Pension

[Joe Shmoe]

I'm guessing most responses will be to seek professional advice, but I want to research myself before doing anything. Can anyone savvy with this kind of thing point to me in the right direction.

I have an old private work pension, I believe the cash transfer value is around 100k. I won't be paying any further private pension contributions and I don't have any other pensions to transfer its value to.

The monthly charge on this is negating its yearly increase in value, so I need to find something to do with it. Something suitable giving that I won't be contributing ever.

Any advice to steer me in the right direction?

 

[williams1185]

i was in the same boat and an advisor recommended moving it it was placed with aegon so far its been making some decent interest well worth looking into or depending on your age you could take funds out if possible

 

[John15]

You could visit a couple of the high street banks to see what they can offer in the way of a savings/draw-down plan. I have one with HSBC which is performing OK (so far!!).

John

 

[RogerS]

i was in the same boat and an advisor recommended moving it it was placed with aegon so far its been making some decent interest well worth looking into or depending on your age you could take funds out if possible

Don't get me started about Aegon. The information that they dish out with regard to pensions is skating on thin ice. They will stick every obstacle in the way to stop you withdrawing your pension and/or not mention all your options. There isn't a bargepole long enough.

I moved my pension pot to a SIPP with Hargreaves Lansdowne and never regretted it.

 

[RogerM]

i was in the same boat and an advisor recommended moving it it was placed with aegon so far its been making some decent interest well worth looking into or depending on your age you could take funds out if possible

Don't get me started about Aegon. The information that they dish out with regard to pensions is skating on thin ice. They will stick every obstacle in the way to stop you withdrawing your pension and/or not mention all your options. There isn't a bargepole long enough.

I moved my pension pot to a SIPP with Hargreaves Lansdowne and never regretted it.

As a retired IFA, that's sound advice. Maybe shop around a few providers to see who has the most competitive charges. Hargreaves Lansdown is a solid company, as is TD Direct Investing. You will have to make your own investment choices, but if you stick to established funds or investment trusts rather than stock picking it's not rocket science.

 

[Sailormantom]

Hi, another happy Hargreaves Lansdowne customer here. They can also advise on investments (but they will charge you for it), although I have relied on my own ideas. They publish lots of research and articles on their website to help you find your way through.

Good luck, Tom

 

[rafezetter]

Having worked in investments and being the son of a FA with a 50 year career, only recently retired, another company you might wish to look at is St. James's Place (the company my father worked for / with). They have excellent fund managers and the majority of their clients are in the top 5% wealth bracket, so good fund performance is expected.

100k will also get you through the door (just about ) Initial charges may seem higher compared to a normal high street, but as I said, their clients EXPECT RESULTS or they move their millions elsewhere, so longterm performance should offset that. They will also be able to help with other financial aspects such as inheritance tax liability etc etc

Yes I'm biased, but they really are first rate.

Here's a link to their main site:

https://www1.sjp.co.uk/find-a-partner?g ... oC_K7w_wcB

 

[Joe Shmoe]

Thanks for all your replies.

I'm currently with Aegon. As mentioned, the charges I'm facing is ludicrous. Must have something to do with not contributing a monthly amount anymore? I'm not sure.

I will take a look into the suggestions you've all made and post again.

Thanks guys.

 

[RogerS]

Well, Joe, when you do come to transfer your pension from them then, if my wife's experience is anything to go by, prepare yourself for a very, very, tedious and exhausting time. You have my sympathies. You've heard the phrase 'left hand....right hand'? Well, the impression that Aegon gave was that not only did they not have a left hand or a right hand to begin with, they didn't even have a torso. Wrong forms, missing forms, erroneous advice (luckily my wife was savvy enough not to fall for any of that otherwise it would have been Financial Ombudsman time). Repeated advice, missing advice, wrong advice. Website inaccurate and/or incomplete.

As I said in an earlier post they will make it as awkward and difficult for you to remove your pension as they possibly can. But hang in there. You will come through the process ! The very best of luck to you. Keep us posted.

