Going to sort my pension today - any help?

MiM

Morning all. I've taken the day off to finally take some decisive action on my pension.

I'm 41, recently married. I've got a small dormant pension with Equitable Life (circa £7.5k) which I know I should have got rid of long since but I suppose at least it won't have taken as much a battering as most of late!

Also got a pension with Standard Life which I pay far too little into (£80 per month).

I've also got a couple of ISAs (a tracker and a self select funds through Fidelity via Cavendish), plus £3,000 and falling in shares with Selftrade.

Finally, I've got a collection of antique pottery worth maybe £20,000 (maybe much less, possibly even more, hard to be sure).

I only owe about £45,000 on house worth about £145,000 and am currently paying tiny mortgage, having recently switched to an interest only base rate tracker (now at 3%). Wife's flat also has equity and is being rented out.

I've looked into a SIPP, that was my plan, but having trawled through the stickies above I think I've decided that while I do love the idea, I may not be organised or on the ball enough to do the necessary research on an ongoing basis. Have enjoyed the debate between Ed and Dunstonh though!

My current plan is to switch my Equitable fund to the SL fund and substantially increase payments (possibly withdrawing and going back in through Cavendish?).

I also plan to start paying a substantial monthly amount into an equities ISA, maybe another one with Fidelity, not really sure yet.

Thanks to anyone who's bothered to read all that. Just wondered if anyone has any thoughts on the above before I get my teeth into the paperwork.

I don't do anything with money before asking the kind and well informed community on this forum and today isn't the time to start! Thanks again.

MiM

Haven't done anything yet so would still be grateful for any thoughts.

EdInvestor

MiM wrote: »

I'm 41, recently married. I've got a small dormant pension with Equitable Life (circa £7.5k)

What is this pension invested in?If it's in the With profits fund, does it have a GIR(Guaranteed Investement return)?

Also got a pension with Standard Life which I pay far too little into (£80 per month).

What fund(s) is this pension invested in?

I've also got a couple of ISAs (a tracker and a self select funds through Fidelity via Cavendish), plus £3,000 and falling in shares with Selftrade.

How much are these worth in total roughly?

How much are you expecting from the 2 state pensions?Get a forecast here: https://www.thepensionservice.gov.uk

Presumably there is no company pension available?

Your plan may be sensible but impossible to say without more info.

MrMicawber_2

You probably haven't got replies becuase your position is fairly complex and from what you say you're probably not a DIY person.

Your note suggests you are able to contribute quite a lot per month and you don't say how much you have in the SL fund.

I reckon the best bet would be to see a fee paying IFA. There's nothing to stop you starting a SIPP and taking independent advice on where to put the money, or staying with SL might be the best bet - or moving to something else.

A fee paying IFA would give you the pros and cons. To save time and therefore probably money if you do this it would be a good idea to provide as much detail as possible.

MiM

Thanks Ed and MrM. I've already applied for state pension estimate earlier today after reading one of your other posts, Ed.

Will add this info and answers to the other questions asked in a few days when the login details come in the post.

MiM

Ok, got some details now...

Equitable: With-profits PPP worth £15,904 on Dec 31 2007, transfer value £14,005, protected rights within that £10,587, transfer value £9,530. I've no idea what any of that means. Can't see any mention of GIR though.

SL: Stakeholder UK Equity Fund, value on April 27 2008 £9,992 (6,775 units). No doubt that's taken a battering!

ISAs and other shares: Total £9,000.

State pension: Currently £67.68, January 2033 rate £145.82.

No company pension.

Any thoughts? Thanks.
P

MiM

You there Ed/anyone?

EdInvestor

MiM wrote: »

Equitable: With-profits PPP worth £15,904 on Dec 31 2007, transfer value £14,005, protected rights within that £10,587, transfer value £9,530.I've no idea what any of that means. Can't see any mention of GIR though.

It would seem that you are taking these figs off annual statements.Check if the value of your fund has been increasing each year by 3.5% or so.If it has, you have a GIR.Ring them up and check if you can't see the effect.

You also have an MVR (exit penalty), that's why there is a difference between the current value and the transfer value. But the Equitable WP fund is primarily invested in bonds, so will not be affected much by market falls, so the MVR is unlikely to change much and anyway doesn;t apply at maturity. You could argue that this is a safe -ish spot to leave your money right now.

SL: Stakeholder UK Equity Fund, value on April 27 2008 £9,992 (6,775 units). No doubt that's taken a battering!

Indeed.Please update the figure.

State pension: Currently £67.68, January 2033 rate £145.82.

Very good.:) That's an annual income of 7,582 index linked with 100% spouse pension you can expect at retirement.


To my mind you need to contribute enough at this stage (in the absence of a company pension and assuming you pay basic rate tax) to provide a top up to an annual income level of 10k in pensions. That will mean you get all your pension income tax free as it is within the 10k age allowance tax band

The rest of your money should be invested in the tax free ISA wrapper, so that it too is tax free when you want the income.

So what you need to do now is

a) Check on that Equitable GIR, as we will then have a good idea how much income that pension will eventually generate if you stay with it.
b) Update the Std Life amount. Is it a personal or a stakeholder pension?
Then we can work out likely contribution levels to reach the right end amounts to generate the correct income.

But your main task is to look at the right way to invest money in your ISA accounts so as to generate steady long term growth and eventual dividend income to add to your pensions.

MiM

Hi Ed. Got those extra figures.

a) SL is a Stakeholder and is now at £7,169.92. Ouch.

b) EL ploicy does have a GIR. Current transfer value is £14,005.73.

Does this change anything?

Many thanks once again.

EdInvestor

Taking the EL pension, which we know will increase @3.5% a year, let's say you plan to retire in 20n year's time @ 61.The EL pension will then be worth 27,867 and it will pay you a level pension of 1,920 p.a.

Add in your state pension of 7,582 and you are nearly up to the 10k.p.a tax free income limit even before looking at the SL fund which will probably add another 750 -1k or so a year.

So I would tend not to put any more money into pensions, just leave them as they are.

Rather I would max out your stocks and shares ISA ( 7.2k a year, 600 quid a month, how does that sound?) The investment choice is the same as with a pension, the ISA is much more flexible (are you reasonable disciplined, sounds like you are?) and the eventual income will be optimal from the tax point of view - ie you won't pay any: )

If you invested 600 a month for 21 years and achieved an average growth rate of 6% net of charges, then your capital would have grown to almost 300k by the time you retire.this would generate another 15k p.a of tax free income to add to your 10k of pension income. Plus you keep the capital which can be passed on to spouse/heirs.

But a couple of queries.

Do you pay basic or higher rate tax?
Apart from her investment flat, what is Mrs MiM's pension situation?

MiM

Thanks Ed.

Basic rate (earn around £31k).

Wife has a similar salary but is a nurse so is in NHS pension scheme.