Stakebagger Pension

The_Biff

I don't normally have any taxable income. Could I invest in a mutual's stakeholder pension with the intention of either a windfall,or collapsing it at some stage and getting my hands on Gordon Browns gross-up share? If the collapsing is feasible, at what amount is it best to aim for?

Robert_Sterling_3

Within the limits each £1 you put into a Stakeholder pension will be grossed up to £1.28 approx if you are a non tax payer.

I do not know what you mean by "Collapsing" it.

You can't get any money out before you reach the minimum retirement age.

dunstonh

Forget it. Putting money into a stakeholder pension with profits fund is just a complete waste of money. There arent even that many that offer a with profits fund as part of the stakeholder pension.

homersimpson_3

please confirm why 'a stakeholder pension with profits fund is just a complete waste of money'. my friend has one with standard life and my other friend is considering getting one with standard life to take account of windfalls. good or bad ideas?
thanks

EdInvestor

my other friend is considering getting one with standard life to take account of windfalls.

Too late now to get a windfall at Standard life. There are various other mutuals where you could try a punt: Royal London, Liverpool Victoria, NFU Mutual are the bigger ones.Make very certain that the product you invest in confers membership though, as some mutuals have rather complicated rules designed to deter and confuse carpetbaggers.;)

rchddap1

Indeed, it is far too late to invest in a with profits policy with Standard Life in order to get some benefit from the impending stock marketing listing. Conditions were set to ensure that it is genunine members that get the benefit, and not carpet baggers trying to take advantage late on in the day.

dunstonh

please confirm why 'a stakeholder pension with profits fund is just a complete waste of money'. my friend has one with standard life and my other friend is considering getting one with standard life to take account of windfalls. good or bad ideas?
thanks

Companies offering Stakeholder pension with profits funds for new business are Norwich Union, Scottish Equitable, Scottish Life and Standard Life.

NU, St Life and Scot Eq have all gone or its too late. Scot Life only transact business through IFAs and are a subsidiary of Royal London. RL are still a mutual but I dont believe that a subsidiary of RL would benefit if RL were to float. Given that RL do not transact new business themselves, its less likely that they would float.

Then you have the point that using a with profits funds with the vast majority of providers is basically throwing money away with low potential growth for the forseeable future with most. Over 19-20 years, you are looking for a potential £250-£500 bonus that may or may not happen but investing in a fund that would have cost you more than that in lost growth.

The_Biff

By "collapsing" I mean cancelling it before it reaches an amount that has to be taken as a pension. e g I put in £800. Gordon tops it up to +/- £1000. I collapse it & get back £1000 - poss tax free.

EdInvestor

The_Biff wrote:

By "collapsing" I mean cancelling it before it reaches an amount that has to be taken as a pension. e g I put in £800. Gordon tops it up to +/- £1000. I collapse it & get back £1000 - poss tax free.

This is called 'trivial commutation'.As of next April the rules will change on this.It will only apply when the maximum of all your pensions (excluding state pensions) is no more than 15k. You will not be able to do it until the age of 60. 25% of the money can be taken tax free but the rest will be taxed before you get it.


Bit of a minority sport really.

ReportInvestor

dunstonh wrote:

I dont believe that a subsidiary of RL would benefit if RL were to float.

Correct. Not least because Scottish Life members have already received a fixed rate windfall when RL bought the company.

Although they were ripped off big time when their promised variable rate windfall was later cancelled by RL in accordance with the transfer document's clause 57, part y, subsection 78 or some such.