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    • cambs1999
    • By cambs1999 12th Mar 17, 10:47 AM
    • 24Posts
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    cambs1999
    Adding to a Scottish Widows Pens Portfolio Two
    • #1
    • 12th Mar 17, 10:47 AM
    Adding to a Scottish Widows Pens Portfolio Two 12th Mar 17 at 10:47 AM
    Hi,

    My husband has a works pension. They are currently paying into Scottish Widows Pens Portfolio Two.

    I've been looking into this pension a bit more, my husband requested a pension without much risk - however it appears to be a medium risk option. Does anyone have any knowledge of this pension, the risk and how it's been performing over the last few years? I've had a quick look and it seems to be doing ok but my knowledge in pensions is pretty much zero.

    With his employer contributions he's currently paying in around £360 per month. We were thinking of upping it by another £70 a month but before we do this we wanted to check whether this would be a wise decision?

    Thanks
Page 1
    • dunstonh
    • By dunstonh 12th Mar 17, 11:33 AM
    • 89,513 Posts
    • 55,949 Thanks
    dunstonh
    • #2
    • 12th Mar 17, 11:33 AM
    • #2
    • 12th Mar 17, 11:33 AM
    Does anyone have any knowledge of this pension, the risk and how it's been performing over the last few years?
    It is not a pension. It is a fund within a pension that is available on a few of their versions. Its a really basic fund designed for simplicity over quality. That does not make it bad. It will expected to be middle of the road in terms of performance relative to risk profile. It is at the higher end of medium risk.

    With his employer contributions he's currently paying in around £360 per month. We were thinking of upping it by another £70 a month but before we do this we wanted to check whether this would be a wise decision?
    Anything extra you put towards retirement is a good thing. You could do better but you would need either to use an IFA (and its not cost effective with such a small amount) or DIY (and that requires a higher level of knowledge). You could do a lot worse. So, accept that it is a basic plan with a basic investment option really aimed to stopping you from making mistakes.
    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 an Independent Financial Adviser local to you.
    • sandsy
    • By sandsy 12th Mar 17, 11:39 AM
    • 1,215 Posts
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    sandsy
    • #3
    • 12th Mar 17, 11:39 AM
    • #3
    • 12th Mar 17, 11:39 AM
    How old is your husband?

    You say he wanted to invest without much risk - but funds without much investment risk often give rise to another risk - the risk that the fund will not outperform inflation, in effect making the buying power of the fund less than it was when the money was contributed! Losing money in real terms is far from ideal so it's generally advisable to take on some risk, especially when an individual is still some years from retirement.
    • cambs1999
    • By cambs1999 12th Mar 17, 6:42 PM
    • 24 Posts
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    cambs1999
    • #4
    • 12th Mar 17, 6:42 PM
    • #4
    • 12th Mar 17, 6:42 PM
    Thanks for your replies.

    He is 45, so we're starting to look at his retirement a bit more seriously now to try to make sure we do what we can now to ensure he ends up with a fairly reasonable amount in 20 or so years.

    Can you also advise as to a reasonable amount he should be aiming for to enable him to have a reasonable income in retirement, I.e £300,000/£400,000 etc? He currently has around £170,000 ish over 3 similar set ups to the Scottish Widows one.

    Thanks again.
    • MoneySavingUser
    • By MoneySavingUser 12th Mar 17, 7:08 PM
    • 1,607 Posts
    • 644 Thanks
    MoneySavingUser
    • #5
    • 12th Mar 17, 7:08 PM
    • #5
    • 12th Mar 17, 7:08 PM
    Presumably, he has a Scottish Widows GPPP?

    He should have a read through the information here: http://www.scottishwidows.co.uk/Extranet/Literature/Category/228

    The important parts being the guides which tell you what Scottish Widows Pens Portfolio Two is, what the investment approaches that SW use are, what other funds are available etc.

    He should also find out which charging structure applies to him. My employer wasn't very helpful in this regard and neither were SW I'm afraid!

    Does his employer allow him to contribute via salary sacrifice?

    edit: If you really don't know what you are doing, then Pens Portfolio Two is a decent fund to be in. Check which investment approach you are setup in if you are in one (you should be able to see if you log into the website) - I think they have a few such as targeting cash, annuity etc.
    • kidmugsy
    • By kidmugsy 12th Mar 17, 7:36 PM
    • 9,821 Posts
    • 6,614 Thanks
    kidmugsy
    • #6
    • 12th Mar 17, 7:36 PM
    • #6
    • 12th Mar 17, 7:36 PM
    With his employer contributions he's currently paying in around £360 per month. We were thinking of upping it by another £70 a month
    Originally posted by cambs1999
    (i) Would his employer contribute more too?

