Pensions

[killienick]

My only retirement asset currently is my home. I habitually overpay my mortgage slightly to try and bring the loan down quicker and increase my equity. Definitely need to sort a private pension out though, been meaning to for ages but never got around to it. Off to email my IFA.

 

If you are looking for a cheap as chips option that you can set up yourself, then the L&G Stakeholder will take you 10 minutes to set up.

[killienick]

I am very wary of 'financial advisers'.

I spoke to two recently, one who works for our solicitors and who was a waste of time and one who works for our accountants and was incredibly helpful.

Paying for a one off consultation may be worthwhile if you get the right person, but often they are just looking to take a piece of the pie on an ongoing basis for doing virtually nothing.

 

Why is financial advisers in commas? Most advisers won't charge you for a consultation but you will pay a fee for advice. There has to be a proven cause and effect to justify the fee which is entirely negotiable. If you don't think the service is worth it, don't pay it.

 

ETA to say: The on-going fee also has to be justified. Were you offered a portfolio which would be monitored on-going within risk tolerances and performance expectations? Were you offered annual reviews to check if your circumstances have changed? All of this falls under the on-going fee. If you don't think that you are getting value for money you can switch this off at any time.

 

The chap who worked for your solicitor may not have been an independent financial adviser. He may have been a tied adviser which is an entirely different ball game to an IFA.

Edited May 18, 2016 by killienick

[Sweet Pete]

If you are looking for a cheap as chips option that you can set up yourself, then the L&G Stakeholder will take you 10 minutes to set up.

 

Got my guy on it now, Nick, but thanks for the suggestion. I suspect you'll know him come to think of it.

[killienick]

Got my guy on it now, Nick, but thanks for the suggestion. I suspect you'll know him come to think of it.

 

Chances are I will bud.

[Granny Danger]

Why is financial advisers in commas? Most advisers won't charge you for a consultation but you will pay a fee for advice. There has to be a proven cause and effect to justify the fee which is entirely negotiable. If you don't think the service is worth it, don't pay it.

 

ETA to say: The on-going fee also has to be justified. Were you offered a portfolio which would be monitored on-going within risk tolerances and performance expectations? Were you offered annual reviews to check if your circumstances have changed? All of this falls under the on-going fee. If you don't think that you are getting value for money you can switch this off at any time.

 

The chap who worked for your solicitor may not have been an independent financial adviser. He may have been a tied adviser which is an entirely different ball game to an IFA.

Don't think either of these guys were IFAs but spoke to an IFA some time back before I set up our SIPPs, wasn't impressed by him either. I wanted to discuss a range of options includingdomestic buy-to-lets and commercial property as well as other investment options but he didn't seem too clued up. Maybe I was just unlucky.

I eventually set up SIPPs with Hargreaves Lansdown; simple and straightforward. Mainly invest in FTSE100 and FTSE250 tracker funds, won't set the heather on fire but does what I want. Had the occasional punt at shares with mixed and hilarious results.

[killienick]

Don't think either of these guys were IFAs but spoke to an IFA some time back before I set up our SIPPs, wasn't impressed by him either. I wanted to discuss a range of options includingdomestic buy-to-lets and commercial property as well as other investment options but he didn't seem too clued up. Maybe I was just unlucky.

I eventually set up SIPPs with Hargreaves Lansdown; simple and straightforward. Mainly invest in FTSE100 and FTSE250 tracker funds, won't set the heather on fire but does what I want. Had the occasional punt at shares with mixed and hilarious results.

 

He may not have been qualified in the Mortgages and Property sector and therefore wouldn't know about that type of investment. It's an entirely different qualification that you don't need to be an IFA. (Just a guess though).

 

Hargreaves can be good but can also be ridiculously expensive if your aren't using them to their full potential. This would possibly be the case if you are only investing in trackers as there is far less 'active management' involved however I can't comment fully not knowing your specific circumstances though.

 

You may also be able to share deal elsewhere depending on what you are buying and the quantities and you can always transfer these in-specie into your SIPP - it could be a cheaper option because there can be a big disparity in dealing charges.

 

Sounds like you've got it under control though

[Raidernation]

My pension here (called my 401K) will probably be pish since it's reliant on Illinois not being fucking skint (about $500M in the red for pensions I believe) but I already get 2 "widows" pensions from Scotland and I'll be entitled to my SPPA pension when I reach 65, It should be ok as I topped it up with my private pension from pre-teaching work when I started teaching so there's about 20 years contributions in there.

[Dariusz]

That struck me as a ridiculously low figure and a quick Google search suggests an inaccurate one. Though there is no consensus on the actual figure it appears to be higher.

Without eating into the capital and properly managed, £38,000 would net you about £1,000 per annum, £20 per week. Not a huge supplement to the state pension.

With regards to your last point, that's a fair way to look at it and a personal choice though I think most folk would hope for a retirement that's more than the state pension can offer.

I'd read from a few different sources that you need a pot of around £160k-£170k for a £10k a year pension. It's all kinda guesswork by the looks of it.

