Scottish Widows Pension , stay or go ?

looking_forward

Morning Everyone ,


I have approx. £27K in a Scottish Widows pension scheme , over the last few years it has increased in value reasonably . I am aware that should I wish to I can ask an IFA to take the money from there and invest somewhere else that may be more productive. I have 6 years until I am 55 , has anyone else done this and is it worthwhile or do the charges outweigh the potential ?


TIA

dunstonh

I am aware that should I wish to I can ask an IFA to take the money from there and invest somewhere else that may be more productive.

What would be more productive?

Increased potential maybe. Lower costs maybe. However, "productive" cannot be measured without hindsight and context.

I have 6 years until I am 55

Does age 55 have any significance to you?

looking_forward

dunstonh wrote: »

What would be more productive?

Increased potential maybe. Lower costs maybe. However, "productive" cannot be measured without hindsight and context.


Does age 55 have any significance to you?

Exactly , that is my quandary , as it is not performing badly at the moment , but should I be looking at other potentially better options or should I leave well alone ?


55 Is that the age that the funds can be accessed if required ?


As you may have gathered pensions are not something I have had much to do with .

dunstonh

but should I be looking at other potentially better options or should I leave well alone ?

You should always carry out periodic reviews to make sure the investments match your risk profile, goals, pass research due diligence etc. That review could well result in a "leave alone" outcome or it could result in a change.

55 Is that the age that the funds can be accessed if required ?

Whilst the rules allow access from 55, for the vast majority of people that age means nothing unless you are looking to enter a retirement phase of your life. The average retirement age is around 63 in the UK.

looking_forward

dunstonh wrote: »

You should always carry out periodic reviews to make sure the investments match your risk profile, goals, pass research due diligence etc. That review could well result in a "leave alone" outcome or it could result in a change.



Whilst the rules allow access from 55, for the vast majority of people that age means nothing unless you are looking to enter a retirement phase of your life. The average retirement age is around 63 in the UK.

Ok , more research to do ,


cheers

jamesd

There are two reasons to transfer:

1. to get access to investments not available where you are. This one only applies if you have some idea of what you want to use that you aren't using.
2. to get lower costs.

A transfer could achieve both of these things.

Age 55 is useful because subject to limits you can take the 25% tax free lump sum and recycle it into more pension contributions to get tax relief again. Those on low enough incomes who would never make pension contributions above £10k can also recycle the income, accepting the cut in the annual pension contribution allowance from £40k to £10k that comes when more than the 25k is taken.

At 55 you also have the advantage that the money is no longer locked up, so you may need to keep less money outside a pension for contingencies.

For these reasons age 55 is very significant even if that isn't your targeted retirement age, since it allows you to increase the efficiency of your pension contributions.

pinkforfloyd

An interesting insight jamesd.

If I had say £65k PCLS and left the remainder invested in SW, I could (using previous years allowances) reinvest to a SIPP get 20% added by HMRC or am I over simplifying your response?

I also understand that if no pay was received due to full retirement, I could still add £2880 to my pot in subsequent tax years to boost tax relief!

TIA

jamesd

Yes, that's right, though you do need to consider the lump sum recycling limit. from next year there's an easy to comply with limit of £7,500 of tax free lump sum taken per year (12 month gap, not tax or calendar years). So you'd just take the money in stages at that rate to get it done if none of the other recycling rules lets you go over that.

looking_forward

jamesd wrote: »

Yes, that's right, though you do need to consider the lump sum recycling limit. from next year there's an easy to comply with limit of £7,500 of tax free lump sum taken per year (12 month gap, not tax or calendar years). So you'd just take the money in stages at that rate to get it done if none of the other recycling rules lets you go over that.

Thanks for that info , that gives me some help with my plans.