Pension investments - any ideas?

MeOnMonSavExp

My partner has just received around £37,000 in pension as a result of a divorce settlement and it is currently held by Hargreaves L in the form of cash awaiting her instructions as to how to invest it. Any ideas (that don't include Costa Rican trees)?

She owns about 50% of her house, has no other significant savings and has not used any ISA allowances this tax year.

atush

Well, as it is pension it should stay in pension. Not sure she could take it out for mtg or ISAs or anything anyway w/o tax penalties.

How will she pay for her future retirement going forwards? Does she have a pension at work or elsewhere? If not, she needs more than this 37K going forwards so needs to make contributions. What is her age? Her income? If she doesn't have a work pension now she will in future as all employers will soon be required to provide one.

As to if she should transfer to a PP or use a HL Sipp that would depend on how much she knows about investments. If nothing she has two options. Choose an IFA thru unbiased.co.uk and have them arrange the pension and investment for a set fee. Or open a PP, chose a basic 'lifestyling' option and transfer the money to that pension. In either case, she should arrange to make monthly payments into the chosen pension in future.

And she really should build up a cash emergency fund in Cash ISAs then build up other savings and investments outside the pension as well.

oldtoolie

Depends on many things not mentioned in your query. Is the money locked in as a pension or accessible to your partner?

But from what you say if it was me I would set up a cash ISA's this year and next in a multi-year 'bonds' as emergency reserve. The remainder I would pay down my mortgage depending on the terms.

dunstonh

Any ideas (that don't include Costa Rican trees)?

On the info you have given us to filter the options available its really a case of picking a number between 1 and 30,000. i.e. that is what is available but you havent given anything to reduce it down.

She should invest suitable to her risk profile, capacity for loss both now and in retirement, knowledge and ability and how she intends to run the investments.

MeOnMonSavExp

atush wrote: »

Well, as it is pension it should stay in pension. Not sure she could take it out for mtg or ISAs or anything anyway w/o tax penalties.

How will she pay for her future retirement going forwards? Does she have a pension at work or elsewhere? If not, she needs more than this 37K going forwards so needs to make contributions. What is her age? Her income? If she doesn't have a work pension now she will in future as all employers will soon be required to provide one.

As to if she should transfer to a PP or use a HL Sipp that would depend on how much she knows about investments. If nothing she has two options. Choose an IFA thru unbiased.co.uk and have them arrange the pension and investment for a set fee. Or open a PP, chose a basic 'lifestyling' option and transfer the money to that pension. In either case, she should arrange to make monthly payments into the chosen pension in future.

And she really should build up a cash emergency fund in Cash ISAs then build up other savings and investments outside the pension as well.

I agree that she needs to build up a Cash ISA fund for emergencies. At the moment she has the capacity to save in the region of £3600 a year. She has a workplace pension (just starting) contributing about £1450 p.a. (5% of the annual gross). She's 39 and has about 17 years contributions to state pension.

She (we, in fact) know little about investments, but I wonder with such a moderate fund whether an IFA would provide value for money (that's why I'm here in fact).

I had assumed the best thing to do was to leave it in the HL SIPP. I guess, my question was where to distribute it within that.

MeOnMonSavExp

dunstonh wrote: »

On the info you have given us to filter the options available its really a case of picking a number between 1 and 30,000. i.e. that is what is available but you havent given anything to reduce it down.

She should invest suitable to her risk profile, capacity for loss both now and in retirement, knowledge and ability and how she intends to run the investments.

I think I would describe her risk profile as low; I can't imagine she'd take any active interest in managing the funds at all and has no knowledge of investments. I'd imagine she'd want to stick it in something and forget about for 25-30 years. She has a small workplace contribution of £1450 pa, but I don't think that will rise and may indeed stop in about 5 years when she will have to decide whether to top the pension up from her own self-employment.

gadgetmind

She might care to look at either a portfolio fund or perhaps a Vanguard Lifestrategy tracker. My wife uses one of the latter in her Hargreaves Lansdown SIPP, which is a similar size to the sum you're discussing. The tracker itself has low fees but there is also a £2 pcm charge from HL.

Those who prefer more active management will find a large number of "Mixed Investment" and "Flexible Investment" funds to choose from. Given the 25+ year time scale, something more growth oriented might make sense. As the decades roll by, she might want to look at slowly reducing the equity percentage but you won't need to worry about this for a while yet.

Of course, this is at complete odds with a low risk profile but IMO that's because such a profile is at complete odds with such a long investment window.

westy22

Well, if you are looking to a low maintenance, low cost, 'catch all markets' approach for 20+ years then a broad-spectrum index tracker such as the Vanguard LifeStrategy 80% equity fund would be worth a look. It carries a small introductory charge and a £2 per month platform fee on H-L but on £37k those costs would still bring the annual ongoing cost to less than 0.4% per year. This is what I have done for my young daughter's pension.

westy22

gadgetmind - you must be a quicker typist; great minds ....!

gadgetmind

westy22 wrote: »

gadgetmind - you must be a quicker typist; great minds ....!

BTW, I went for the LS 100% equity plus some strategic bond funds for my wife but I doubt it will make much difference in the long run and does mean I have to rebalance myself.

I did look around at portfolio funds such as Jupiter Merlin Growth, but the fees are over 2% a year!

MeOnMonSavExp

gadgetmind wrote: »

Of course, this is at complete odds with a low risk profile but IMO that's because such a profile is at complete odds with such a long investment window.

You're probably right about that. Perhaps some of the emerging economy funds?