Group Personal Pension with Standard Life

loobs40

My husband has started a new job where he can join the group personal pension plan which is with Standard Life.

He is 44, and already has 20 years contributions to a final salary scheme with Pilkington Glass.

His salary is 20k and we have decided to pay a contribution level of 8% with the company adding 5% rising depending on his length of service. We have chosen a balanced investment choice and are leaving the fund choice to Standard Life as we know very little about this area of finance.

Does this all seem reasonable ?

Incidentally I have a guaranteed final salary scheme (BT) which I paid in 14 years on a good salary and have just joined another final salary scheme (T-Mobile). I am also contributing £350 gross per month to 2 other personal pensions schemes.

EdInvestor

Taking the free money is a good idea, but more attention to fund choice is suggested.Standard Life has quite a few good funds available, but the balanced managed fund is not one of them.Suggest that you take a closer look at the list of those available especially any external funds, which can be top performers.

It's good that you're saving, but beware of tying up too much extra in personal pensions if you are a basic rate taxpayer who already has considerable pension provision.Investment ISAs may be a better choice.Remember that pension income is taxed in retirement and you lose control of the capital: ISA income is not taxed, and the capital can be freely accessed.

loobs40

EdInvestor wrote:

Taking the free money is a good idea, but more attention to fund choice is suggested.Standard Life has quite a few good funds available, but the balanced managed fund is not one of them.Suggest that you take a closer look at the list of those available especially any external funds, which can be top performers.

.

How would I go about evaluating the funds available ?

EdInvestor wrote:

It's good that you're saving, but beware of tying up too much extra in personal pensions if you are a basic rate taxpayer who already has considerable pension provision.Investment ISAs may be a better choice.Remember that pension income is taxed in retirement and you lose control of the capital: ISA income is not taxed, and the capital can be freely accessed
.

I am now a high rate taxpayer in my new job. Does that make a substantial difference as to whether I should keep the personal pensions? Up to now I have put all my money into cash isas and high interest savings accounts, but I think its time to put my toe in the water and look at the bewildering world of investment isas and funds

EdInvestor

How would I go about evaluating the funds available ?[/qote]

https://www.citywire.co.uk/Funds/Home.aspx

You can look funds up on this site which rates them by past performance.Don't bother with any that aren't in the top 10. The better funds are under "IMA" and then look in the appropriate sector. The less good funds are under "ABI".

You may find that performance will improve at your own existing PPs if you switch the money to better funds.:)

I am now a high rate taxpayer in my new job. Does that make a substantial difference as to whether I should keep the personal pensions?

You haven't got any choice about keeping the money in pensions - it is there for life It's more a question of whether you should put more money in them, or divert it to less restrcitive investment ISAs.

If you are only just into the high rate band you probably won't see much benefit from the PPs as it is probably being eaten up by the company pension.But I'm not a tax expert, so hopefully someone else will be along to help with that query.

loobs40

EdInvestor wrote:

How would I go about evaluating the funds available ?[/qote]

https://www.citywire.co.uk/Funds/Home.aspx

You can look funds up on this site which rates them by past performance.Don't bother with any that aren't in the top 10. The better funds are under "IMA" and then look in the appropriate sector. The less good funds are under "ABI".
.

On the Citywire site it says 'IMA funds (covering funds sold as ISAs and general investments) or ABI funds (covering life and pension funds)'

So are you saying that I can choose any fund I like and it doesn't have to be an ABI ?

Edit : I just checked the Standard Life site and it has a fund selector tool for group personal pensions. It has a fairly limited choice and it implies in the notes that this list is the current and full range of pension funds available. Is it likely that they will impose a restiction on the funds that can be chosen or have I misunderstood

EdInvestor wrote:

You haven't got any choice about keeping the money in pensions - it is there for life It's more a question of whether you should put more money in them, or divert it to less restrcitive investment ISAs.

.

So you are saying that instead of continuing to put the £3500 into a PP, I could use up my £4000 ISA allowance each year and manage the funds myself ?

EdInvestor

loobs40 wrote:

EdInvestor wrote:

On the Citywire site it says 'IMA funds (covering funds sold as ISAs and general investments) or ABI funds (covering life and pension funds)' So are you saying that I can choose any fund I like and it doesn't have to be an ABI ?

As a general rule, many PPs now give you access to "external funds" which are the better quality IMA funds.Their own funds are the inhouse ABI ones.

Edit : I just checked the Standard Life site and it has a fund selector tool for group personal pensions. It has a fairly limited choice and it implies in the notes that this list is the current and full range of pension funds available. Is it likely that they will impose a restiction on the funds that can be chosen or have I misunderstood

Check with your husband's pension literature to see what's available.

So you are saying that instead of continuing to put the £3500 into a PP, I could use up my £4000 ISA allowance each year and manage the funds myself ?

Yes.Start with opening an ISA account with a discount broker which rebates fund charges.Examples:

https://www.hargreaveslansdown.co.uk
https://www.chartwell-investment.co.uk
https://www.cavendishonline.co.uk
https://www.bestinvest.co.uk

Put the money in and then choose a selection of funds to put it in. You can do this online. Pop in now and again to see how it's doing.

That's it really.

dunstonh

With a group PPP there should be an IFA on call for you to use at no cost. Get them to make the recommendations

EdInvestor

Get them to make the recommendations

Tell the IFA you're looking for good performance, and ask if there are any good external funds available.Post the suggestions back here.

EdInvestor

BTW, when choosing your funds through the discount broker, always choose from the top 10 funds from each sector ( as seen on Citywire) .

As to which sectors, depends on your "attitude to risk". A typical UK investor tends to like this asset allocation setup for a lump sum, I've noticed:

20% No risk (cash)
20% Low risk ( bonds and commercial property funds)
50% Medium risk (mainstream shares: Equity income funds)
10% High risk (other shares: Foreign,small cap, commodities funds)

It's a bit different for a saving scheme, and obviously you have plenty of cash elsewhere, but it may give you an idea of how to divide up the money.

loobs40

dunstonh wrote:

With a group PPP there should be an IFA on call for you to use at no cost. Get them to make the recommendations

I read every line of literature supplied by the company and Standard Life when I got home and there is no IFA on call

loobs40

EdInvestor wrote:

BTW, when choosing your funds through the discount broker, always choose from the top 10 funds from each sector ( as seen on Citywire) .

As to which sectors, depends on your "attitude to risk". A typical UK investor tends to like this asset allocation setup for a lump sum, I've noticed:

20% No risk (cash)
20% Low risk ( bonds and commercial property funds)
50% Medium risk (mainstream shares: Equity income funds)
10% High risk (other shares: Foreign,small cap, commodities funds)

It's a bit different for a saving scheme, and obviously you have plenty of cash elsewhere, but it may give you an idea of how to divide up the money.

The fund choice is limited and its going to take me a while to go through them all and work out their ranking ! I am going for the balanced view.

I read also that under this scheme you are only able to change funds a max of 20 times in the lifetime of the plan. Seems a bit mean to me tbh