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  • FIRST POST
    • lgar
    • By lgar 16th Oct 16, 5:57 PM
    • 1Posts
    • 0Thanks
    lgar
    pensions & brexit
    • #1
    • 16th Oct 16, 5:57 PM
    pensions & brexit 16th Oct 16 at 5:57 PM
    Due to claim my private pension, how will the uncertainty over brexit & the falling £ effect this?
Page 1
    • Linton
    • By Linton 16th Oct 16, 6:06 PM
    • 6,941 Posts
    • 6,535 Thanks
    Linton
    • #2
    • 16th Oct 16, 6:06 PM
    • #2
    • 16th Oct 16, 6:06 PM
    Are you buying an annuity or taking drawdown?
    • robber2
    • By robber2 16th Oct 16, 6:27 PM
    • 131 Posts
    • 85 Thanks
    robber2
    • #3
    • 16th Oct 16, 6:27 PM
    • #3
    • 16th Oct 16, 6:27 PM
    "how will the uncertainty over brexit & the falling £ effect this?"

    In an uncertain way
    • robin61
    • By robin61 16th Oct 16, 7:33 PM
    • 489 Posts
    • 371 Thanks
    robin61
    • #4
    • 16th Oct 16, 7:33 PM
    • #4
    • 16th Oct 16, 7:33 PM
    Due to claim my private pension, how will the uncertainty over brexit & the falling £ effect this?
    Originally posted by lgar
    Well I have to say that since the referendum my SIPP has been doing very well. Will it continue to do so ? Who knows ? Best not to have all your eggs in one basket. I think that was true before Brexit and will still be the case after.
    Last edited by robin61; 16-10-2016 at 9:46 PM.
    • dunstonh
    • By dunstonh 16th Oct 16, 8:23 PM
    • 85,106 Posts
    • 50,128 Thanks
    dunstonh
    • #5
    • 16th Oct 16, 8:23 PM
    • #5
    • 16th Oct 16, 8:23 PM
    Private pension is not an actual product. It is a collection of some very different types of pensions that are not taken via the workplace. So, what type of pension is it? How do you intend to draw the income? annuity or drawdown

    Well I have to say that since Brexit my SIPP has been doing very well.
    You can slap me for being pedantic Brexit hasnt happened yet.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • robin61
    • By robin61 16th Oct 16, 10:12 PM
    • 489 Posts
    • 371 Thanks
    robin61
    • #6
    • 16th Oct 16, 10:12 PM
    • #6
    • 16th Oct 16, 10:12 PM
    Yes you are right. Edited my post. Fancy me jumping the gun like that !
  • jamesd
    • #7
    • 16th Oct 16, 10:47 PM
    • #7
    • 16th Oct 16, 10:47 PM
    Due to claim my private pension, how will the uncertainty over brexit & the falling £ effect this?
    Originally posted by lgar
    First we need to know what type of private pension you have.

    If it is a defined benefit type like final or average salary then there is no effect at all on it. Any risk is with the pensions scheme and the employer.

    If it is defined contribution then the effect so far is low but you might make a horribly bad mistake and buy an annuity, losing you perhaps half of your potential income level vs state pension deferral. It's commonplace for annuity sellers to not even mention state pension deferral as an option or to say only annuity is an option because all they sell is annuities, without bothering to mention that you can transfer to get the full range of choices.

    For defined contribution the best option tends to be income drawdown using money from that to fund state pension deferral since this is what provides the highest guaranteed income level for the money. It also allows handy things like taking income at a higher rate until state pension age is reached.
    • atush
    • By atush 17th Oct 16, 10:37 AM
    • 15,291 Posts
    • 9,163 Thanks
    atush
    • #8
    • 17th Oct 16, 10:37 AM
    • #8
    • 17th Oct 16, 10:37 AM
    Brexit and uncertainty affect GBP and the markets. The markets and GBP could affect your pension, if it is of the invested type.

    So far, markets are up and the pound down. So fairly good for pensions.

    What will happen going forwards is anyones guess?
    • woolly_wombat
    • By woolly_wombat 17th Oct 16, 12:06 PM
    • 364 Posts
    • 222 Thanks
    woolly_wombat
    • #9
    • 17th Oct 16, 12:06 PM
    • #9
    • 17th Oct 16, 12:06 PM

    So far, markets are up and the pound down. So fairly good for pensions.
    Originally posted by atush
    Not so good for those close to retirement who have Lifestyle pensions. Gilt yields are up, so prices are down and look as if they may have topped.
    • atush
    • By atush 17th Oct 16, 2:29 PM
    • 15,291 Posts
    • 9,163 Thanks
    atush
    I dont know too many people who are lifestyling now
    • dunstonh
    • By dunstonh 17th Oct 16, 3:07 PM
    • 85,106 Posts
    • 50,128 Thanks
    dunstonh
    I dont know too many people who are lifestyling now
    Originally posted by atush
    We had a compliance bulletin a year or two back (in the lead up to pension freedoms) giving a recommendation that we cease to use lifestyling options as the are largely incompatible with pension freedoms and could be considered a mis-sale in future.

