AIMING FOR £50,000 per year of pensions at 65

EdInvestor

What charges are you paying on the ScotEq pension?It's a very old pension started in 1987 and is almost certain to have high charges, exit penalties the full catastrophe, surely?

[I note it is in a "mixed fund",ie, it's not a With profits pensions, correct?]

Can't see much point in bothering with an IFA for such a small fund, when obviously the rest of savings will be going into the army pension and the mortgage (agree that it's worth checking if this is on optimal terms).

If you like being independent you may as well learn how to DIY investments,by experimenting with this little pension, in advance of getting the big lump sum.It will save you a fortune in the long run.

Try a couple of "Equity income" funds and a commercial property fund. The HL site has some good candidates.It's not hard.

peterg1965

EdInvestor thanks.
The Scottish Eq pension started in 1989, and I understand that the contracted out SERPs contributions to it were then backdated to 1987. I have had a look at the paperwork, the administration and management charge is 1%. The Fund is MIXED described as:
Launched 7-Jan-1983
ABI Sector Balanced Managed
Fund manager's benchmark Lipper Balanced Managed pension sector median
Risk Average . The plan value was £14944 as of 26/2/06. The transfer value drops by £134. £5634 was invested in the fund up until it was unfunded from 1993 when i was obligated to transfer into the AFPS (Armed Forces PS).

Agree that it would be a good idea to use it or some DIY investments. I value all of the advice given thus far.

dunstonh

You can deal with Scot Eq directly. You can ask them all the questions and they will usually reply to half of them

It is important to know what funds are available. The mixed fund is 1% and HL's equivalent is 1.5% and hasnt performed as well. Whilst I am no fan of balanced managed funds, there is no point coming out of one contract which may offer all the funds you are require cheaper than the one you are going into.

NMA = New Model Adviser. Its a different business model to that of the old model. NMA is more about ongoing servicing and reporting. Old model was (often] one off transactions and never see the person again. NMA basis is also cheaper normally than old model as the focus is to build up funds under management to increase the income stream and not the intial commission.

peterg1965

I just called Lansdown and Hargreaves for a SIPP information pack. I am told that I would be unable to transfer the Scot Eq pension into a SIPP as it has 'protected rights'. The Government restrict where is can be put because it has been sourced solely from 'contracted out' contributions. I can, however, transfer into other 'approved' pension funds! Looks as though I am already on the learning curve!

dunstonh

I am told that I would be unable to transfer the Scot Eq pension into a SIPP as it has 'protected rights'.

Correct. It has to be in a hybrid SIPP, fund supermarket pension, personal pension or stakeholder. Seeing as your 1% charging effectively matches stakeholder and the mixed fund is a stakeholder fund, that is where you are at (effectively). However, given the age of the pension, it is actually a personal pension but it may or may not have access to the full fund range currently available with Scot Eq. If it has, you may not see the need to move provider but just do a fund switch.

If you arent going to use an IFA, then you can forget about hybrid SIPP/fund supermarket pension as they are IFA products and I dont think any of the online discount IFAs offer them yet as they are mostly post A day products.

So, currently you are in a personal pension using a stakeholder charged fund. You need to decide what happens next.

peterg1965

Thanks. I have spoken to Scot Eq. I am permitted to change internal funds once per tax year without charge. That means that I can split my mixed funds between any number of funds, so long as it is perfomed at the same time, without being charged. There are about 60 or so 'standard funds' for me to choose from with a variety of risks. SE are sending me a transfer form whilst i decide what to do. The standard AMC is 1% but i have noticed that a few of the funds have additional yearly charge of 0.85%. I am fairly convinced, as you point out dunstohn, that i may as well stay put and transfer funds. I think i will go it alone, i will review the fund histories and make the plunge taking on slightly more risk. In your opinions is there any no go areas? ie UK equity funds, ethical, US, pacific basin funds, with profits??

EdInvestor

Ask them what "external" funds are available - these are usually the better performing ones run by outside companies.They may cost a little more, but the much better returns are usually worth it.

You can check the performance of funds here:

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

The Scot Eq ones will be under "ABI", and the external ones under "IMA". Look for funds with a consistent top 10 performance over 3, 5 and 10 years.

It is expected that Sipps will be able to accept PR money later this year, possibly in April, after Sipps become regulated by the FSA, so you can move later if you want to.

jamesd

Don't find good ones as the first step. Learn about asset allocation, decide what your target risk level is and what allocation that takes, then select the funds that deliver that result. You're likely to end up with funds from many different parts of the world and market sectors, particularly if you are on the higher risk/potential reward end.

With profits are closest to no go, since that's a mostly discredited type. The rest are fine as part of a mixture.

EdInvestor

Scot Eq pension funds

When choosing funds at an insurance company, always look first at their in- house commercial property fund, and if it has performed well, put it on your list. ScotEq's pension property fund would be on mine at first glance for a chunk of the money.

What else? Of their internal funds the Ethical one (2910) looks worth further checks as does their UK Smaller Cos ( no 2984). Run them past the Citywire rating system and see how they look.

On the external side, Invesco Perpetual Income, the top UK Equity Income fund is available :)So is JPM Natural Resources, the commodity fund most people like ( a bit spicier this, than the other funds).

And so is Fidelity European, top of the pops for those who don't mind a bit of currency risk over the Channel The trouble with all that foreign stuff though - as very obvious this year with the US and Japanese funds - is that you just can't trust that pound of ours to stay down where it belongs.

It will tend to rise and wipe out all the foreign gains.It's most exasperating, I do agree.

peterg1965

Thanks,
I fired off an email to Scot Eq to ask what external funds are available to me, no response yet.