Discontinue pension plan?

MotT

Hi All,

In March 2011 my FA set up a Stakeholder Pension Plan for me which is run by Legal & General. The money I pay into my plan is paid into 10 funds. Since March 2011, it's in the region of 10k.

Shortly after the plan was arranged, my FA left the company and handed over to another person who is quite rubbish. I thus consider discontinuing doing the plan and transfer it into a SIPP.

However, my life plans have changed in the meantime, too. It's more likely now that I'll leave the country for Germany within the next 3 to 5 years. My questions.

• Considering that I won't be in the UK for much longer, should I discontinue using either pension plan (SIPP or Stakeholder) and just pay into an ISA?
• If indeed I would discontinue using the Stakeholder Pension Plan, where would the money be hold until the age of 65 - when I can access the funds?

Thank you for your help.

MT

Lokolo

It's good that you are still thinking about retirement and are wanting to do something other than pension. ISAs have their advantages and disadvantages. However if you are not a resident then you cannot open an ISA.

You also have to be resident and ordinarily resident in the UK for tax purposes (ask your tax office if you are in any doubt about this).

So it depends whether you'd be still considered as a resident if you are living outside the country.

The stakeholder will stay where it is unless you transfer it. It will continue to be invested and go up and down. You should be able to access the funds from 55 (unless there are specific plan rules stopping you)

dunstonh

In March 2011 my FA set up a Stakeholder Pension Plan for me which is run by Legal & General. The money I pay into my plan is paid into 10 funds. Since March 2011, it's in the region of 10k.

ten funds on £10k in a stakeholder is overkill but not bad.

Shortly after the plan was arranged, my FA left the company and handed over to another person who is quite rubbish. I thus consider discontinuing doing the plan and transfer it into a SIPP.

The stakeholder is a basic product for small values offering basic investments for people that dont really know what they are doing with investments. The SIPP is an experienced investor product offering 30,000 odd conventional investments and access to unregulated investments. It can be quite cheap or damned expensive. Typically aimed with those with larger amounts. Personal pensions tend to cover the middle ground between the two.

So, what is making you want to jump from one extreme to the other?

Considering that I won't be in the UK for much longer, should I discontinue using either pension plan (SIPP or Stakeholder) and just pay into an ISA?

Which is best for your objectives? (note that some countries will recognise others pension products as tax free but not other tax wrappers - you should check the position with Germany)

If indeed I would discontinue using the Stakeholder Pension Plan, where would the money be hold until the age of 65 - when I can access the funds?

If you are intending to invest in a SIPP then you should know that. After all, you only pick a SIPP to invest in things you cannot invest in a stakeholder or personal pension. This brings us back to why do you want a SIPP?

MotT

Hi Both,

Thanks for your replies!

Firstly, I live in the UK, and am basic-rate taxpayer here.

Well, the reason for me to go with a SIPP is a) to have full control over what I do (current problem with FA is that he's not even able to answer my e-mails, let alone tell me how the funds are doing), b) I reckon it's cheaper, c) I don't want to outperform the markets but would buy ETFs, a third corporate bonds, a third bonds/gilts, and a third shares... and then just let it sit.

On that note what countries recognize what pension scheme I think I ignore this. I'm 31 years old, ie not able to do anything for at least 24 years (permitted I can access with 55). So many things may happen in that period...

Thanks, MT

dunstonh

just checking if the board is censoring with the word !!!!!!!!!!! (ok, board is censoring in-vestments)

jem16

dunstonh wrote: »

just checking if the board is doing with the word !!!!!!!!!!! (ok, board is censoring in-vestments)

Somebody must have typed a "c" instead of a "v" into the censoring list.

Odd thing is that your post was fine earlier on.

Annisele

I still don't understand why you want a SIPP. Apologies if I'm completely the wrong track - but you do realise you can choose your own investemnts* within a personal pension, and you don't need a SIPP wrapper for that? (Just wondering if the the 'self' part has confused you).

Some schemes are more expensive than others (and I'm including all types of investment wrapper in that), but very often SIPPs are more expensive that other pension wrappers.

Whatever you're doing, buying something and then letting it sit indefinitely is probably a bad idea. You'll want to rebalance every so often, or you could end up with something that's way off your risk profile.

MotT

Thanks Annisele,

Annisele wrote: »

I still don't understand why you want a SIPP. Apologies if I'm completely the wrong track - but you do realise you can choose your own investemnts* within a personal pension, and you don't need a SIPP wrapper for that? (Just wondering if the the 'self' part has confused you).

Sorry, I might have been confused and wonder now if things appeared clearer to me than they actually are. I understand that with funds I invest in as part of a stakeholder pension plan from Legal & General I actually pay management fees to both L&G as well as my FA.

Annisele wrote: »

Some schemes are more expensive than others (and I'm including all types of investment wrapper in that), but very often SIPPs are more expensive that other pension wrappers.

Do you see that a SIPP wrapper from Selftrade or TD Direct Investment can be more expensive than L&G if I only by iShares or db-x trackers (ie, funds with hardly a management fee)?

Annisele wrote: »

Whatever you're doing, buying something and then letting it sit indefinitely is probably a bad idea..

Yes, I think what I want to say is I won't check on a daily basis and thus not react on a daily basis (ie, there'd be hardly any trading or purchase fees as I wouldn't do it all too often).

dunstonh

I understand that with funds I invest in as part of a stakeholder pension plan from Legal & General I actually pay management fees to both L&G as well as my FA.

Not with a stakeholder pension you dont. Stakeholder pensions are mono charged. That means one charge and that will be the annual management charge. That charge goes to the pension provider. The pension provider will pay for others out of their funds and not charge it explicitly to your stakeholder. Although the cost is factored into that annual management charge.

Lazy investors should use investments geared for lazy investing. Not use investments that require monitoring, analysis and rebalancing. That tends to result in lower returns over the long term.