[Granny Danger]

I'd read from a few different sources that you need a pot of around £160k-£170k for a £10k a year pension. It's all kinda guesswork by the looks of it.

That's probably on the basis of buying an annuity, one that's unlikely to be inflation proofed. If you wanted a £10k a year pension without biting into the capital you'd need double that.

I'm not a fan of annuities but I understand their appeal.

[SaintZorro]

Had 7 years of a final salary pension when I started work and on current projections it'll be worth as much as my following 38 years of defined contributions will generate.

[killienick]

I'd read from a few different sources that you need a pot of around £160k-£170k for a £10k a year pension. It's all kinda guesswork by the looks of it.

 

You'd need way more than that for a 10k annuity at the moment. (depends though on your age, health and death benefit choices) Annuity rates are closer to 3%-4% at the moment so for £170k you'd get closer to £6,800 per year at the high end or £5,100 at the lower. Even if you managed to get 5%, (which you won't), you are still only getting an annuity of £8,500. (That would die with you unless you bought death benefits which can reduce the income substantially).

 

You basically want to be single with a terminal illness because that's the only way you are getting a good annuity rate until gilt yields, (and a few other factors), change.

[Granny Danger]

You'd need way more than that for a 10k annuity at the moment. (depends though on your age, health and death benefit choices) Annuity rates are closer to 3%-4% at the moment so for £170k you'd get closer to £6,800 per year at the high end or £5,100 at the lower. Even if you managed to get 5%, (which you won't), you are still only getting an annuity of £8,500. (That would die with you unless you bought death benefits which can reduce the income substantially).

 

You basically want to be single with a terminal illness because that's the only way you are getting a good annuity rate until gilt yields, (and a few other factors), change.

I'd love to see the marketing material that backs up that sales pitch.

If annuities are only offering 3-4% then they're even worse value than I realised and should be avoided like the plague (unless you have the plague I suppose).

[JamieT1314]

Hybrid products are the way to go. Guarantee an income with an annuity and invest the rest in drawdown.

Edited May 18, 2016 by JamieT1314

[killienick]

I'd love to see the marketing material that backs up that sales pitch. :lol.

What they should tell people is that it's the only time in your life that you want people to think that you are on death's door.

[killienick]

Hybrid products are the way to go. Guarantee an income with an annuity and invest the rest in drawdown.

Some of them are great. The ones where both elements are written under drawdown rules and the policy can be switched between the two offer excellent value. The death benefits are also much better with these products.

[Granny Danger]

Some of them are great. The ones where both elements are written under drawdown rules and the policy can be switched between the two offer excellent value. The death benefits are also much better with these products.

Also you can get close to 100mpg (that's the official figure anyway).

[fanny paddery]

Anyone got any experience of pensions across different countries. I have a final salary pension here in Australia that I have been paying into for a couple of years. However, I don't know if I will stay here long term. I know I can get all the money out of it (at a 45%) tax rate if I were to give up my residency status, but that isnt something I want to do. What would happen long term if it just left it here?

[Eednud]

Anyone got any experience of pensions across different countries. I have a final salary pension here in Australia that I have been paying into for a couple of years. However, I don't know if I will stay here long term. I know I can get all the money out of it (at a 45%) tax rate if I were to give up my residency status, but that isnt something I want to do. What would happen long term if it just left it here?

Check out the Australian Government My Super web page which might be this link https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/choosing-a-super-fund/mysuper I think the main problem here in Oz is/was that if your super sits dormant for a number of years with no contributions it ends up in the Government's hands. Rules might have changed but the link above might help or contact your super fund provider.

[Jacksgranda]

When you get your annual statement you should check a few things.

 

What is your AMC? If you are paying 1% or more then you are probably paying too much as there are companies who will house a pension for 0.3%-0.4%.

 

What funds are you in? Most pensions are placed in one size fits all funds but why would a 20 year old have the same risk profile or time scale objectives as a 60 year old. If you don't want to visit a financial adviser then you should try to find a risk profiler online to gauge your understanding of investments and your tolerance to risk.

 

What are your fund charges? If the charges for your funds averages out at much more than 1% then you are being charged too much and you should move. You should also try to build a diverse portfolio which traverses all asset classes, geographies and sectors to give you diversification in your portfolio if possible.

 

Is there commission on the plan to the person who set it up? Some plans have latent commission being paid to someone you have likely never met for the privilege of having set the plan up. You can switch this off - it may be as much as 0.5%.

 

What are your time weighted and money weighted returns? i.e. are you making money or is it just your contribution that are pushing the value up?

 

The best advice if unsure would be to visit a Financial Adviser who can analyse you, your tax situation and the costs/benefits of your scheme in line with your objectives. This generally pays for itself many times over if they transfer you to a better scheme which is cheaper, better performing and more suited to your needs.

 

There are many more things to consider but the above should give you a good idea as to what your pension is really costing you and what you are getting in return.

 

You forgot to leave your contact details...

[JamieT1314]

Some of them are great. The ones where both elements are written under drawdown rules and the policy can be switched between the two offer excellent value. The death benefits are also much better with these products.

Agreed.