SIPP - tell me more

vitesse

I've never understood pensions but it's time to sort things out. Although by all accounts I know more than most, i.e. what the funds are, projected values etc and what my state pension will be £120/week.

I'm 54ish, have a pension fund of ~£180K spread over a number of managed funds with 1 small final salary pension, that I paid into for less than 2 years.

The fund, ~£20K, in the final salary pension is projected to pay out ~£200/year with a draw down of £600 at 55! Total projected payout keeping things as they are is ~£6k/year.

I've recently found out about SIPPs and have had a review of my pensions, the highlights being;

• By transferring the final salary pension would result in a possible of £5K at 55 (if wanted).
• For the full fund transferred to a SIPP a projected pay out of £26K/yr at 65.

This all seems too good to be true!

My concerns are investing my pension pot in an overseas apartment complex, with income transferred to gold. The investment is SIPP certified, if that means anything, there are guaranteed returns for the first 3 years, ~8%, and there is a choice to spread across a couple of properties plus gold.

If this is the way forward my plan would be to draw down £25K at 55 (it would be useful) and then leave it alone until 60, take a small annual at 60 and increase the draw down at 65. I'm sure I'll still be working (self-employed) past 60 and probably 65.

Comments?

Lokolo

Transferring a Final Salary Pension requires sign off and is unlikely to be beneficial. A £20k transfer pot for the Final Salary that is paying out £200 a year is pretty good.

Investing all your money in "international property and gold" is a receipe for disaster. There are no such things are gaurenteed returns.

Who on earth has recommended this? Sounds like a bit of a scam tbh.

vitesse

Lokolo wrote: »

Transferring a Final Salary Pension requires sign off and is unlikely to be beneficial. A £20k transfer pot for the Final Salary that is paying out £200 a year is pretty good.

Investing all your money in "international property and gold" is a receipe for disaster. There are no such things are gaurenteed returns.

Who on earth has recommended this? Sounds like a bit of a scam tbh.

A final salary pension that pays out £8,000 if I live to 100 from a £20K fund is good? Where's the other £12K gone?

The guaranteed return for the first 3 years is written into the contract, but yes it does look like a scam hence the query.

Looking at it differently, are SIPPs a good idea and are there recommended providers. I noticed that NFU provide them, always been happy with them as insurance providers.

Lokolo

SIPPs as a general concept are fine. This particular SIPP doesn't.

dunstonh

Looking at it differently, are SIPPs a good idea and are there recommended providers. I noticed that NFU provide them, always been happy with them as insurance providers.

SIPPs are fine. They give experienced investor the investment options they are looking for. They also give scams the opportunity to rip off inexperienced investors who are enticed by silly schemes, such as overseas property.

You would need an IFA to sign off on the final salary scheme and given your current objectives, I cant see many IFAs willing to do that even if you do fall in the 1% where transfer is best advice.

Linton

vitesse wrote: »

The fund, £20K, in the final salary pension is projected to pay out £200/year with a draw down of £600 at 55! Total projected payout keeping things as they are is £6k/year.

Those figures dont look right to me. Are you really sure?? The £6K/year - thats on retirement at 65 is it? If that is true then the £20K transfer value looks extremely unbelievably mean. On the other hand £20K now for a pension that only pays £200/year looks unbelievably generous.

Or is this on the basis that you keep on working for another 10 years?

vitesse

Linton wrote: »

Those figures dont look right to me. Are you really sure?? The £6K/year - thats on retirement at 65 is it? If that is true then the £20K transfer value looks extremely unbelievably mean. On the other hand £20K now for a pension that only pays £200/year looks unbelievably generous.

Or is this on the basis that you keep on working for another 10 years?

6K/year is for the total ~£180K fund. Pensions start variously at 60 or 65.

Yes the £20K transfer value does look good, or the payout looks very mean. I paid in ~£4K rest is employer contribution.