    (ii) Does he contribute by salary sacrifice?

    (iii) Does he pay higher rate tax?

    (iv) How good is your own pension provision?

    (v) As a couple, have you got an emergency cash fund?
    • cambs1999
    • By cambs1999 12th Mar 17, 9:52 PM
    • 24 Posts
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    cambs1999
    • #7
    • 12th Mar 17, 9:52 PM
    • #7
    • 12th Mar 17, 9:52 PM
    Thanks for the replies.

    1.His employer wouldn't contribute more.
    2.He pays via salary sacrifice.
    3.He isn't a higher tax payer.
    4.I have a LGPS pension but only work part time and not likely to return to full time work anytime soon - hoping for a pension of around £15,000 (if I don't take lump sum) but I'm hoping to also up my contributions by around 4%.
    5.We don't have much in cash savings as we've been overpaying the mortgage with the intention to pay it off in around 8 years. We have an offset mortgage so could in an emergency gain access to the money we've overpaid.
    • another casualty
    • By another casualty 12th Mar 17, 10:00 PM
    • 3,030 Posts
    • 4,863 Thanks
    another casualty
    • #8
    • 12th Mar 17, 10:00 PM
    • #8
    • 12th Mar 17, 10:00 PM
    It may not be relevant here, but I had a small gripe about Scottish widows.

    I used to put £30 p.m into a Scottish widows savings account from mid'80s till mid '90s .
    Apparently , I was entitled to £50 after lloyds took them over.

    One day , I wanted to withdraw some money . When I phoned , I wasnt recognised. I read out my account no. .they changed it .
    It meant, I obviously missed out on the £50. I was naive , and just swallowed it . They should never have changed my details .
    That was pre Internet . Probably pre m.s.e.Plus I'm more experienced now.
    And bitter
    • bigadaj
    • By bigadaj 12th Mar 17, 10:31 PM
    • 10,658 Posts
    • 6,961 Thanks
    bigadaj
    • #9
    • 12th Mar 17, 10:31 PM
    • #9
    • 12th Mar 17, 10:31 PM
    I believe when they were bought then you were only a member if you and a qualifying, normally pensions, investment or insurance product. If you held money as savings with the bank you didn't qualify.
    • another casualty
    • By another casualty 12th Mar 17, 10:34 PM
    • 3,030 Posts
    • 4,863 Thanks
    another casualty
    I believe when they were bought then you were only a member if you and a qualifying, normally pensions, investment or insurance product. If you held money as savings with the bank you didn't qualify.
    Originally posted by bigadaj
    Thanks for that .
    I'll bow out of this thread, so not to derail any important information for the o p
    Thanks again
    • sebthered
    • By sebthered 13th Mar 17, 5:42 PM
    • 34 Posts
    • 14 Thanks
    sebthered
    My company pension comprises this fund, 55% pens three- 45% pens 2 - I looked up the details recently here is the link -
    https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=qgf29&univ=P

    I have just turned 55 and I note that my contributions are now being allocated 95%Pens Portfolio 3 and 5% pens 4, which presumably is lower risk. You can of course allocate your payments to any fund/portfolio they hold at anytime.
    Last edited by sebthered; 13-03-2017 at 5:46 PM.
    • ex-pat scot
    • By ex-pat scot 13th Mar 17, 6:15 PM
    • 212 Posts
    • 230 Thanks
    ex-pat scot
    My company pension is also a SW series 2 GPPP.
    I have selected an adventurous basket of funds from within the selection, albeit I can't access the Vanguard ETF series (which would be my default option, if available). I can live with that restriction, for the sake of the company contribution and sal sac arrangement.


    When I leave my present employer, I will be transferring straight out of SW and into my existing SIPP, and into VWRL (with a side salad serving of gold etf)
    • Bravepants
    • By Bravepants 13th Mar 17, 8:01 PM
    • 272 Posts
    • 316 Thanks
    Bravepants

    Can you also advise as to a reasonable amount he should be aiming for to enable him to have a reasonable income in retirement, I.e £300,000/£400,000 etc? He currently has around £170,000 ish over 3 similar set ups to the Scottish Widows one.