 

[finneyb]

Well, Joe, when you do come to transfer your pension from them then, if my wife's experience is anything to go by, prepare yourself for a very, very, tedious and exhausting time. .

Issue all instructions in writing, timed and dated and keep a copy. I had similar issues with Mellon over the transfer of an ISA - basically a US company who couldn't perform to save their lives. My wife suffered losses due to their lack of admin ability. They paid up for the loss, eventually. So KEEP RECORDS.

Brian

 

[morturn]

Have a look at this

https://www.futurelearn.com/courses/managing-my-investments

It is an online course (MOOC) delivered by the Open University. Although the title says 'Managing My Investments' it covers in depth pensions too, in fact almost everything you need to know. Weeks two or three is slightly complex, but you can get your head around it if you take your time.

These futureLeanrn courses are free, no catch and are great for learning at your own pace.

 

[Keithie]

well, I do know a bit about pensions ...

1. every time you do anything with your pension pot (other than draw it down) someone will rip you off and take a chunk of it
2. watch out for fees ...some IFA teams will gouge you more than others
3. These days if your pension pot keeps pace with inflation over the medium to long term then thats not so bad imo
4. No-one can 'know' whats gonbna happen in the future so, frankly, no one really knows what they aretalking about when it comes to investment advice.
5. If you must change, pick a professional adviser that is known personally (and has been for a fair time) by a friend you trust

Honestly ...the best you can probably hope for is 'not shooting yourself in the foot' ..long term compound effects of inflation are a killer if you dont keep up with them...and you need to outperform them by the amount of fees you are paying to intermediaries ..so to just keep pace with inflation that means finding very low fees or gambling probably with your life savings/ financial future.

hope you find a solution you're happy with and that works for you.

 

[RogerS]

well, I do know a bit about pensions ...

1. every time you do anything with your pension pot (other than draw it down) someone will rip you off and take a chunk of it
2. watch out for fees ...some IFA teams will gouge you more than others
3. These days if your pension pot keeps pace with inflation over the medium to long term then thats not so bad imo
4. No-one can 'know' whats gonbna happen in the future so, frankly, no one really knows what they aretalking about when it comes to investment advice.
5. If you must change, pick a professional adviser that is known personally (and has been for a fair time) by a friend you trust

Honestly ...the best you can probably hope for is 'not shooting yourself in the foot' ..long term compound effects of inflation are a killer if you dont keep up with them...and you need to outperform them by the amount of fees you are paying to intermediaries ..so to just keep pace with inflation that means finding very low fees or gambling probably with your life savings/ financial future.

hope you find a solution you're happy with and that works for you.

True ...as far as the old fashioned approach to pensions go. Ie...give a wodge of money to someone to invest for you. A more modern approach, albeit not without its own risks, is to put that pension pot into a SIPP and by choosing the right shares etc you can get a much better return than inflation.

 

[finneyb]

Have a look at this

https://www.futurelearn.com/courses/managing-my-investments

It is an online course (MOOC) delivered by the Open University. Although the title says 'Managing My Investments' it covers in depth pensions too, in fact almost everything you need to know. Weeks two or three is slightly complex, but you can get your head around it if you take your time.

These futureLeanrn courses are free, no catch and are great for learning at your own pace.

Futurelearn is good I've dome a few courses - I didn't see this one though. Just joined

Brian

 

[Alexam]

Courses on this very specialised subject should only be undertaken by those prepared to work very hard and study for a long time. Some financial advisers don't even have much of a clue after a year or more of training in this subject, but are overseen by others with more qualification to check their advice.

A postal course of getting you to a position where you could select realistic investments has ony a small chance of helping. It should give you a 'general overview' but you would still struggle and probably take greater risk in not understanding the balance of investments that can be used for various reasons and results. Do be very careful and avoid actual shares rather than Funds, which have a wider spread and often less risk. Sipp could be your best bet, but how old are you now and when would you need to draw an income from it?

Malcolm

 

[RobinBHM]

Whats the view on investing in property?

I looked into it last year but initial impressions seem to be its tricky and the income especially if fully managed letting service is not great once management fees and maintenance are included and the high cost of buy to let mortgages.

