Civil Service Pension - no more lump sum, what to do?

In the Times yesterday they said the following. "from next year Britons
can claim a 40% contributions from the taxman by putting an overseas home on their personal pension funds". Where do I find out more about this? I will only have about 10 years pension, albeit Govt pension, and will have to retire overseas to be able to liive..
Doug

dougodurban wrote:

In the Times yesterday they said the following. "from next year Britons
can claim a 40% contributions from the taxman by putting an overseas home on their personal pension funds". Where do I find out more about this? I will only have about 10 years pension, albeit Govt pension, and will have to retire overseas to be able to liive..
Doug

That is not strictly true.

You will be able to claim 40% if you are a higher rate taxpayer. Basic rate taxpayers will be 22%.

Also, property purchases through a SIPP are likely to be far more expensive than an individual purchase and the compulsion to sell on specific events may not suit everyone.

Basically, allowing residential property into personal pensions is going to suit the wealthy rather who have significant reserves rather than someone using this as a sole retirement vehicle.

You also need to have the bulk of the money in the pension fund already to be able to buy the property. Contribution limits may prevent you doing this for a few years, unless you already have a big fund built up.

1) in a private pension or isn't it worth it (especially avc's due to the uncertainty of what is happening with CS pensions)

Depends on your circumstances. A private pension is just a tax wrapper to put investments in. The same investments which go in ISAs also go in pensions.

Can you clarify if you are a member of the civil service pension scheme?

2) I already invest 100 a month via fidelity international managed in North america but I belive this fund has expensive charges so do I continue.

Too many people get hooked up on charges as the main thing. It is not. Its about value for money. Now that can mean paying more for quality. Would you rather be in a fund costing 0.5% but returning 5% or in a fund costing 1.5% but returning 9%?

Also, with charges, you have to remember there are charges on everything. Savings Accounts, Cash ISAs, the lot. Some you see, some you do not. However, the profit is there on all of them. Savings accounts, for example, can actually be one of the most expensive products for a consumer. Yet most consumers will tell you that they pay no charges. If the bank it making 9% on the money and only paying 4%, then it is taking a 5% charge off it. With unit trust/OEIC funds, the charges are explicit and you can see them.

Fidelity funds tend to be more expensive, as do many of the top fund houses. However, in general, you do get what you pay for.

Standard & Poors did some research a few years back that showed, in general, the higher charged funds outperformed the cheaper funds. There will always be exceptions of course.

As to whether you continue placing £100pm into a higher risk fund in just one sector is your choice. I would never stick 100% into one sector, either professionally or personally.

The classic scheme is still a very good scheme. Even if the retirement age is upped to 65, it will still be one of the best. Although, that wont bother you as you are already in it. Its only newcomers.

I wouldnt be inclined to pay any more into a pension as you have the classic scheme. I would focus on capital and building up lump sums, such as in ISA.

As I live in a very large & old property I am catious of putting too much money up in the stock market when I might need it due to the nature of the property I live in also my wife will be giving up work soon to take up full time education.

This gives me a little worry. You appear to be cautious but are in medium/high risk fund. Investing in the stockmarket isnt just an on/off switch for risk. Its a sliding scale and you have picked a fund near the top end of the scale. There are also equity ISA funds which can have no stockmarket content. Gilts, corporate bonds, fixed interest and from April 2006, commercial property. Mixing and matching these funds means you dont expose yourself to one area. For example, using the crude but simple 1-10 risk scale, (1 = low risk, 10 = high risk), you are in a risk 8 fund. Stockmarket content funds begin around 5. Equity ISAs tend to have funds that begin around 4. The scale is crude when looked at in isolation but it gives you an idea of where you are investing in the scheme of things. I bet if I emailed you my DIY risk questionnaire (9 questions to ascertain your risk tolerance which are then scored and give you points depending on how you answer), you would come out way below where you are currently investing.

As for where you should put it, look at where you are currently with your assets. Heavy in property, heavy in cash and a small bit in just one sector. Ideally you shouldnt be heavy in any one area.

You should always have an emergency fund and you have. Remember that modern equity ISAs have no exit penalties. If you invest with a fund supermarket you can spread your money over at least 10 funds. Keep some of it in lower risk funds so if your emergency fund is not enough, you can call on the low risk funds first, if it isnt suitable to hit the higher risk funds. An alternative option would be to increase your monthly amount so you phase in your contributions so you dont hit your savings all at once.

I am cool with that as long as i balance my protfollio (get me with the lingo).

ROFL

Is there anything you can recomend or any advice on building a balanced portfolio. If you don't mind me asking are you an IFA ("Independent Financial Advisor - AKA "DD" on old board.")

I can't on here as advice is personal and Pal would shoot me for doing so as the board has a no advice on forums rule. I will send you a PM and we can have a chat in private.