Pensions vs Savings

cheerfulcat

Hi, krazyk,

I don't think there's any reason to wait; in fact, if you have the money, it would be worth making this year's contribution now, otherwise you'll lose it. I would certainly consider moving out of the current fund; you may be able to move the money into a SIPP. You don't have to make any immediate decisions as to investment; the money can sit in the SIPP as cash until you know what you want to do with it.

Cheerfulcat

Edit - you may find that there's an exit penalty applied to your with profits fund. It's up to you to decide whether you are willing to pay it. I got out of two wp funds and took the hit ( 5% in my case ). I thought it was worth it to gain control of my own money and have made up the 5% and then some, since.

krazyk

It hasn't been mentioned that there is a charge to move it, but JRG are suggesting to do so and at 0.1% growth I don't think I have a choice. I will ask JRG about moving it over to a SIPP. I have no spare money to invest myself (I would actually love to have my pension back as I could really do with it now). But I obviously cannot and so should make the most of it.

Is this really the best place to put my pension? Are there other alternatives?

K

cheerfulcat

Well, it will have to stay in a pension wrapper of some kind. A SIPP with the right provider is the cheapest option. I'm sure that whoever manages your pension will be able to tell you what choices are available; why not ask them, and post the answer here?

If you mean are there alternatives for saving for your old age, then yes, of course there are - you could put aside a certain amount every month into a savings account, or into a cash mini-ISA. The trouble with cash is that it isn't inflation proof. People think that it's a totally safe "investment" but really it isn't. If your after-tax return is 4% and inflation is 5%, you are losing money. Equities, on the other hand, by and large, go up by the rate of inflation plus a bit more. Index-linked gilts are the only truly safe option but the rate of return ( 1%-2% above the rate of inflation ) isn't great. The rule of thumb is greater risk = greater return, though this is not always true; sometimes the rate of return for the risk taken is miserly.

Cheerfulcat

dunstonh

Paul_Varjak wrote:

Is your wife invested in a Commerical Property fund?

Yes. We chose to invest hers mostly in low/low medium risk funds with the vast majority being in Comm property. Did that when Stakeholders first came out.


As for GE Life, I saw a pension from them some time back and the charges were massive. There were transfer penalties too. However, they offered a range of plans so that may or may not be the case for you. You should check first and ask for current value and transfer value (difference is your penalty) and if there is a market value reduction and how much is it if there is

krazyk

Hi there,

I asked my IFA if I should move my pension into a SIPP and this is what she said:

"It depends what you plan to do with your pension long term – if you want to self invest the funds immediately then yes a SIPP is suitable, however due to the size of your current pension fund it would be uneconomical as there are higher charges associated with a SIPP. A deferred SIPP might be more appropriate – this is a normal personal pension which can be self invested in the future."

Then advised me she would have to charge me £500 for sending recommendations for the above. :-(

The transfer value is higher than the current value (for some reason). I am awaiting my IFA to send recommendations on a normal transfer (no charge). So will see what that says and post back here then.

K

paul666

it appears you need a lot of cash to investment in a SIPP

Yes and no. The article is talking about a full SIPP. CheerfulCat is talking about a 'e' sipp which only allows you to invest in shares and funds. These are much cheaper because they are much more simple.

Don't expect to be able to open a 'e' sipp and be able to buy company premises and rent them back to you company or whatever because you won't be able to.

e-sipps are very popular with many people but they aren't a fully capable SIPP. Find out exactly what the sipp provider will allow before you buy.

It hasn't been mentioned that there is a charge to move it

They won't call it a 'charge'. They might not even show it on a transfer value quotation. Look for something called a 'MVA' or 'MVR' (Market Value Adjustment/Market Value Reduction) as it applies to the with-profits fund.
This isn't strictly to do with the pension - It's more to do with the fund that the pension money has been invested in. Be careful, these can 'adjustments' can be large and can change from day to day.

Hope that helps.