The thought that the rental can pay the mortgage, which if paid by retirement in theory leaves an income stream (assuming you dont get some non paying freeloading scroat) and capital does seem tempting.

Ive seen some people suggest commercial or even garages as a better option than domestic due to far lower maintenance expectations.

ISAs at the moment are a joke with fractiknal % interest barely enough to buy a mars bar let alone a domino XL

 

[Inoffthered]

Whats the view on investing in property?

I looked into it last year but initial impressions seem to be its tricky and the income especially if fully managed letting service is not great once management fees and maintenance are included and the high cost of buy to let mortgages.

The thought that the rental can pay the mortgage, which if paid by retirement in theory leaves an income stream (assuming you dont get some non paying freeloading scroat) and capital does seem tempting.

Ive seen some people suggest commercial or even garages as a better option than domestic due to far lower maintenance expectations.

ISAs at the moment are a joke with fractiknal % interest barely enough to buy a mars bar let alone a domino XL

With regards to buy to lets, dont forget that one of the last things George Osbourn did as chancellor was to change the rules regarding the allowability of mortgage interest as a charge against profits for properties held by individuals .Previously mortgage interest payments were fully allowable when computing the taxable profit arising on rental properties. Over the next few years the amount of interest allowed as a deduction is going to be reduced so that relief is only available at basic rate. In true HMRC style the mechanism for the calculation is overcomplicated but you should work out the cash flows that take account of any tax payable before committing to a BTL.
The other option would be to buy a property through a limited company but that introduces a load of other complications.

 

[Keithie]

also, property is quite a 'lumpy' asset. Not always very easy to sell if you need to and, unlessyou have really quite a lot of cash, doesnt give a lot of diversification. Doesnt mean it might not make sense for some folk tho.

 

[stuartpaul]

........ (snip)....ISAs at the moment are a joke with fractiknal % interest barely enough to buy a mars bar let alone a domino XL

That's certainly not been true for our stocks and shares ISA which over the last 2 years has provided over 5%. Very good when compared to the average high street return.

We only followed this route as a result of professional advice.

 

[RogerM]

You need to be careful of over investing in one asset class. If you are a home owner, then you already have a significant part of your wealth invested in residential property. As pointed out above, interest relief on buy to let has been reduced to basic rate only as a transition to it not being allowable at all, making it quite likely that whilst you may make a gross profit, you'll still make a net loss if you have a mortgage to pay. Then there is the additional 3% stamp duty that is now payable on 2nd and subsequent properties. BTL landlords normally buy those type of properties which would otherwise appeal to first time buyers, but as hitherto they have been able to offset costs including mortgage interest, it hasn't been a level playing field, and it is clear that government is out to make BTL less appealing.

Then there are the practicalities. A single property is either let or it isn't, making "voids" a serious potential problem, as is the risk of getting a bad tenant who doesn't pay his rent. It will take you 3 or 4 months to get possession during which time you have no income and the overheads are the same. Add in the costs of insurance, maintenance etc and the reality is often a lot less appealing than the theory. When you want to sell, how long will that take? Do you sell with a tenant to give continuity of income, but reducing the pool of potential buyers, or do you get vacant possession and sit on a non-income producing asset whilst you wait for a buyer?

If you want to invest in property, I would suggest doing it via REITs (Real Estate Investment Trusts). These are companies that invest in property which is run by professionals, and by buying their shares you are investing in a large portfolio of properties, with variety of both type and location, reducing the risk of a single property with a single tenant in a single location. Buy these inside a SIPP or ISA and the income and growth is tax free, and currently an average tax free income of 5%, rising each year, with no hassle or overheads is not difficult to find, in addition to any capital growth from increases in the value of the property portfolio. And if you want to sell, your cash is just a click of a mouse away.

Self education is part of the price you have to pay, and I would suggest that a subscription to "Moneyweek" would be money well spent. You need to avoid some of their more whacky ideas, but it'll keep you informed of current trends. You could do a lot worse than invest in their model Investment Trust or Lifetime wealth ETF portfolio.