Pension Transfer

mbeamethyst

I posted previously that my husband is considering transferring his FS pension from his employer. Appreciated all the advice given at the time but don't think I asked these:

1. If he does transfer the pension, does the new investment have to be in a pension, or can he invest outwith pension wrapper? (Aware of potential huge tax impact).
2. Will the new pension investment have to be in husband's name only or can investment be joint? If in husband's name, is it then up to us to make arrangements for the investment should anything happen to him, or does it automatically pass to me or does it disappear on his passing?
3. Seeing an IFA, if different types of pension investments are suggested (SIPP, drawdown or annuity) should IFA explain pros/cons if each option? I understand annuity, but a bit less clear on the differences between SIPP/drawdown.
4. With the current state of the economy is there a generalised preference for the investment types or is the choice very much dependent on the circumstances for each individual? Continuing that theme, what are thoughts on taking/not taking 25% TFLS? - circumstance specific again?

Sorry, thought I only gad a couple of questions byt more occurring to me as I'm typing.

TIA

AnotherJoe

The questions you ask, with no disrespect meant, show such a lack of understanding of the options that they scream out the answer "see an IFA".

dunstonh

1. If he does transfer the pension, does the new investment have to be in a pension, or can he invest outwith pension wrapper? (Aware of potential huge tax impact).

Doesnt need to be in a pension but as you would lose nearly half of it in tax if you didnt. Plus, little point taking it out of one tax wrapper, paying massive tax just to put it in a different tax wrapper that can invest in the same things as the pension.

2. Will the new pension investment have to be in husband's name only or can investment be joint? If in husband's name, is it then up to us to make arrangements for the investment should anything happen to him, or does it automatically pass to me or does it disappear on his passing?

Pensions are a personal thing. They are not joint. Death benefits are by expression of wish.

3. Seeing an IFA, if different types of pension investments are suggested (SIPP, drawdown or annuity) should IFA explain pros/cons if each option? I understand annuity, but a bit less clear on the differences between SIPP/drawdown.

The IFA should eliminate options that are not relevant and then make you aware of options that are. SIPP is a product. Drawdown is a method.

4. With the current state of the economy is there a generalised preference for the investment types or is the choice very much dependent on the circumstances for each individual? Continuing that theme, what are thoughts on taking/not taking 25% TFLS? - circumstance specific again?

What is the current state of the economy?
Why would you take the 25%?

You appear to be jumping to options and outcomes without mentioning what your needs and objectives are. Dont try and run before you walk.

mbeamethyst

TIcompletely agree and have an appointment to see an IFA. Fully aware I am clueless and will appear so herwith the inane/basic questions but if don't know the answers I ask the questions -.trying to get a couple of basics in my head before seeng advisor. After all what's the MSE forum for if not getting amnswers to things you don't know. Plus at least I can be anonymously clueless!!

mbeamethyst

@dunstonh thanks for the replies. I personally wouldn't take the 25% TFLS as we have funds elsewhere to cover future purchaess/emergencies, so having no specific need for the LS would leave it in the pension but (being clueless) not sure if in general or specific terms leaving LS in the pension would be seen as a crazy option.

Re state of the economy just thinking really basically re interest rates poor/annuity rates poor/Brexit i.e. idiot's view of the economy.

Re needs/objectives - looking for income from this investment starting in 4 years when husband 55. Our risk view I'd say was cautious and we are not comfortable, as you can no doubt determine, managing investments ourselves. My income (pension) covers basics, this pension to help make life more comfortable.

Happy to share more info if relevant, just let me know.

dunstonh

not sure if in general or specific terms leaving LS in the pension would be seen as a crazy option.

If you dont need it, you dont take it. There should be some justification for taking it. If you cant find any justification then it should not be taken.

Re state of the economy just thinking really basically re interest rates poor/annuity rates poor/Brexit i.e. idiot's view of the economy.

Forget all that. The economy goes in cycles and has to deal with constant change and unknowns. Financial crisis occur on average every 7 years. Stockmarket crashes come and go all the time. its just normal. You will likely be invested (if you transfer) for 35 years. That is plenty of volatility to enjoy with all sorts of events creating ups and downs. Most of which will be due to events that you know nothing about.

