[Closed] any financial (pension) advisors in?

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.

Earlier post of mine ^^^ advised contacting your pension providers to confirm status of dependants; you should for clarity and for any IFA discussions.

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.

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 Tax

You 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

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?

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 get

You 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.

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.

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.

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.

I posted some comments way back in this thread but since then have opted to stay out as you appear to be asking a bunch of strangers for advice or to comment on the options available to you.
I really think you need to take some professional advice.
In your comment about £80k investment to support £3.4k drawdown you have made no allowance for tax; this will be applied on an emergency code basis and you then correct through your annual tax return. It won't last for 23 years.

as you appear to be asking a bunch of strangers for advice or to comment on the options available to you.
I really think you need to take some professional advice.

i dont mean to sound flippant there, its good advice, i appreciate it and i may yet go down that route. if you remember the start of the thread, id been to an IFA but they wanted a percentage of all money invested which would be so much as to wipe any gains out id have thought.

if theres an IFA who would just charge a nominal fee for an hours advice say, to look over my options and give advice on it id probably do that.

btw i assume from your tax comment that you'd probably side 'against the SIPP'?

s'wat i mean, its probably that close as to not really matter too much which i choose as i cant predict when ill die, but interested in expert opinion, which in the case of knowledgeable stw forum members, i do actually consider 'expert'.

thanks 🙂

Good luck with whatever you finally do.

In your comment about £80k investment to support £3.4k drawdown you have made no allowance for tax; this will be applied on an emergency code basis and you then correct through your annual tax return. It won't last for 23 years.

If he just moves £80k from DC pensions to a SIPP, no tax is incurred as he never sees the money, it just transfers between pension funds.

He can then draw down £3.4k a year and pay tax on that and all his other pension incomes as would any pensioner.

£3.4k is approx 4% of £80k which is generally considered to be the sustainable draw down rate. Lasting 20 years is perfectly feasible, but it all depends on how well the markets do etc and no one knows what will happen in 20 years time.

In terms of Tax, there is no difference between a SIPP and a DC pension - they're treated the same.

it [i]will[/i] be going into a pension mate, its just a question of which one. the choice is amalgamating £80,000 into current DB pension guaranteeing a further £3400 per year for life, or putting this money into a SIPP (another type of pension) which will give me more versatility but when its gone its gone.

thanks

ok, im about to press the button on integrating the £80,000 'bits and bobs' into the fire service pension, but just one last question before i do please.

ive tried getting as much info as possible on my options and what im getting back from IFAs is that my choice basically depends on my appetite for risk.

£80,000 in a SIPP has the potential to go up or down, so if markets dont do well, it could end up less.
£80,000 in a fire DB pension will give me guaranteed £3400 pa.

this is why ive chosen to go down that route, less risk. and if i do live to a ripe old age my £80,000 wont have run out.

my question is for peace of mind that an £80,000 SIPP is a fair equation to £3400 pa.
my fire pension is based on 30 years which i wont get. say very roughly half my working life ill have paid into engineering pensions, half into a fire pension when i retire.
why then would my 'engineering half' only equate to about 6 years of a fire pension (which is what theyve told me, and that equals £3400pa). ok engineering pensions may not be as good, but shouldnt they be nearer 15?

im just wary of signing away half my lifes pension payments on an inferior transfer rate i spose.

im betting the answer is 'its not as simple as that' 🙂 can you put my mind at rest tho that theyre pretty equal in value and its only the risk appetite that will dictate my final decision?

thanks

this is why ive chosen to go down that route, less risk. and if i do live to a ripe old age my £80,000 wont have run out.

Fair enough decision.

There is no 'right' answer as no one knows what will happen to the markets.

yeah, the way i looked at it, theres not a lot in it. if i took a strict £4000 pa from the SIPP it may last me 20 years, maybe a bit longer if i took a bit less or if i made a bit of interest on it.

so it wouldnt alter my life for the better by much by taking 'a bit more out than £3400pa', plus its finite.

only way id lose considerably is if i died early, but then im dead anyway 😀

spose the only way id gain from a SIPP is maybe taking out a lump sum if i needed it at any time, the flexibility, but from a pure finance perspective it makes more sense to me to be conservative with my risk appetite.

thanks

Sadx - if i was offered a fixed 4.25% on 80k for the rest of my life i d take it. Maybe the mkts can pay 6,7,9 or 12 % but its variable and not guaranteed.

This year my direct investment pot should return 10%, maybe more. If i was offered half for doing nothing i d be tempted. However, i like meddling.

Tbh i d pay an ifa a few hundred quid for proper advice though.

i (potentially) dont have time to do that mate. complicated, but..... if i dont sign and get it posted to the fire lot by 5th nov, theres no guarantee i can go ahead with it. like i said, its complicated, to do with part of the pension having started a year ago, and i can automatically transfer my DC pots into it within first year.

after 5th nov, id have to apply to transfer it in, which may or may not be granted.

all the IFAs ive contacted have wanted over £1000 for their advice plus a whole lot of time to look over my papers. i have one connected to the family but hes on holiday til end of the month.

so..... if i decide to go ahead with the 'safe option' i have to act now or risk not having that option any more.

thanks

Is the £3,400 in today's money?

if theres an IFA who would just charge a nominal fee for an hours advice say, to look over my options and give advice on it id probably do that.

