Repensioning. Increase your pensions return without any risk discussion area

silentotter

Both my husband and I have a NFU stakeholder pension which we have just placed on a premium holiday due to its very poor performance over the last few months - last seen figures at minus 17%!.

We have looked at all the pension companies to see who we can repension with or start a new pension with but to be frank none of then are doing spectacularly well. Would Taking out AVC's with our empoyers pension plan be a better option as they are both public sector employers? Or maybe shares would be a better pension pot?

Help advice needed Martin, anyone as we are somewhat confused by it all.

Silentotter

dunstonh

Both my husband and I have a NFU stakeholder pension which we have just placed on a premium holiday due to its very poor performance over the last few months - last seen figures at minus 17%!.

minus 17% is not a surprise. The mid/small caps are down around 20% so its about right. Property is down about the same so if you have some of that in there then again its about right.

We have looked at all the pension companies to see who we can repension with or start a new pension with but to be frank none of then are doing spectacularly well.

What you are looking at? Pensions dont make or lose money. Its where you invest the money that does.

Would Taking out AVC's with our empoyers pension plan be a better option as they are both public sector employers?

And where are those AVCs invested? That would be stockmarket mainly and you wont get much choice either.

Or maybe shares would be a better pension pot?

Where do you think your money is invested at the moment?

we are somewhat confused by it all.

Yes you are. Nothing to be ashamed of but you shouldnt make decisions to stop a pension on the basis of something you dont know about.

The first thing to note is that pensions are just a wrapper. If a pension provider offers say 100 funds then you will find that China or India have doubled in the last year but property and small/mid caps have suffered big time in the last 6 months or so. That doesnt make the pension good or bad. It doesnt make where you are investing bad either. As a rough rule of thumb you would expect as an average 1 bad in year 5, 1 which doesnt do much and 3 that are good. Hopefully the three that are good cancel out the bad (which usually happens). There are of course no guarantees but its worth remembering that when things go down, its a good buying opportunity. You are not buying at the moment despite it going down.

I think you need some advice and shouldnt do this yourself as I think you will do more damage than good.

silentotter

I understand that you can amass more shares for your money, however it does you pension no good as the value isn't growing.

As I am closer to retirement then my husband I understand gilt and cash funds are better for me, are these affected by the stock market slump as well or are these shares performing well?

silentotter

dunstonh

I understand gilt and cash funds are better for me

Depends on what your plans are for the pension in retirement. However, lower risk funds are certainly better for those looking at annuity purchase and getting closer to retirement.

are these affected by the stock market slump

What stockmarket slump? Ignoring that, Fixed interest funds are not invested on the stockmarket although some may contain a very small element of quoted stocks with high yields.

are these shares performing well?

They are not shares as mentioned above. They have had 18 months of poor performance but that was largely expected as they usually do when interest rates rise and the yields on the bonds drops. Currently interest rates are heading down and the yields have been rising very nicely and the potential for fixed interest funds looks a lot better.

silentotter

I am 45 years old and looking at the possibility of retiring at 55. I don't want my pension for anything fancy just to provide a decent retirement income. I will also have two occupational pensions and I understand from my current employer that I will be entitled to the state pension. Both my occupational pensions are final salary public sector schemes.

It would seem then that lower risk fixed interest funds would be a better option for me. Is this what gilt and cash funds are known as?

Would you know if most stakeholder providers offer these funds?

Silentotter

jem16

silentotter wrote: »

I am 45 years old and looking at the possibility of retiring at 55. I don't want my pension for anything fancy just to provide a decent retirement income. I will also have two occupational pensions and I understand from my current employer that I will be entitled to the state pension. Both my occupational pensions are final salary public sector schemes.

You are aware that if you take your final salary public sector pensions at 55, you are likely to lose around 25% of it as it is actuarially reduced?

Also you won't get your state pension until you are 66.

EdInvestor

silentotter wrote: »

I am 45 years old and looking at the possibility of retiring at 55. I don't want my pension for anything fancy just to provide a decent retirement income. I will also have two occupational pensions

How much income will you receive from these pensions?

and I understand from my current employer that I will be entitled to the state pension.

There is no way that your current employere would know how much state pension you might be entitled to, which could vary from around a thousand pounds a year to ten times that .Have you ever checked?

It would seem then that lower risk fixed interest funds would be a better option for me.

You can't know that until you have an idea of what pension income you will likely receive from existing schemes and how much extra you need on top of that.

We can't help you until you provide more information.

diamond9_2

dunstonh wrote: »

...

Also, under post April 2006 rules, anyone with primary or enhanced protection on their pensions would lose the protection if they did this transaction.

...

This is a very interesting point!

I have enhanced protection with a stakeholder pension and was considering moving to a SIPP. If the SIPP provider rebated the fund's initial charges and added it to my pension fund, would that invalidate the enhanced protection? Would the same thing happen when you switched investments and commissions were rebated?

dunstonh

Thats an old post. Since then it has been confirmed that you can switch providers (investments dont matter either). However, you have to be careful that the criteria is met but that shouldnt be an issue. A lot of the information on the consequences of A day didnt filter through until after A day.

http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM03104090.htm

silentotter

I am well aware that I would lose some of my occupational pension if i retired at 55 which is why I took out a stakeholder to augment that should I decide to retire early.

My employer simply stated that as a couple we would still be entitled to the state pension upon reaching pensionable age. That I think at the moment is £86 per week per couple.

As for the lower risk fixed interest funds (gilt & cash funds) would it be possible to get these in a stakeholder package or only in a sipps package?

silentotter