Pension Pot Consolidation

Sloppy_Saver

Bestthingsinlifearefree wrote:

My advice would be to stop the pension contributions and pay of your mortgage first.

Wouldn't that mean that I'll end up having to rely on the state pension (and my currently inadequate personal pension) to finance my old age?

I don't know about this strategy, sounds risky

jamesd

It's not just risky. It's a near-guarantee that you will be poorer, because you'll save less in mortgage interest than you'll lose in lost investment growth, on average over the long term and assuming decent investment choices.

It is safe and predictable and some people value that more.

EdInvestor

Sloppy_Saver wrote:

One other question. If I decide to move the larger pension away from the current provider, Can I split it so that just the protected rights part of the pension (say 2k) can go into a stakeholder and the remaining 58k can go into the SIPP with it's 12k brother?

Yes. Has the 12k one got protected rights in it? If so you'll need to move that bit to the stakeholder and the other bit to the SIPP. :rolleyes:Hence you will still have 2 pots, one consolidating the PR money, the other the non-PR.

The "pay off the mortgage" idea assumes that eventually you "trade down" from your house to something smaller and generate extra money which then provides your pension.This is only really a good idea for people with low salaries, where they can afford either a house or saving for retirement,but not both.

In that case IMHO the house is a better idea because you have to pay rent anyway, and they will usually already be covered for the 2 state pensions.So with a bit of luck the house will provide an adequate top-up and a comfortable retirement can be had.

Sloppy_Saver

EdInvestor wrote:

Yes. Has the 12k one got protected rights in it? If so you'll need to move that bit to the stakeholder and the other bit to the SIPP. :rolleyes:Hence you will still have 2 pots, one consolidating the PR money, the other the non-PR.

The "pay off the mortgage" idea assumes that eventually you "trade down" from your house to something smaller and generate extra money which then provides your pension.This is only really a good idea for people with low salaries, where they can afford either a house or saving for retirement,but not both.

In that case IMHO the house is a better idea because you have to pay rent anyway, and they will usually already be covered for the 2 state pensions.So with a bit of luck the house will provide an adequate top-up and a comfortable retirement can be had.

Luckily the 12k pension was contracted in, so no PR. Will do as suggested with the two pots, seems the sensible plan. I guess I am then best to leave the stakeholder "as is" and just contribute to the SIPPS?

dunstonh

Yes. Has the 12k one got protected rights in it? If so you'll need to move that bit to the stakeholder and the other bit to the SIPP. :rolleyes:Hence you will still have 2 pots, one consolidating the PR money, the other the non-PR.

That is not what you need to do. That is an option but its not the only option. A hybrid SIPP or fund supermarket pension may be the better option.

I guess I am then best to leave the stakeholder "as is" and just contribute to the SIPPS?

You choose a SIPP because you want access to the sorts of investments that offer greater potential than the limited options in the stakeholder. Someone willing to use a SIPP wouldnt consider a stakeholder generally for that reason. SIPPs are more expensive than stakeholder or personal pensions so you must use the "extra" investment options to make it cost effective. If you arent going to use them, then you should stick with a personal pension stakeholder. If you are going to use them, then you wouldnt want a stakeholder.

Sloppy_Saver

dunstonh wrote:

That is not what you need to do. That is an option but its not the only option. A hybrid SIPP or fund supermarket pension may be the better option.



You choose a SIPP because you want access to the sorts of investments that offer greater potential than the limited options in the stakeholder. Someone willing to use a SIPP wouldnt consider a stakeholder generally for that reason. SIPPs are more expensive than stakeholder or personal pensions so you must use the "extra" investment options to make it cost effective. If you arent going to use them, then you should stick with a personal pension stakeholder. If you are going to use them, then you wouldnt want a stakeholder.

I thought I was not allowed to put the Protected Right portion of my pension into a SIPP. If I can then I would do, because I'd rather pay for one pension rather than 2. I also intend having more involvement with them now I'm self employed - When they were company pensions I couldn't really do much with them, but had the advantage of the company contributions. I've now lost the additional contributions and so will make up for that with more involvement - hence the SIPP preference.

EdInvestor

IMHO moving the 12k to the HL SIPP and then learning about investing the money is a good plan.Suggest you leave the larger pension for the moment until you have got the hang of how the SIPP works and have got some investment knowledge - there's plenty of discussion about what funds to choose in the Savings and Investment forum.

Then you can move the other pension in as well, leaving the PR rump behind in the stakeholder, if they still haven't changed the rules.You can make regular contributions into the SIPP at HL at no extra cost, but IMHo you'd be better to max out your equity ISA with spare cash first.You want to limit pension income in retirement to around 10k to reduce tax, whereas ISA income is tax free.

Sloppy_Saver

EdInvestor wrote:

IMHO moving the 12k to the HL SIPP and then learning about investing the money is a good plan.Suggest you leave the larger pension for the moment until you have got the hang of how the SIPP works and have got some investment knowledge - there's plenty of discussion about what funds to choose in the Savings and Investment forum.

Then you can move the other pension in as well, leaving the PR rump behind in the stakeholder, if they still haven't changed the rules.You can make regular contributions into the SIPP at HL at no extra cost, but IMHo you'd be better to max out your equity ISA with spare cash first.You want to limit pension income in retirement to around 10k to reduce tax, whereas ISA income is tax free.

Sounds like a plan. Will use the 12k to learn to be the best damned investor in the world. "Buy high and sell low!" - That'll be my motto.

dunstonh

I thought I was not allowed to put the Protected Right portion of my pension into a SIPP. If I can then I would do, because I'd rather pay for one pension rather than 2.

Hybrid SIPPs or fund supermarket pensions can take protected rights. Full SIPPs cannot. If you were going to use investment funds (OEIC/UT/SICAVs) then a fund supermarket pension is just the same thing. Fund supermarket pensions can be the same as the ISAs and unit trusts where use of a fund supermarket is more common.