Options for Civil Service member

BoGoF

I wonder if any of our pension experts could provide advice on how I could increase my pension entitlement for when I retire.

I am currently 37 years old and a member of the Civil Service Classic scheme and have been for 20 years. All being well I intend to retire at 60.

My options seem to be buying added CS pension or CS AVC's (via Standard Life or Scottish Widows) or taking out a stakeholder pension. It would appear that whichever Government we end up will attempt to make changes to the Civil Service Pension Scheme I am thinking I do not want to put all my eggs in one basket and maybe an external scheme is the way to go. I can afford a maximum of £300 to save/invest.

I currently have no savings so perhaps a Cash ISA may be the best way to go.

Any suggestions/comments appreciated.

EdInvestor

What is your expected total pension income at retirement (incl state pension)?People who have good existing pension entitlement can find they bump up against tax thresholds and get penalised.

So it would be good to obtain that likely figure first, then you can decide if there is further pension 'space' or it is better to go the stocks and shares ISA route.

BoGoF

My last annual statement shows a projected pension at age 60 of £13,486. No state pension forecast was given but as I understand it as I am contracted out I will only be entitled to the basic state pension. Obviously I should be looking at not breaching the income limit for full age allowance for tax purposes.

EdInvestor

Right, looks like you're on that tax case already BoGoF

Are you an HRT now?If not, there's not a huge advantage in extra pension saving - just the 25% tax free cash.You'll get 20% tax releif on the way in, but pay 20% on the income from the other 75%. S&S ISA is tax free and of course you retain the capital.

What fund choice and charges are available with the CS Scottish Widows AVCs? SW has a good personal pension which is often recommended and if they offer the same deal, possibly cheaper at CS, that would definitely be worth a look.

BoGoF

Thanks for your time Ed.

Not HR taxpayer (unfortunately)

I am not exactly sure what is available, it would appear to be all the funds are available but does not look like it is any cheaper for CS. The link is http://www.scottishwidows.co.uk/civilservice/c-csavc-optionsmain.htm

A S&S ISA sounds an interesting option and whilst I am aware of Cash ISA's and the obvious thing to look for is a good interest rate, I am not sure what makes a S&S Isa better than others.

Any further input would be appreciated.

DiggerUK

BoGoF,
As you have a secure superan pension, why are you considering a private pension with all the risks that involves.

Is it because you automatically go from thinking finance in retirement, to private pension?
There are dozens of alternatives for financial security in retirement, why are you not considering safer options.

With a plan to stay for a further 23 years, you have every chance of securing promotions with increases in salary, and therefore pension.
Me and Mrs.D are superan, and have never considered private pensions, deliberately so.

Best of fortune.

EdInvestor

BoGoF wrote: »

I am not exactly sure what is available, it would appear to be all the funds are available but does not look like it is any cheaper for CS. The link is http://www.scottishwidows.co.uk/civilservice/c-csavc-optionsmain.htm

This is just internal SW stuff, not interesting, you can do better.

A S&S ISA sounds an interesting option and whilst I am aware of Cash ISA's and the obvious thing to look for is a good interest rate, I am not sure what makes a S&S Isa better than others.

S&S ISA has the same investment options as a pension.You don't get tax relief on the money going in, but you don't pay tax when you take it out, unlike a pension.You can always access the capital,unlike a pension.

A mix of taxable (from pension) and tax free income (from ISA) is usally optimal in retirement so if you already are well pensioned up the s&s ISA could be the way to go.

Use a discount broker which will rebate charges such as www.h-l.co.uk

BoGoF

Had a look at the h-l site and although I understand the benefits of a S&S ISA the choice of funds etc is a little bewildering for a novice !!

Where do you start ?

jem16

BoGoF wrote: »

Had a look at the h-l site and although I understand the benefits of a S&S ISA the choice of funds etc is a little bewildering for a novice !!

True

Where do you start ?

By doing lots of research if you want to DIY. Otherwise see an IFA.

Gorgeous_George

I'd be trying to work out my most likely life expectancy. Only then can you decide how to save for the future.

With half pay from the CS classic scheme (based on eightieths with the maximum 40 years qualifying service) and the likelihood that you will be mortgage free at 60 (my assumption), how much more do you want as a pension? Would a lump sum to blow on holidays between age 60 and 70 or 80 be preferable to a pension paying out when you won't enjoy it. Consider your health and work out how much you want, year on year, beyond age 60.

I've gone down the BTL route so that I'll have the option of the rental income or, if things turn out differently, I could sell in order to free up a lump sum (after tax of course).

At 37, I'd expect the state pension to be paid at age 70+.

GG

EdInvestor

BoGoF wrote: »

Had a look at the h-l site and although I understand the benefits of a S&S ISA the choice of funds etc is a little bewildering for a novice !!

Where do you start ?

This site rates the funds in categories based on performance:

http://www.citywire.co.uk/adviser/fund-and-fund-manager-performance/home.aspx?CitywireSuperClassScheme=Unit-Trusts

You can pick a time period - IMHO it's good to see a fund which is a consistent top performer over 10 years.That tends to weed out the first couple of thousand.