Paying in to more than one pension

jamesd

dave23 wrote: »

Hello Jamesd I presume it means that in a stock market crash it will lose more value than a fund that includes a percentage of bonds.

Right. But what happens next? The answer is that the stock markets recover over time.

The risk concerned is primarily short term risk that you could suffer a loss if you had no choice but to sell at a specific time.

Historically that risk in the pensions world primarily happened at a retirement age where it was assumed that an annuity would be bought but we're now in a very different world where drawdown is common and state pension deferral pays more than annuities in the usual cases. That reduces the single moment in time issue.

dave23 wrote: »

I am aware that it has a greater potential for growth over the long term but from what I have read being 100% in shares is high risk and 100% in UK share is not good, so at some point I need to de risk to include bonds in the fund.

It's not bonds in the individual funds that matters, it's bonds in the overall mixture of your investments. There's no difference between one equity fund and one bond fund with 50% in each and a single fund with 50% in each except that the one with two funds will have one described as higher risk and lower risk while the single fund may be described as medium risk. In both cases the overall combination is medium risk.

Or to put that in a different way, your reason for selling doesn't make sense because it's looking at one piece not the whole package and it's considering the short term risk - called volatility - not the risk that matters to you at the moment when you still have a long term investment horizon.

At the moment it's not actually clear that many people need to reduce risk as they approach retirement. That's because an increasing number just stay invested and take income from investments instead of buying an annuity.

dave23

Ok thanks Jamesd I think I will leave SW and Aegeon pots where they are for they next 6 years and then re assess. I have sent an email to the works pension administrators again asking for fund details of the current pension.

Nobody though has commented on the wisdom of paying into two pensions or should I just put any spare money in the ISA

bigadaj

dave23 wrote: »

Ok thanks Jamesd I think I will leave SW and Aegeon pots where they are for they next 6 years and then re assess. I have sent an email to the works pension administrators again asking for fund details of the current pension.

Nobody though has commented on the wisdom of paying into two pensions or should I just put any spare money in the ISA

For most people teh attraction of isa over pension is that you can access the money in an is a whereas it is locked away in a pension. Given that you are 54 then you can access a pensions a years time in an emergency, and if you don't take more than the tax free lump sum it doesn't affect other Payments into your pension.

Pensions get the tax relief, so anything from 20% to 55% uplift which would make a pension more attractive in most circumstances.

The range of investments in pensions and isas are generally similar, and charges vary in both over a similar range so pensions are beneficial for most people in these circumstances.

jamesd

dave23 wrote: »

Nobody though has commented on the wisdom of paying into two pensions or should I just put any spare money in the ISA

You're soon to be 55 with nearly immediate access to pension money when needed. Pension is the easy winner for you because you get the tax advantage without the lock in disadvantage. Do be sure that you do have some pension money that can provide whatever short term access you might need, perhaps work via transfer out periodically to some other scheme.

Bonus for the pension if in addition to income tax relief there's salary sacrifice NI saving available. I have pension contributions of over 60% of my work benefits package value running at the moment for this reason and may increase that from April. I have a fair bit of non-work investment income and plenty of ISA money so I can afford this easily enough to get the pension tax relief.

If you can defer income by spending savings to boost pension investing it's likely to be a good move.