No offence but, really? You really think a decent advisor could just spend an hour to look at it in the context of your overall financial position and advise you on the best option?

Is the £3,400 in today's money?

No offence but, really? You really think a decent advisor could just spend an hour to look at it in the context of your overall financial position and advise you on the best option?

it would simply be "this is the valuation of my DC pots, my alternative is putting it in this DB pension to pay £3400pa at 60, what do you reckon?"

mebbes a bit naive, but thats all i need, a knowledgeable head to confirm my options and that £3400pa is about right for a transfer of £80,000 and that its just a case of risk appetite. im about there now, i spose i just dont mind paying a nominal fee to make sure i havent missed any big consideration.

thanks

I would leave it in the SIPP I think. If it is 80k now and I think you said you had seven more years till retirement. Assuming 4% growth that would be 105k by retirement.

A quick look at the various drawdown tools available on the net say that works out at about 5k a year as a safe draw down rate. Don’t forget while you are drawing down from the 105k it is still going up at circa 4% (well hopefully). It would also buy an annuity for circa 5k if you did not want the drawdown risk.

The SIPP is also your cash rather that tied up in a DB pension, that may or may not be an advantage depending on your situation.

IANAL / IANAIFA etc etc.

haha thanks, more to think about then 🙂

ok, so in 7 years time, it may be 105ish (could also be a lot less if markets crash but lets say its 105k).

drawdown is taking money out annually IIRC, so youre basically saying just take 5k per year from it, then its going down gradually with the remainder getting 4% growth (so after many years itd be like £20,000 getting 4% growth etc)........ taking into account the annual 4% growth (hopefully) how many years would you envisage that lasting? im not good enough with money to work that out! 😀

or you say that amount would just buy me a £5k annuity anyway? apologies for being a financial doofus, but does that mean £5k for life, but then ceases if i die a year later say? so same as the fire DB pension but hopefully a bit more each year?

thanks a lot

There are lots of calculators that will predict how long the money will last based on lots of different risk scenarios, for example

https://www.firecalc.com/firecalcresults.php

The advantage to me of staying in the SIPP is you hedge your bets and keep the flexibility. You don’t need to decide how to actually use it until retirement.

thank you mate, and thanks everyone who's given advice on here, its been [i]very[/i] much appreciated.

ive finally made my decision, and changed my mind now, its going in a SIPP 😀

shows how little i know that i can change my mind so easily, but its not just the last post that made me change it, i re-read the whole thread and it just 'felt' the right decision. plus talking to friends and family, it was pointed out that should the value go down, its not really a life-changing amount of money to lose each year. which also made me a bit sad cos thats all ive got to show for half my working life, doesnt seem a lot really.

anyways, the HL application is in the post, thats it, i can concentrate on other things now, phew 🙂

im assuming ill just hear back that its been accepted, ill have £80,000 just sitting there waiting to invest in [i]something[/i], and ill be taking the advice earlier about splitting it either 4 or 5 ways in different markets.

thanks again, really grateful for your time and advice.

Well done, in answer you the annuity question last page is when you bhy an annuity you surrender the capital in exchange for an income.

So a 100k annuity paying say 3.25k pa, once you pay the 100k its gone, you may live 10 years, 1 year or 25 years. The 100k has gone, like an insurance premium which it effectively is.

Just look at your sip pot in the context of your other investments, your house which you may downsize and free up some cash, state pension, employer. Also, you may work in some way in retirement.

I think you made a good call. Whilst a DB pension is a wonderful thing, I don't think the transfer in they were offering you was great value.

couple of questions if you dont mind.....

firstly the wheels of admin are moving slowly, HL have told me theyve had the wedge in from a couple of my pensions, just sent me some more paperwork to sign and send back and theres still another that theyre waiting on a reply from. so i have [i]some[/i] of my pension pot sat with HL doing nothing as i havent told them what to do with it.
i thought it would be better to wait for it all to come in, advise them of my wishes, and away we go. plus i dont know if charges are involved every time something changes or another 'pot' is transferred in.

1. im going to take the advice from here and do 20% spreads....

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).

2. my wife recently packed in her job to go self-employed. she started a pension late into her employment and has received a statement saying her transfer value is around £2,500.
it hardly seems worth her 'having a pension' now as thered be no other contributions from employers, so she's relying on sharing mine really. shes 43 and if everything goes to plan we'd retire abroad in 7 or 8 years time when i can retire. if that doesnt pan out tho she'd carry on working when i retire (10 years younger than me).
i thought that as its such a low value, it may be worth doing something 'high risk' with it and if she loses it she loses it, we didnt really know we had it in the first place anyway.
could she transfer it into my SIPP if she wanted, or start her own HL SIPP to mirror mine and itd be worth exactly the same as topping up mine anyway?
or if she has to keep it in her own name, is it worth looking into a bit of a higher risk gamble?

thanks

Sorry to hijack but I thought it better than starting my own thread.

Is there a quick way to work out if it's better me starting a pension now (I'm 30 and have none) or overpaying on my 30 year mortgage (29 left!)?

I find pensions hard to get my head into. I'm self employed (ltd) and feel like the money could be better invested into my mortgage overpayments (allowed 10% a year) to see a better return than the ct and personal tax saving at the moment.

Its just a guess though so I'd like to find out!