31 & no pension…. eek – Martin has panicked me into action

cheerfulcat

ttfx wrote:

I was looking at SIPP’s with Hargreaves Lansdown – but the adviser at Lloyds tsb – who obviously only wants to flog Lloyds products – said well if you think you can out perform professional investors, who do this day in day out and have all the financial information there then go for the SIPP – but it will cost £50+ per month and is only really for people who have BIG pension pots….

Is this true/part true?

It's an outright lie, and should be a warning to you as to the trustworthiness of this salesman. A HL SIPP is free of extra charges if you hold funds which pay them commission; otherwise there is a charge of 0.5% p/a, to a maximum of £200 + VAT. Table of charges here; you can print it out and show the Lloyds chap . My pension pot is relatively small but I am perfectly happy to hold it in a HL SIPP.

As to outperforming the " professionals ", taking their charges into account it most certainly is possible.

HTH

Cheerfulcat

dunstonh

I think I need a ‘truly truly’ independent adviser – where/how do I find one?

https://www.unbiased.co.uk is the database of IFAs. search by postcode but do not filter by qualification

The cost of advice…… I appreciate I’ve got to pay – what will the damage be?

Its a bit like asking how much a car will cost. Different dealers charge different amounts and you may want to pay for addons.

If on commission, nothing as the cost is built into the annual management charges. Although IFAs will often discount the commission.

You mentioned the HL SIPP. An IFA can arrange a full/hybrid sipps on the same ongoing terms as HL with as low as 1% initial commission upto around 3%.

ttfx

Could another way of paying for my pension be – forget all these pensions, that can go bust, be miss managed, expensive fees etc - buy a house and just make over payments on the mortgage – then buy another and do the same – that way I pay no commissions – save thousands on interest + the asset can be realised at any time (within reason) and I don’t have to wait until I am 55 then be forced to but an annuity that traps me for the rest of my days.......

dunstonh

Could another way of paying for my pension be – forget all these pensions, that can go bust, be miss managed, expensive fees etc - buy a house and just make over payments on the mortgage

Currently, rental yields are low, legislation increasing and you pay income tax on the income and capital gains tax on the disposal of the property. You also run significant financial risk if you over borrow and cannot afford the payments when interest rates rise. Plus property doesnt always go up.

Pensions dont go bust. They are just a tax wrapper for investments. The investment funds can be switched and you wouldnt invest in just one but many. Pensions also have access to some of cheapest funds in the world.

If you dont want the tie of a pension, then look at one of the other tax wrappers, such as an ISA, as mentioned in my first reponse on this thread.

then buy another and do the same – that way I pay no commissions – save thousands on interest + the asset can be realised at any time (within reason)

You do pay commissions. You have stamp duty and solicitors fees on purchase. You pay tax on the income and disposal. You pay estate agents on disposal. You pay a percentage of your rental income to a management company. You have a liability as a landlord and you will pay interest on the money borrowed.

If you like the idea of property, then you can do it much cheaper within ISAs and pensions.

ReportInvestor

Save for retirement just by accumulating residential property?

Well maybe, but it's putting all your eggs in one basket. And there are costs e.g. 15% agent fees, maintenance, Council tax, utility bills during voids etc.

If you bought one property and also saved for retirement through the stock market via a pension or ISAs then if property prices soared you could still take advantage of them by releasing equity from your sole residence.

ttfx

Yes when you take into account all the costs of property ownership, interest, taxes etc it not as profitable as the home improvement programmes often depict……
Thank you for all you comments today
Tim

margaretclare

ttfx wrote:

I was looking at SIPP’s with Hargreaves Lansdown – but the adviser at Lloyds tsb – who obviously only wants to flog Lloyds products – said well if you think you can out perform professional investors, who do this day in day out and have all the financial information there then go for the SIPP – but it will cost £50+ per month and is only really for people who have BIG pension pots….

Is this true/part true?

No, absolute rubbish. H-L do provide information, new funds, market trends etc - what they don't do is to give *advice*. You've said it - the adviser only wants to flog Lloyds products!!! That says it all! The professional investors he talks about who do it day in day out - does he mean he's one of those, if so he expects to be paid for it! And you can learn - as the saying goes, it's not rocket science!

I transferred my Friends Provident stakeholder earlier this year to a SIPP with H-L. It's certainly not costing me £50+ per month. I wouldn't do it if it was, because ALL my savings now are coming from retirement income. Nevertheless, I accrued a pot of some £8400 in 4 years with FP and I only started in my mid-60s!

Have a look at H-L's website and make up your own mind.

Best wishes

Margaret

dunstonh

The only caveat to looking at SIPPs and some low cost providers in particular is that they are unregulated at present. Next April they will become regulated and firms offering SIPPs will have to meet the FSA solvency requirements which will require many of them to put aside a whole years profit. This will no doubt result in some putting up charges. Something that all the SIPP providers have an allowance for in their terms and conditions. Indeed, some may not be able to raise the capital and could be bought out by an insurer. We just dont know who is going to be affected and how.

EdInvestor

...firms offering SIPPs will have to meet the FSA solvency requirements which will require many of them to put aside a whole years profit....

I'm not quite sure what you mean by this DH.Most SIPPS have three separate firms involved: the administrator,which does the pension/actuarial/tax side, the broker, which handles your investments, and the firm which provides the cash account for the SIPP. I think it may be the latter you are referring to here.

But most Sipps use big banks for this purpose ( Bank of Scotland and Abbey are two that spring to mind which do Sipp business.) I rather think you'll find that these providers already meet the FSA's solvency requirements ( and then some) so that higher charges as a result of regulatory change are unlikely.

dunstonh

Regulated firms have to meet FSA capital adequacy requirements. This includes advisers and distributers as well as product providers. SIPP providers do not currently need to meet FSA capital requirements (another reason they are a little bit cheaper at present) but that will change next year.

New pension rules could drive out small Sipp firms
By Nicola York - 05-Oct-2006

New regulation for personal pensions may drive smaller Sipp providers out of the market due to stringent capital adequacy requirements, according to market commentators.
The FSA's new rules are set to come into force next April after the regulator got feedback on its consultation paper earlier this year.
The rules require Sipp providers holding client money or assets to set aside the equivalent of 13 weeks' expenditure.
Standard Life marketing technical manager Andy Tully says this could equate to the annual profit for some businesses which could stop small Sipp firms from trading.
Tully says: "Holding this much capital could stop smaller Sipp providers from operating in the market because they need to find this cash to set aside. It could certainly make life difficult for them."
Aegon head of pensions development Rachel Vahey says: "It would pose a threat to them but the whole principle behind it is client protection. Client protection has to be paramount."
Under the rules, Sipps will not be classified as personal pensions on the payment menu as the regulator says comparing commission on a Sipp with the market average on personal pensions is misleading. The FSA says the fact that Sipps are not classified as personal pensions should be highlighted on the menu by Sipp providers.
Initial disclosure documents and key features documents for Sipps will not be mandatory from April 2007 as the FSA wants to tie in the changes with its review of the conduct of business handbook scheduled to come into operation in November 2007. Newcob, p58