Advice on pension

berbatov10

Over the past few weeks I have been posting and reading other posts about stakeholder pensions and SIPPS. I have gained a wealth of knowledge from people on here but as its getting near end of tax year I am going to need to invest. I would welcome some input
I am 53 years old have a final salary pension which should which give me a lump sum and monthly income around £1400/month when I retire in 4.5 years. I also have 2 buy to lets which after mortgage payments give me around £800/month.
I want to put the £8000 which I have earnt at higher rate tax (£42K to £50K) this year into a pension pre April. Should I put this into a SIPP I am leaning toward a VLS fund 60/40 fund and then make regular £250/£300 month contributions or should I do similar with the £8000 and monthly contributions into a stakeholder pension. Thoughts and views would be welcomed

kidmugsy

I've no idea whether Stakeholders offer VLS: if not, what would you plan to own in the Stakeholder? In your shoes I might welcome the simplicity of having just the one pension in action here. Would it cost too much just to do it through Hargreaves Lansdown? They are not too expensive for small SIPPs according to Monevator, and their service is excellent. Or how about using Cavendish Online and investing in Fidelity's nearest approximations to Vanguard's funds?

berbatov10

Hi kidmugsy. I am of the thought that a VLS will be simple straight forward and may not be as cheap as others but sems to have a diversification of assests within it. The other option is maybe a L&G global equities fund with maybe a blackrock fund holding bonds globally

AlanP_2

kidmugsy wrote: »

Or how about using Cavendish Online and investing in Fidelity's nearest approximations to Vanguard's funds?

Fidelity via Cavendish offer most (if not all) the Vanguard funds including the full set of VLS options.

berbatov10

AlanP I noticed they do but they come in at .59% for the 60/40 fund, do you not deem that expensive? I note from your other posts you hold similar?

berbatov10

A further linked question If I select a number of funds to make up a SIPP on the cavendish website do I pay the 0.20% 'service fee' on each one IE if I selct 4 do I pay .80%

Deneb

Disregarding the selection of funds for a moment, your priority is to get the £8000 into a pension before 6th April. You can always hold it in the pension as cash until you have made a decision on investments, which can be done post 6th April if necessary.

berbatov10

Deneb you are of course right but its important to lodge the funds with the platform which is most cost effective otherwise I may be paying transfer fees

greenglide

a number of funds to make up a SIPP on the cavendish website do I pay the 0.20% 'service fee' on each one IE if I selct 4 do I pay .80%

You pay 0.20% on all your holdings (up to a limit when the platform charge is capped - at least on fidelity's own site) whether it is one fund or 100.

It is 0.2% of the holdings, not the number of funds.

AlanP_2

berbatov10 wrote: »

AlanP I noticed they do but they come in at .59% for the 60/40 fund, do you not deem that expensive? I note from your other posts you hold similar?

I make the overall charge 0.54% as opposed to 0.59% made up from:

Cavendish Fee = 0.05%
Fidelity Fee = 0.25% for a Pension (and 0.2% for an ISA)

plus

Fund Charge, in this case VLS60 at 0.24%

=> 0.54%


You will always pay the Cavendish and Fidelity elements, so 0.30%, plus whatever OCF the fund charges.

There is also the 0.1% initial deduction with the VLS funds that is charged on all purchases and is used to top up the overall fund value (i.e. shared amongst the existing issued units). Personally I ignore that as there are people putting in a far greater amount than me so it all comes out in the wash.

If you are interested in the Cav / Fidelity route bear in mind that it takes about 2 weeks to get the pension opened with them so you need to make a decision soon.

Cavendish have a PDF list of all the funds they offer and you can work out the overall charge per fund very easily by adding the last 3 columns.

berbatov10

Hi Alanp thanks for that. Just to add to the mix I was looking also at a 50/50 split of Vanguard FTSE all world ETF and Vanguard UK Govt bond ETF which are a lot cheaper with similar traits