    Lifestyling was geared towards a static retirement date with the aim to buy an annuity at that point. That is no longer what most are doing.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • AnotherJoe
    • By AnotherJoe 17th Oct 16, 6:36 PM
    • 4,139 Posts
    • 4,167 Thanks
    AnotherJoe
    Due to claim my private pension, how will the uncertainty over brexit & the falling £ effect this?
    Originally posted by lgar
    It's only a matter of before someone asks how Brexit will affect the rise in their bread making machine.
    • bigadaj
    • By bigadaj 17th Oct 16, 9:11 PM
    • 7,816 Posts
    • 4,764 Thanks
    bigadaj
    It's only a matter of before someone asks how Brexit will affect the rise in their bread making machine.
    Originally posted by AnotherJoe
    No more dough, no impact on inflation?
    • Triumph13
    • By Triumph13 17th Oct 16, 10:11 PM
    • 714 Posts
    • 656 Thanks
    Triumph13
    Due to claim my private pension, how will the uncertainty over brexit & the falling £ effect this?
    Originally posted by lgar
    Glass half full = shares going up
    Glass half empty = LTA shrinking as it's denominated in £
  • jamesd
    Not so good for those close to retirement who have Lifestyle pensions. Gilt yields are up, so prices are down and look as if they may have topped.
    Originally posted by woolly_wombat
    Gilt yields are only roughly back to where they were pre-Brexit vote so far but I agree that more increases in yield and decreases in capital value seems likely.

    But lifestyling is in large part obsolete, just like annuities for those close to state pension age in normal good health with typical pot sizes, so it's perhaps worth considering getting out of that if you're in it. Enough in low volatility options to pay for any fixed in time spending that you plan to do can be useful though.
    • RickyB2000
    • By RickyB2000 18th Oct 16, 7:11 AM
    • 253 Posts
    • 156 Thanks
    RickyB2000
    Does life styling still make sense for an AVC attached to a DB pension where you can take the AVC as the 25% tax free or to buy more DB pension?
  • jamesd
    Yes, some lifestsyling makes sense for that. Traditional lifestyling has two parts:

    1. reducing ups and downs due to market movements close to retirement.
    2. matching annuity rate changes by using annuity-related investments such as gilts.

    The gilt bit doesn't make sense for the 25% tax free or more DB pension case but the market movement part does. For someone who's paying attention it's probably better to turn off lifestyling and manage the fund choices themselves. Lifestyling plans have in some cases started way sooner than seems sensible to me, as much as fifteen years before retirement, reducing investment returns for that whole period.

    Buying more DB income usually doesn't make sense because the reverse commutation rate is usually poor. But if the rate is OK and competitive with state pension deferral or a better paying annuity then it can be a good move.
    • coyrls
    • By coyrls 18th Oct 16, 9:35 AM
    • 591 Posts
    • 544 Thanks
    coyrls
    Yes, some lifestsyling makes sense for that. Traditional lifestyling has two parts:

    1. reducing ups and downs due to market movements close to retirement.
    2. matching annuity rate changes by using annuity-related investments such as gilts.

    The gilt bit doesn't make sense for the 25% tax free or more DB pension case but the market movement part does. For someone who's paying attention it's probably better to turn off lifestyling and manage the fund choices themselves. Lifestyling plans have in some cases started way sooner than seems sensible to me, as much as fifteen years before retirement, reducing investment returns for that whole period.

    Buying more DB income usually doesn't make sense because the reverse commutation rate is usually poor. But if the rate is OK and competitive with state pension deferral or a better paying annuity then it can be a good move.
    Originally posted by jamesd
    I think there are two reasons to manage your fund choices as you come up to retirement. The first, as jamesd says is the 25% tax free lump sum, which you can gradually move to a cash equivalent to make the sum a bit more predictable. Another reason for moving to a cash equivalent is if you are going to have to transfer your pension in cash (e.g. from an occupational DC scheme to a SIPP because the occupational scheme doesn’t offer drawdown). As you are not in control of the point at which your funds are converted to cash, you cannot control what the transfer sum will be unless you adjust your investments. You most likely will also be out of the market for several weeks while the transfer takes place before you can reinvest the cash.

    I gradually moved my pension to a cash fund over the twelve months prior to transfer to give myself a bit more certainty over the final sum to be transferred. I guess some of this is psychological but I didn’t like the idea of my funds being converted to cash at a date over which I had no control.
    • woolly_wombat
    • By woolly_wombat 19th Oct 16, 10:43 AM
    • 364 Posts
    • 222 Thanks
    woolly_wombat
    Gilt yields are only roughly back to where they were pre-Brexit vote so far but I agree that more increases in yield and decreases in capital value seems likely.

    But lifestyling is in large part obsolete, just like annuities for those close to state pension age in normal good health with typical pot sizes, so it's perhaps worth considering getting out of that if you're in it. Enough in low volatility options to pay for any fixed in time spending that you plan to do can be useful though.
    Originally posted by jamesd
    I have been concerned for some time about one of my OH's pensions, which had lifestyling.

    Action has already been taken.

    I thought this article was interesting:
    http://monevator.com/weekend-reading-when-is-an-inflation-target-not-an-inflation-target/
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