Pension MoneySaving: Buy a different way to boost returns Article Discussion Area

TheLearner2008

I am thinking of getting a pension from Cavendish Online from Aviva.

What happens if I want to change countries? Can I transfer my pension to another country at retirement?

TheLearner2008

"Your own payments into all registered pension schemes in any tax year, should not be more than £2880 net (£3600 gross) or 100% of your UK taxable earnings."

Which is it? Is there a limit of £3600 if you earn less more than £3600 or what does this actually mean?

koru

TheLearner2008 wrote: »

What happens if I want to change countries? Can I transfer my pension to another country at retirement?

Google "pension transfer overseas".

TheLearner2008

I am 28 now, what risk category should my pension be in? Currently its in Balance - but I am thinking it should be in Agressive and then moved to more conservative when I am close to retirement?

dunstonh

I am 28 now, what risk category should my pension be in?

That's up to you. Risk profile are personal. Someone elses risk profile isn't yours.

but I am thinking it should be in Agressive and then moved to more conservative when I am close to retirement?

If that is what you think and are happy to accept 60% losses in bad periods then that is fine.

tinatinab

What is the difference between a private pension and some savings schemes?

dunstonh

tinatinab wrote: »

What is the difference between a private pension and some savings schemes?

1 - taxation
2 - maturity process
3 - timescale
4 - availability of investments (or even cash vs investments if you are talking about cash savings schemes rather than say regular contribution unit trusts).

I have left off charges as there is the potential to have no difference in charges between the different tax wrappers (i.e ISA vs pension vs unwrapped).

Do you want to expand on your question a bit. At the moment its a little vague in what you mean by savings scheme and what you want to know that is different.

jamesd

TheLearner2008, ignoring your personal risk tolerance I'd say that we're currently in the part of the economic cycle when an aggressive profile is likely to be most beneficial. When you read of the markets getting close to their past highs or everyone piling in because things have had years of great returns that would be a good time to switch gradually to a more cautious mixture, in preparation for the next drop so you don't lose so much of your gains.

UK mixtures tend to have a high UK component. Personally I prefer keeping the UK percentage down to 20% or so because that's closer to the UK's position in the world. As you get nearer to retirement more investments in the area and country where you expect to retire will be more appropriate to reduce exchange rate risk.

If you didn't see it, the UK recession formally ended with the last set of economic numbers, after two consecutive quarterly increases in economic output. But unemployment was still increasing so it's still quite early days yet, with some reasonable prospect of more growth in the UK and around the world.

jamesd

tinatinab, also risk: your pensions are not exposed to means tests or creditors if you have financial trouble, so long as you're under 55. Your S&S ISA or other investments are. That makes pension investing safer unless you have enough to live on without relying on benefits.

If you're investing for your retirement either a pension or a S&S ISA can be good. Cash ISAs and savings accounts won't grow enough to do the job efficiently and you'd end up having to pay in much more to reach any retired income target.

koru

TheLearner2008 wrote: »

I am 28 now, what risk category should my pension be in? Currently its in Balance - but I am thinking it should be in Agressive and then moved to more conservative when I am close to retirement?

In my view, the best way to make this judgement is to educate yourself. Some of the best articles to do this are as follows:

http://www.fundadvice.com/articles/buy-hold/fine-tuning-your-asset-allocation.html
http://www.fundadvice.com/fehtml/bhstrategies/0108/0108a.html
http://www.fundadvice.com/articles/retirement/retirees-earn-lower-returns.-have-more-money..html

The articles will require a bit of effort to understand, but they are written for the layman and if you work through them slowly I think you will get there. The articles are written for a US audience, using US figures, but the principles are just the same in the UK.

The first article, in particular, makes it clear what is really meant by risk. Look, in particular, at the worst ever cumulative losses at the bottom of the table and ask yourself if you honestly would have the nerve to stick to an aggressive strategy. (What did you do in 2008 when the markets plunged?)

There are lots of other articles on that site that are also worth reading.