha hmm ha decision isnt it 🙂
EDIT: just another thought, how much would £80,000 get me if i just kept it invested and 'creamed the top off it'? itd only be coppers really wouldnt it?
thanks. but i spose if i chuck the £80,000 into the current DB itd still be growing too wouldnt it? so all the way til the pension ends at 60 itd be much of a muchness?
yes, but you'd have all your eggs in one basket, so if the plan gets into trouble and falls into the Pension protection fund, AVCs will be wiped out.
I'd stick the £80k into a SIPP as you're less likely to loose it all that way.