Looking for IFA for pension planning

twizzel

I want to speak to an IFA regarding my pension plans. No one in my circle of friends/relatives is able to recommend anyone in my area so I will have to use my own judgement.
I have used unbiased.co.uk to locate a few in my area.
My question is, what qualifications should I be looking for in a pensions advisor ?
So far it seems like they all have passed different exams for example -

K20 - Pensions Investment Options (CII)
G60 - Pensions (CII)
CF9 - Pensions Simplification (CII)
J05 - Pension Income Options (CII)

These are just a few of the pension related quals I have seen.
Basically I want to review my existing plans and discuss what should be done with them for the remaining 8+ years before I use them for drawdown or annuity or whatever.
I know there is more to choosing an IFA than just the qualifications they have, but there's no point in meeting someone if they fall short in that area.

twizzel

Does anyone have any tips ?

GhIFA

Of those quoted above, G60 would be the "highest" level of qualification. Or look for something called AF3, which is the comparable level under the current system.

dunstonh

My question is, what qualifications should I be looking for in a pensions advisor ?

What sort of pension/investments are you looking at?

An IFA, by default, will be qualified to handle pension transactions. It is only the more advanced transactions where you need a specialist. What you say you want to look at does not indicate any need for higher qualifications. That said, if drawdown is likely, then exam J05 is worth it as that is the main one that covers that area. G60 hasnt existed for almost six years. It was replaced with AF3. AF3 deals with the practicalities of pension transfers at a higher level. J05 focuses on income in retirement. (ignore J04 is it really isnt necessary for you and R04 is the J04 replacement. Ignore CF9. That covered the 2006 rule changes. Wont affect you).


i would say J05 is the main one you should be looking for. AF3 has an expectation of knowledge from J05 and J04 level but its primary focus is on occupational pension transfers.

jamesd

If you're 55 or older you should also evaluate whether it's worth taking benefits now and reinvesting income drawdown income in new pension contributions. This gets you a second tax free lump sum, an extra boost to your tax relief.

Decide what maximum drawdown you can accept from each investment and overall. That's the maximum anticipated drop in value in a bad year. It can range from nil for cash through 80% drop or so for some specialist funds and is perhaps 70% drop for emerging markets and natural resources funds. The UK stock market as a whole is around 20% in routine regular drops and 50% or so every ten years or so, with a small chance of an 80%+ drop in really extreme and rare cases. Part of the job of an IFA picking investments is to arrange them so that the overall drop is consistent with the level you can handle, both psychologically and in terms of being able to wait for a recovery in values.

You might also ask the IAs whether they think that now would be a good time to buy gilts or whether property funds might be a better idea. Gilts are in a bubble, property funds are still out of favour and you should hope an IFA to say so and comment that some money in property rather than gilts seems like a good idea. Those who buy gilts today can expect to see a 30% capital loss that isn't likely to be recovered, sometime in the next five or so years. in the same circumstances commercial property values are likely to increase. Part fo the reason to ask is to verify that the IFA doesn't see risk levels of investments as an unchanging thing but recognises that they change over time. Gilts are normally regarded as low risk, but the current situation has changed that. Or just show them this and ask what they make of it...

twizzel

dunstonh wrote: »

What sort of pension/investments are you looking at? ......

Through various jobs I have ended up with a final salary pension (currently being paid) and 3 money pot 'managed plans'. The latter totally about £150k. I'm 57 and have never used an IFA before and I am well aware that this is overdue.
I am no longer in paid work and so I no longer contribute to any pension plan.
It is the future of these 3 plans that needs discussing with an IFA. It may be that they are ok as they are, but I doubt it, or I may be better to move them to a single managed plan with lower charges. I don't know.

jamesd

Since you' re not in work now, how are you funding living expenses? If you're not, say, getting taxable income up to your full personal allowance it may well be a good idea to take some pension income up to the full personal allowance to get tax free pension income. That can be significantly better than taking income from an ISA that could instead be staying inside the ISA and growing your tax protected capital base.

If you're not working and have no PAYE income you can only contribute 3600 gross into a pension, and that gross includes basic rate tax relief even for those who aren't tax payers.

twizzel

jamesd wrote: »

Since you' re not in work now, how are you funding living expenses? ....

I am in receipt of my final salary pension, enough to cover most expenses. My wife has a small income too.

jamesd

Thanks. Not living off ISA money or non-pension savings, which were the cases that would have prompted a discussion of the merits of taking more pension income instead of using ISA money.

You should discuss with an IFA the merits of taking pension income and using it to fund the same investments within a S&S ISA. This is a tax bet: speculating that in the future the income tax rate will be above 20% so it's worth paying 20% income tax now to avoid the higher future income tax rate.