When you invest, you just accept that. If you cant then you should not invest. if your transfer value was say £800k. Could you handle a typical 25% drop? That is not a worse case scenario. You are likely to see several at that level. Now putting that 25% in monetary terms, that means seeing that £800,000 drop to £600,000. If the statement came in and was £200,000 lower what would your reaction be?

AnotherJoe

mbeamethyst wrote: »

TIcompletely agree and have an appointment to see an IFA. Fully aware I am clueless and will appear so herwith the inane/basic questions but if don't know the answers I ask the questions -.trying to get a couple of basics in my head before seeng advisor. After all what's the MSE forum for if not getting amnswers to things you don't know. Plus at least I can be anonymously clueless!!

The problem is, many of the questions don't even make sense, to answer them as you asked would be highly misleading.

As Dunston cogently points out you are jumping to ends, such as taking a 25% TFLS, without establishing any need to take one, or indicating why you'd need the money or what you'd do with it.

Your requirements come first. Then come solutions.

But you are asking about solutions first, with zero context, some of them utterly barking such as "should I take all the money out of the pension, lose half of it in tax and then put it back in investments again".

When you ask questions like that, almost any answer apart from "are you crazy" risks giving a 3 year old a loaded AK47. And asking "are you crazy?" causes offence.

You either need to do a lot more reading and understand the basics, OR start with what it is you want. What amount of income ? How much risk can you tolerate ? Do you want to be managing investments ? (When you sugest throwing half of them away to start with I'd suggest the answer is "no" )

Go and see an IFA. Be prepared so you can tell them what you want as outcomes (income, risk, dependents, leaving money and so in) and leave the half baked solutions alone for now.

mbeamethyst

AnotherJoe wrote: »

The problem is, many of the questions don't even make sense, to answer them as you asked would be highly misleading.

As Dunston cogently points out you are jumping to ends, such as taking a 25% TFLS, without establishing any need to take one, or indicating why you'd need the money or what you'd do with it.

Your requirements come first. Then come solutions.

But you are asking about solutions first, with zero context, some of them utterly barking such as "should I take all the money out of the pension, lose half of it in tax and then put it back in investments again".

When you ask questions like that, almost any answer apart from "are you crazy" risks giving a 3 year old a loaded AK47. And asking "are you crazy?" causes offence.

You either need to do a lot more reading and understand the basics, OR start with what it is you want. What amount of income ? How much risk can you tolerate ? Do you want to be managing investments ? (When you sugest throwing half of them away to start with I'd suggest the answer is "no" )

Go and see an IFA. Be prepared so you can tell them what you want as outcomes (income, risk, dependents, leaving money and so in) and leave the half baked solutions alone for now.

If you think my questions suggest I was "jumping to solutions", perhaps it's because: We do know our requirements. We do know what we want the investment to do. We do know what level of income we want. We do know we don't want to manage the investment ourselves. We doknow what our attitude to risk is. What I didn't know were the answers to the questions I asked and I didn't and still don't feel the questions I asked needed all that context for them to be answered. Should I have been more specific than generalistic? Probably. Should I have posted a new thread an hour before going to see an IFA? Probably not. Did I intend to open a can of worms or have all the "experts" laugh at the crazy? Definitely not.

But BTW I didn't suggest throwing half of the investment away, I asked if it had to be in a pension - because I've had dodgy financial advice before this was something that occurred to me that an IFA might go off on a tangent and suggest alternatives to pensions. So I wanted to be clear should IFA only be talking about pensions. Apologise for poorly worded question but fully aware that anyone who wanted to take the money out of a pension just to reinvest it is quite frankly a numpty.

Also not sure where you're seeing half-baked solutions in my original post? When I posed the questions, I had no solutions, half-baked or otherwise.

Thankfully Dunston didn't share your response to my post, gave me some helpful information in answer to my questions, regardless whether he thought them completely ridiculous or not, which assisted me in having a discussion with an IFA this afternoon where I wasn't treated like an imbecile.

Thanks for your words of wisdom, I've seen an IFA so hopefully won't have to bother the forum again with my ridiculous questions and you won't need to tear your hair out at the craziness.

Yours, Barking (and Proud)