Pensions and Sipps

Annabelle_C

[FONT=&quot]HI
I currently have a pension with Xavier Consulting through my employer and this is a money purchase one and has been running since I rejoined in 2008. With the same employer I had a pension from 1998 to 2006 when I left the company and this was Final Salary and is with Capita.

My current pension I am advised is best to leave in place on account of the employer contributions. I am not sure about sipps and how to go about this with my old pension. My husband has a pru personal pension and is self-employed and has not made payments into this for several years should we also SIPPS this?

Many thanks for any advice![/FONT]

dunstonh

My husband has a pru personal pension and is self-employed and has not made payments into this for several years

is he aware that the self employed get lower state pensions? Part of the reason self employed pay less in taxes is that it is believed they will make greater provision for themselves as they prefer to be in control. The loss in the second state pension is equivalent to a pension fund valued at around £120,000. So, any self employed person with a pension valued at under £120k at retirement has more or less made no provision for retirement.

should we also SIPPS this?

What SIPP features are you after that rule out stakeholder or personal pensions?

Your pension cannot be transferred without an IFA so yours is a non-issue.

Annabelle_C

Thanks your reply- should my husband start paying into his pension again or start another? When you say mine is a non issue - what do you mean? many thanks annabelle

RichandJ

Annabelle_C wrote: »

Thanks your reply- should my husband start paying into his pension again or start another? When you say mine is a non issue - what do you mean? many thanks annabelle

Because it's (almost) always a bad idea to transfer a final salary benefit into a money purchase one. You will also find it very difficult to find an IFA to sign such a transaction off and dh should know as he is one.

Incidentally dunston, next time I have an IFA request for a CETV should I just phone them up & say the ... scheme is FS or do you still need it to do the TVAS ? Save me a lot of work that would.

dunstonh

Incidentally dunston, next time I have an IFA request for a CETV should I just phone them up & say the ... scheme is FS or do you still need it to do the TVAS ? Save me a lot of work that would.

Given that around 99 times out of 100 the advice is to leave it where it is, any request is just giving you extra work. Often a scheme booklet and a statement of benefits is what is really needed [to show its wrong to transfer] and not the TVAS. However, we have to be seen to document everything and some scheme administrators are very slow. So, you just request everything at once to save time. I have a couple of IFAs refer their pension transfer business to me and they often get clients who dont have a clue what they have and no paperwork at all to give you. So, a money purchase style request goes in as at the point of request you don't know what the scheme is. Once you find out its defined benefit, you virtually always say leave it where it is. So, it may be worth looking at requests that seem to be worded for money purchase and giving them a call to see if they still want the works. They just maybe in the dark and are after figures for shortfall planning.

RichandJ

Ta, I have noticed over the last few years that most requests seem to assume MP. I've also noticed how good people are at keeping their deferred statements so I might start giving it a try.

Loughton_Monkey

Annabelle_C wrote: »

Thanks your reply- should my husband start paying into his pension again or start another? When you say mine is a non issue - what do you mean? many thanks annabelle

Depends whether he wants a good pension or not. Self Employed get minimum state pension and unless he has invested 20%+ over his working life for retirement, then his retirement income will involve a huge drop.

It is not too difficult to 'value' your pensions plus that state pension and do some projections as to what sort of income it will give in retirement.

Any 'Final Salary' scheme is a 'non issue' because to transfer them is very usually about the worst thing you can do. But you can't anyway, because nobody will accept the money without a 'sign off' of an FSA regulated advisor, who would generally lose his license if he signed such a silly idea.

As to SIPP's, then these usually make sense for those with larger funds, who know very well what they are doing, and wish to invest in something other than the normal pension funds. Is this 'you'?