Old pensions, new pensions and a Sipp? Advice neeeded.

TomboTombo

Hi,

I have just accepted a permanent role at a company afterspending 2 years contracting through a Limited company.

Happily they will contribute 8% of my salary to a pensionplan and I am looking to top it up by roughly 12% (to 20%) on a monthly basis.

I’m nearly 32, a higher tax payer and a married father ofone (possibly 2 in next year or so).

I have two Fidelity company pensions with former employersworth roughly 14k and 10k (as of this year’sstatements). I also have roughly 25k retainedprofit from the LTD company which I was looking to invest into a SIPP beforethe offer came about an thus delayed my plans somewhat.

My new employers Group Retirement Plan is administered by StandardLife - Save and Invest. The fund theyhave advised me to invest in based on my age and risk tolerance is ‘StandardLife MyFolio Managed V Pension Fund’ however the ‘Ongoing fund charge per year’is 1.406% which seems rather high to me.

I have been given a link which gives me access to a list offunds that are potentially available to me and I’m starting to make my waythrough it to see if there is anything on it.

My question is:

Would I be better off doing a, b, c.

a) Leave the two old fidelity pensions where theyare. Open a Sipp with the 25k I have in the LTD company. Invest the 20% (8% company contribution /12% personal contribution) into the SLcurrent employer pension fund.

b) Transfer two fidelity pensions into the SIppwith LTD company money. Invest the 20% (8% company contribution /12% personal contribution) into the SLcurrent employer pension fund

c) Open the Sipp transferring in the two fidelitypensions, investing LTD company money and also the 12% personal contribution. Justhave the 8% company contribution going into the SL current employer pensionfund

The Sipp is likely to be invested into Vanguard LifeStrategy 80% fund, where I hope for at least a few years I can just open, payin and forget. My retirement goal is55-60 with an income of roughly 50-60% of what it is now, hoping to be mortgagefree by 45.

Thanks for reading

T

bigadaj

The two things to look at are charges and range of investments available. Whether the old pensions and sipp are in the same place doesn't really matter, apart arguably from convenience.

the company scheme option does sound expensive, options should be available at0.5% or less.

dunstonh

Please change the font size. its difficult to read,

however the ‘Ongoing fund charge per year’is 1.406% which seems rather high to me.

its not that high. Remember that with pension funds, the AMC is the OCF. Plus, it is bundled pricing. it is a managed funds but their myfolio funds are pretty good.

The Sipp is likely to be invested into Vanguard LifeStrategy 80% fund,

Whilst that would be cheaper (including platform charges), it is worth noting that net of charges, the Myfolio fund has outperformed it (over 1 year and 3 years).

bigadaj

dunstonh wrote: »

Please change the font size. its difficult to read,



its not that high. Remember that with pension funds, the AMC is the OCF. Plus, it is bundled pricing. it is a managed funds but their myfolio funds are pretty good.

Can't agree with that, those charges are well above what you would expect to be paying for an employer pension in my opinion.

Whilst that would be cheaper (including platform charges), it is worth noting that net of charges, the Myfolio fund has outperformed it (over 1 year and 3 years).

I'd like some comparison over a longer time period before stating any outperformance.

TomboTombo

Thanks for your replies, I can see both sides. Maybe a 50/50 split on excess between the two.

bigadaj

Sorry didn't really answer your question in terms of options.

I think c is probably the one to go for, relatively unusual to get the employer contribution with no personal payments, but this would appear to be the lowest cost option.

Dependent on the sums involved and your wider financial situation then just using vls 80 might be limiting and maybe worth considering other investment options as well, though this is probably soemthing to think about when the sipp has grown to a decent amount after a couple of years. Though you would have £50k ish from day one so worth considering the asset split as this is a decent sized pot.

TomboTombo

Looking at 1k a month in total..

Wife works part time on prorata basis which pulls in a few I short of the national average now.

We have some emergency money in easy access acounts which we add to monthly, a few Post office shares, some peer to peer lending money and some other savings for specific things and events.

What other assets would be worth looking into?

Thanks

atush

S&S isas maybe.

But that is after you put in enough in pensions to get A- CB for the kids, and B- HRT relief.

Have a look at the cheaper funds on SL for your pension. Look for global exposure. If there are no global funds, choose funds from the major areas and emerging markets to make your own.

TomboTombo

atush wrote: »

S&S isas maybe.

But that is after you put in enough in pensions to get A- CB for the kids, and B- HRT relief.
.

What what I need to be putting in to get A and B?

kangoora

TomboTombo wrote: »

What what I need to be putting in to get A and B?

A = keep gross income <£50k/year - keep child benefit unreduced
B = keep gross income <£42,386/year - don't pay higher rate tax

Typically achieved by dropping extra into your pension

SL cheapest funds, even trackers, seem to start at 1% AMC - for the ones available in my company pension scheme anyway. Although, I do get a 0.3% discount on that figure via the company - still not great