Cashing in an Index-lined pension?

rpc

atush wrote: »

+40 years if she is in her 40's. Could be mroe like 50.

Current life expectancy (principal UK projection, 2012 based cohort table) is 31.9 years for him and 45.5 for her. Assuming that they both survive until the first pension is in payment, her life expectancy is 39.9 years from that point.

So 40 years is about right, on average. High LE variant says 44 years, low LE projection is 36 years.

If there was no age gap, you could expect the pension to be in payment for 10 years less time (fairly obviously)

In any case, a few years either way is inconsequential. It doesn't change the madness of doing it.

Freecall

rpc wrote: »

Current life expectancy (principal UK projection, 2012 based cohort table) is ........ 45.5 for her.

So statistically more lies ahead than behind.

Kind of puts it all in perspective doesn't it.

rudebhoy

Saw the IFA again earlier today.

He was reluctant to give a firm recommendation on cashing in the pension, but when I pressed him, he said he was edging towards recommending I cash it in.

Told him I had given it some thought and had decided not to do that -I ran some projections based on me living to 85 and my wife to 90, which seems to be the average based on our current ages. If i take the BG pension at 55, it will pay out 480k in the above scenario, if I leave it till it matures at 60, it will pay out 540k, so cashing it in for 415k is not as good as it looked at first. (Above figures do not include the index-linking element which is another string argument for not cashing in imo.)

In terms of investing the 200k cash, he has recommended the following

50% in Prundential Prufund Growth (risk level 4/10)
17% F&C MM Navigator Distribution (risk level 4/10)
17% JPM Multi-Asset Income (risk level 5/10)
16% Schroder Income Maximiser (risk level 7/10)


any thoughts on that mix? My instinct is that I am ok with the first 3, but not the last one because of the risk rating.

atush

I dont' know that fund, but if it is an income maximiser i assume it is invested in equities with a good dividend? If so, I would think the fact it pays an income would mean it could rise and fall alot and the income owuld not be affected.

and the rest is so much lower on the risk scale. What fund chargtes do these have? Do you have any other cash? Would not invest all the 200K if that wasn't the case?

jem16

rudebhoy wrote: »

Saw the IFA again earlier today.

He was reluctant to give a firm recommendation on cashing in the pension, but when I pressed him, he said he was edging towards recommending I cash it in.

Pity you didn't ask him the critical yield and why he was edging towards a recommendation.

In terms of investing the 200k cash, he has recommended the following

50% in Prundential Prufund Growth (risk level 4/10)
17% F&C MM Navigator Distribution (risk level 4/10)
17% JPM Multi-Asset Income (risk level 5/10)
16% Schroder Income Maximiser (risk level 7/10)


any thoughts on that mix? My instinct is that I am ok with the first 3, but not the last one because of the risk rating.

You shouldn't think of each fund in isolation but the whole portfolio averaged out. The last fund has a good yield which is what you're looking for.

However if you're not happy with the risk, then say so to the IFA. He should either explain it to you and/or adjust it to what you are comfortable with.

dunstonh

e was reluctant to give a firm recommendation on cashing in the pension, but when I pressed him, he said he was edging towards recommending I cash it in.

Until you get a report that gives a firm recommendation and breaks down the costs and consequences and mentions things like critical yield etc. you have to assume the advice is bad. The FCA consider occupational pension mis-sales as mis-sold unless proven otherwise.

any thoughts on that mix?

You are mixing and matching investment methods which will result in asset allocation being broken. What research have you done to decide that your asset allocation is better than a professionally researched allocation? (it could be more suitable for you but are you picking at random or have you reviewed this in detail)?

jem16

dunstonh wrote: »

You are mixing and matching investment methods which will result in asset allocation being broken. What research have you done to decide that your asset allocation is better than a professionally researched allocation? (it could be more suitable for you but are you picking at random or have you reviewed this in detail)?

I thought that the OP said the IFA recommended those funds for the £200k?

atush

I believe he did.

kidmugsy

atush wrote: »

I dont' know that fund, but if it is an income maximiser i assume it is invested in equities with a good dividend?

It adds to its yield by selling calls: I just about understand that - it means giving up potential capital gains to get more income.

dunstonh

In which case, I would consider questioning them. As as I said, there could be reason but typically you use multi-asset OR single sector with manual selection for each sector. Mixing and matching like that by adding a UK equity fund breaks the purpose of multi-asset funds. In the OPs shoes I would like to know why. And given the comments on the occupational scheme, I would be questioning ability.