How does this look for a balanced agressive portfolio?

jamesd

Definitely worth questioning. The ISA option starts out provisional because you can contribute your whole annual income to a pension each year.

So you can ago with ISA and review. If your investments are doing very well and it looks as though you might exceed the lifetime allowance you can stick with ISA. If it looks as though missing the lifetime allowance is certain you can switch the ISA money to the pension in bulk.

You can't do the switch the other way so the ISA approach initially gives you the flexibility without costing you anything.

If your investments are doing very well but not lifetime allowance well you'll be sure to be a higher rate tax payer in retirement and there's benefit in getting the maximum available tax free cash.

If inheritance is a factor, that would instead favor the ISA if there's plenty of money around. Or maybe splitting the pension into multiple pots and not taking benefits from some of it.

peterg1965

The Lifetime allowance is currently £1.5million, I think, and one can assume it will raise progressively over the next 13 years (maybe a flawed assumption). If it matches the inflation target of 2% it will be about £1.9million in 13 years. Therefore I cannot see the lifetime allowance as being a significant factor in my calculations.

Given this I am certainly erring towards the pension option (at £800/month £16000 Gross/year) and £200/month (£2400) in four different ISA investment funds, this gives me some 'flexibility'. I have an IFA appointment 15 August and I will see what she advises. If I stay with Scottish Equitable for my pension provision and go with H-L for the ISAs it would appear she will not make much money out of me? Is one of the options that she takes on the management of my pension, providing me with investment advice and thereby gaining a trail commission from the PPP? From what Dunstonh has said there is no merit in taking out the ISA with the IFA as she will probably not beat the discounts offered by H-L.

Inheritance is not a factor that I have considered.

dunstonh

The Lifetime allowance is currently £1.5million

1.6 is the current but right on the rest.

If I stay with Scottish Equitable for my pension provision and go with H-L for the ISAs it would appear she will not make much money out of me?

She wont make a penny.

Is one of the options that she takes on the management of my pension, providing me with investment advice and thereby gaining a trail commission from the PPP?

Most legacy pensions dont pay any trail commission. A fund supermarket pension/SIPP or a decent personal pension could. However, payment of trail is not a jusification. Quality of product is.

From what Dunstonh has said there is no merit in taking out the ISA with the IFA as she will probably not beat the discounts offered by H-L.

If you are going DIY, that is certainly the case. If you want the IFA to do the lot then you are only losing around 0-0.25% p.a.

jamesd

Really you should consider whatever pension option she suggests as giving her and you the best fund options for her to actively manage your investments and be inclined to go with that assuming the cost is reasonable. The pension portion does give a good chance that you won't pay cash for annual rebalancing and reviews of the investments.

peterg1965

dunstonh wrote: »

1
She wont make a penny.

Most legacy pensions dont pay any trail commission. A fund supermarket pension/SIPP or a decent personal pension could. However, payment of trail is not a jusification. Quality of product is.

So to make money/commission she may well recommend a transfer to another PPP provider? Is this ethical, just to create a commission?

I have had a good look at Scot Eq funds internal and external, they have 135 funds (about 75% external), some of which appear to be performing very well, with reasonable AMCs. Do Scottish Widows and Standard Life offer a wider and/or better range of funds? - assuming that that may be where the IFA may advise me to go.

dunstonh

So to make money/commission she may well recommend a transfer to another PPP provider? Is this ethical, just to create a commission?

It isnt a justification to do it. However, Scot Eqs admin is awful, their fund range is limited and you cannot really build a decent portfolio with it. Some of the pension products have higher charges as well. There can often be plenty of reasons to move it where you do better and the adviser gets paid.

I have had a good look at Scot Eq funds internal and external, they have 135 funds (about 75% external), some of which appear to be performing very well, with reasonable AMCs.

135 is not bad for a personal pension. You should be able to get a half decent portfolio in there.

Do Scottish Widows and Standard Life offer a wider and/or better range of funds?

Around 1000 funds on the Scot Widows top contract. Couple of hundred on the insured Std Life contract but 2000 on their SIPP.