    Thanks again.
    Originally posted by cambs1999
    Some of the figures for safe drawdown rates bandied around the Internet are 3% to 4% per annum, So on a £300k pot you could draw down £9k per annum to £12k, of course the smaller the amount the longer your pot will last and grow above inflation (depending on how you invest once you go into drawdown).
    • MoneySavingUser
    • By MoneySavingUser 13th Mar 17, 8:29 PM
    • 1,607 Posts
    • 644 Thanks
    MoneySavingUser
    I have just turned 55 and I note that my contributions are now being allocated 95%Pens Portfolio 3 and 5% pens 4, which presumably is lower risk. You can of course allocate your payments to any fund/portfolio they hold at anytime.
    Originally posted by sebthered
    Yes, at some point lifestyling kicks in if you have an investment approach selected.
    • Notfarfromtheborder
    • By Notfarfromtheborder 13th Mar 17, 11:54 PM
    • 119 Posts
    • 163 Thanks
    Notfarfromtheborder
    My company pension comprises this fund, 55% pens three- 45% pens 2 - I looked up the details recently here is the link -
    https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=qgf29&univ=P

    I have just turned 55 and I note that my contributions are now being allocated 95%Pens Portfolio 3 and 5% pens 4, which presumably is lower risk. You can of course allocate your payments to any fund/portfolio they hold at anytime.
    Originally posted by sebthered

    As mentioned by the previous poster, Lifestyling option may have kicked in, however, I thought with this option existing funds would be transferred to the lower risk funds, not just new contributions, or is this an option also with Lifestyling?
    • Linton
    • By Linton 14th Mar 17, 8:40 AM
    • 8,451 Posts
    • 8,368 Thanks
    Linton
    ......
    Can you also advise as to a reasonable amount he should be aiming for to enable him to have a reasonable income in retirement, I.e £300,000/£400,000 etc? He currently has around £170,000 ish over 3 similar set ups to the Scottish Widows one.
    Originally posted by cambs1999
    When planning retirement the first task is to determine what you consider to be a reasonable total income. A good first guess is to take what you are spending now and remove those things you wont need to pay for in retirement - pensions, mortgage, work expenses, children. You may then wish to increase your estimate. I suggest you dont try to reduce it without first reducing your actual expenditure now to see how you would cope. Then you need to increase your estimate by the estimated inflation between now and retirement.

    Next job is to work out how you are going to fund it. This funding will come from personal/DB pensions, State Pension and savings. An order of magnitude guess for the lump sum you will need is about 30X that part of the income it will have to pay for. This will include a reasonable chance of matching inflation. You will have to add extra if you want to retire before you reach State Pension Age and DB Pension Age.
    • cambs1999
    • By cambs1999 14th Mar 17, 5:08 PM
    • 24 Posts
    • 0 Thanks
    cambs1999
    Thanks for all your replies.

    Sorry... But I don't really understand the previous posters comments about the lump sum you will needs needs to be 30x that part of income etc.

    Can you explain this in a bit more detail please?

    I think we would want an income of around £1500 per month as a minimum.

    If we get a state retirement pension we should be ok but I'm worried by the time we retire it won't exist - anyone got any opinion on this?
    Thanks for all your help.
    • bigadaj
    • By bigadaj 14th Mar 17, 6:51 PM
    • 10,658 Posts
    • 6,961 Thanks
    bigadaj
    Thanks for all your replies.

    Sorry... But I don't really understand the previous posters comments about the lump sum you will needs needs to be 30x that part of income etc.

    Can you explain this in a bit more detail please?

    I think we would want an income of around £1500 per month as a minimum.

    If we get a state retirement pension we should be ok but I'm worried by the time we retire it won't exist - anyone got any opinion on this?
    Thanks for all your help.
    Originally posted by cambs1999
    The lump sum comes from safe withdrawal rates during drawdown from a pension, thirty times you annual needs equates to a figure of between 3&4% which is also quoted abive and is what many people might consider a good rate that won't erode capital and be sustainable for a few decades.

    However if you are in a final salary or defined benefit scheme then you just take what you get.

    There's always talk of the state pension being removed, the recent changes to the single tier pension have potentially made it more sustainable and certainly clearer for most, so it's likely to conti us in the medium term, and po ably in the longer term as older people tend to vote in larger numbers.
    • cambs1999
    • By cambs1999 14th Mar 17, 6:56 PM
    • 24 Posts
    • 0 Thanks
    cambs1999
    Thanks. So if we want around £1500 pm does this mean 30 x £1500 so an annual pension income of £45,000?
    • cambs1999
    • By cambs1999 14th Mar 17, 6:59 PM
    • 24 Posts
    • 0 Thanks
    cambs1999
    Sorry just read it again, is it £1500 x 12 for annual then x 30 so a pension pot of £540,000?
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