Bank of Scotland Pensions

bigbloke45

Looking at your balanced portfolio, my first impression is that it is mainly equities, apart from the SL Higher Income, which will be bonds/gilts. I think you first have to define your timeline, how long to your husband will want to take his benefits? Secondly, what is your attitude to risk? If the answers are "not Long" and "low risk", I suggest that you should think very carefully about your "balanced portfolio".

A few points come to mind;

If you are looking at an equity only portfolio, then the "balancing" is having exposure across different sectors in order to attempt to reduce your risk by spreading it. It looks like you are using a percentage split of your husbands fund to "balance" the portfolio. This will, in fact, distort your balance.

Why not think about the asset classes you want to invest in? i.e, equities, cash, property, fixed income? and ask yourself WHY you would want to invest in these classes. You also have to think about geographical spread, should you think about overseas assets?

But, most importantly, think about the fact that, over the last few weeks, bond yields have risen out of their 20 year trend,i.e. prices have collapsed. Fund managers are now saying that bond funds should now be avoided. Even more alarming is the fact that the British gilt yield remains the basis of valuations of all shares in the UK. If gilt yields have risen, then so will equity yields; they can only do this by falling in price!

Perhaps "sell in May and go away" might be the best option at the moment?

Liz_the_Whizz

bigbloke45

I take your point that it's very heavily weighted in equities, but I was struggling with what to include given the dire state of bonds, gilts etc.

And I too am expecting impending doom - perhaps we should just sit tight on our guaranteed 3.5% for now!

dunstonh

thanks for yours, the constraint on numbers of funds by Standard Life presents a dilemma. So IFA it is.

bigbloke45

Liz, if base rates are going to hit 6%, you should do better than your 3.5% guarantee by just putting the money on deposit. But I think you are overstating the lack of funds at SL. How many do you need?

The more specialised funds you choose and your timing of choice will increase your risk of getting it wrong.

Keeping it simple is always a good idea; always remember that full time investment professionals, with vast resources at their fingertips still get it wrong, for example Long term capital management in the 'States. And so do governments; look at dear old Gordon selling off half our gold at the lowest price for donkeys years!

EdInvestor

...no more than 20 different funds in total over the lifetime of the product.

I agree with DH this is not good enough for a pot of 80k.

However if you do have some protected rights money in there, what you could consider is splitting the money, with the PR money going to Standard and the rest to the SIPP. (PR money is not allowed in SIPPs yet).

If the PR slice is fairly small, the restriction on funds is not such a problem, especially when you have a choice of virtually the whole universe for the major pension in the SIPP.

dunstonh

Or go with a fund supermarket pension or personal pension which has no restriction on protected rights.

Liz_the_Whizz

Just checked the figures from Equitable Life and the transfer values are £48k non protected rights and £28k protected rights.

So does transferring protected rights money to Standard Life and the rest into a SIPP sound a good option?

dunstonh

So does transferring protected rights money to Standard Life and the rest into a SIPP sound a good option?

I wouldnt (and havent with my own money) but then I have products available that you dont have access to unless you see an IFA or approach an IFA for execution only.

Why split the money when you dont need to?
If you want the unit trust fund investment options then isnt it better to have it for all of it?
If you want to control the investment, then do it through execution only IFA but on discounted terms. A fund of £80k should get you a discount on the annual management charge making it cheaper than a SIPP.

EdInvestor

Liz_the_Whizz wrote: »

Just checked the figures from Equitable Life and the transfer values are £48k non protected rights and £28k protected rights.So does transferring protected rights money to Standard Life and the rest into a SIPP sound a good option?

I think it makes sense.If you have a chunk in an insurance co pension you get access to certain funds they do well which don't appear in the unit trust lists ( eg property funds and some lower risk bond type funds), so in the pension building stage, there's no real problem with PR money not being alllowed in SIPPs (the problem arises later when you want to income drawdown, but hopefyully it will be solved by then).

If you use a SIPP you have access to the full range of external funds,better than the supermarket pension, plus shares gilts (and cash) and investment trusts (all of which can enable you to cut costs substantially.)There's no need to pay more if you choose a low cost online provider.

These fund supermarket pensions are IMHO little different to insurance company personal pensions these days, since the latter now allow you to choose external funds. Certainly they offer nothing even remotely similar to the options in SIPPs.

dunstonh

These fund supermarket pensions are IMHO little different to insurance company personal pensions these days, since the latter now allow you to choose external funds. Certainly they offer nothing even remotely similar to the options in SIPPs.

How wrong you are.

Around 90% of SIPPs taken out after A day invest in unit trust funds. Fund supermarket pensions invest in unit trust funds. personal pensions invest in pension funds.

EdInvestor

dunstonh wrote: »

Fund supermarket pensions invest in unit trust funds. personal pensions invest in pension funds.

Perhaps you could explain the exact difference between the version of a popular fund like Invesco Perpetual High Income (or any popular fund) available in a fund supermarket pension and the version available in an insurance company pension - and what impact this difference will have on the investor's returns.

Here's the unit trust version

And here's the Standard life version

There's a very slight, but pretty negligible difference in the annual growth over the past year, and a slightly bigger gap over three yearsbut they are almost the same.

However I note there is no dividend yield mentioned in the insurer's details of the investment.

Is that the big difference?The insurers confiscate the dividend?