Switching Pension Funds

purch

if you post rubbish it doesnt do the OP any good

Are you saying that buying and holding Bonds/Debt instruments yourself rather than through a fund is a 'rubbish' idea ??

dunstonh

purch wrote: »

Are you saying that buying and holding Bonds/Debt instruments yourself rather than through a fund is a 'rubbish' idea ??

Yes I am because the OP has an AVC and an appropriate personal pension plan. To do what you suggest would involve pension transfers and costs. To make those changes with just 2 years to go would be cost prohibitive and the protected rights would make such purchases awkward very difficult to achieve (not impossible but limited choice and too many charges).

purch

Ok I am with you on that.

The Serps opt out bit does restrict the options too

My point wasn't really directed at the OP's case in particular. I should have mentioned that.

Retired_I.F.A.

OP = opening poster I presume?

Sorry if that sounds an obvious question but i've been on message boards for about 7 years and this is the first time i've seen it.


Q:What would I suggest?
A:Learn about drawdown and annuities.
Thing is most people want to consolidate gains near to maturity and rightly so if that maturity is a lump sum earmarked for a specific need but a pension is money invested until death. A retiree opting for an annuity is effectively opting for investment in todays gilts for possibly 20+ years and throwing away the freedom of choice. Once drawdown is understood properly most will aprecieate it's advantages and opt for it leaving the actual annuity purchase till the day they no longer want control.
The number of people that invest for their future by saving over the next x number of years money thats to be invested at the rate available at the onset equals nil and even if such a product were available very very few would take it up today especially when it's at such a historical low rate But thats effectively what an annuity is.
Once thats understood 9 out of 10 i'd say would change their risk attitude upwards.

EdInvestor

Retired_I.F.A. wrote: »

Q:What would I suggest?
A:Learn about drawdown and annuities....Once thats understood 9 out of 10 i'd say would change their risk attitude upwards.

Quite right I agree and if this were a normal PP the Original Poster could just move it to a SIPP now and invest it as though it was in drawdown, and then take an income from it when he likes. But the trouble is, he has got an AVC - which he can't touch until he takes his occupational pension (at which point he can do as above) and a blasted PR pension which can't (yet) be moved into a SIPP and which won;t be big enough to do drawdown at an insurer on its own.

Hence the answers cannot be optimal.

....and they said they were simplifying the pension system....:rolleyes:

dunstonh

and a blasted PR pension which can't (yet) be moved into a SIPP and which won;t be big enough to do drawdown at an insurer on its own.

Oh come on. How many times I have I said that protected rights drawdown is possible on small funds. Please let it sink in once and for all that there are providers that do it. Not many but they exist.

benny5

My original post has provoked a great deal of debate and provided in interesting insight into the subject for which I am most grateful to all.

Given the fund in question (SERPS opt out) and as I understand it, certain restrictions, my original inclination of going 80/20 cash/low risk seems a reasonable, if cautious, approach.

Thanks to all.

Retired_I.F.A.

Dont see the point in starting a new thread as it's already gone a little off topic but does drawdown now have to be from a SIPP? I did cases where drawdown was taken from a PP albeit all of them had the option to be converted to a SIPP it was part of my selection criteria.

dunstonh

Dont see the point in starting a new thread as it's already gone a little off topic but does drawdown now have to be from a SIPP?

No. Post A day, a lot of providers have actually improved their PP options or have created a Post A day pension products. There are two approaches that appear to be popular at present.

1 - A personal pension using a fund supermarket or very large fund range that does everything a SIPP can but only uses investment funds and not self investment.
2 - The ability to switch at no cost between stakeholder, personal pension and SIPP with the same provider depending on what you want and when. i.e. most consumers are best served with a stakeholder or personal pension so use that getting them to retirement and if they then want drawdown, its moved internally free of charge to the SIPP. Rather than pay the higher charges of the SIPP from the start.

A couple of newer personal pensions are actually cheaper than the solutions that are often posted on the board here as "low cost" for doing income drawdown using funds.

There is a lot of focus on SIPPs at the moment from the FSA as they believe far too many people are going into SIPPs when personal pensions and stakeholders are the cheaper option. Plus the NEWCOB and MIFiD rules that took effect from today work a little in the FSAs favour on the basis that the IQ of the individual is now a requirement to be considered when advice is given.

Retired_I.F.A.

...the IQ of the individual is now a requirement to be considered when advice is given.

Oh boy ! so not only has the job changed to where you have to be an expert in Finance, tax, accountancy, understand TVAS better than an actuary have as much knowledge as a 3rd year medical student to understand Critical Illness cover and the crystal ball all clients think you have to tell them whats going to happen in the future you now have to give your clents an iq test before you can proceed with teaching them a thing!