Equity Release or Re-Mortgage to fund retirement?

jamesd

I don't think that the projected value for the Parmenion pension is credible. Even over six years that requires 23.9% a year growth and that's around three times what the UK stock market delivers on average. They might be assuming that you're going to add lots of new money every year.

Worth looking in detail at their projection to see what assumptions they are making. That'll give a better idea of what's likely.

jamesd

The increase in the value of the school benefits counts towards the £40,000 limit.

Is the school scheme one like LGPS that lets you pay in AVCs and use those to fund a tax free lump sum on the combined value of the AVC and defined benefit parts? That's often a good opportunity for those who can still pay in to exploit because you can pay in with tax relief then take out tax free.

ashpan

jamesd wrote: »

The increase in the value of the school benefits counts towards the £40,000 limit.

Is the school scheme one like LGPS that lets you pay in AVCs and use those to fund a tax free lump sum on the combined value of the AVC and defined benefit parts? That's often a good opportunity for those who can still pay in to exploit because you can pay in with tax relief then take out tax free.

yes its an LGPS so i can pay in extra - i really dont know what my IFA is playing at, hes not discussed any of this with me and im pretty clueless as you can probably tell which is why i bought him on board in the first place. I originally planned to retire age 66 so i think hes invested accordingly so now im worried that if i start to withdraw from the investments hes guided me into that ill loose out. How can i get out of using him without it costing me an arm and a leg in potential lost revenue (my own fault for changing retirement plan) and fees!

bostonerimus

What are your underlying pension and ISA investments? What funds etc. If you don't know that you need to find out. You've already made one pretty big mistake with the property scheme. You need to find out how the rest of your money is invested and how much you are being charged by the IFA/penison companies........my worry is that you are paying big fees to the IFA and the DFM in addition to fund fees.

jamesd

ashpan wrote: »

yes its an LGPS so i can pay in extra

Excellent! That means it should probably be first call to use your savings money, drawing on that to help fund the contributions.

Assuming crystalised benefits of £66,366 means that's the value used in the 25% calculation that means you could put in £22,122 of AVCs with tax relief and get all of that out tax free without reducing the defined benefit pension income.

I'm not sure how much longer you plan to work or how close you'll be able to get to fully exploiting this but it might be worth planning around it for when you stop work, if there's no great hurry.

However, I'm not an expert on the details of the LGPS and there are some real experts on it here who can correct and expand on the general description I just gave. If nobody adds something in a couple of days you might want to start a new discussion with LGPS in the title to attract those people, provide the LGPS details and refer to this discussion for the big picture.

ashpan wrote: »

i really dont know what my IFA is playing at, hes not discussed any of this with me and im pretty clueless as you can probably tell which is why i bought him on board in the first place. I originally planned to retire age 66 so i think hes invested accordingly so now im worried that if i start to withdraw from the investments hes guided me into that ill loose out. How can i get out of using him without it costing me an arm and a leg in potential lost revenue (my own fault for changing retirement plan) and fees!

There isn't normally any penalty for leaving an IFA these days, since they switched to a fee charging model. On older agreements they would often get commission for say five years and customers might have to reimburse that so they don't end up paying less than the full price for the service they originally received.

I think that both pension and ISA are in adviser-only products so you might need to transfer those.

michaels

I don't wish to sound patronising but I think having already invested in the hotel scheme I think the op needs to be very careful that they are not persuaded to do something similar with the rest of their cash savings and dc pension pot.

Malthusian

ashpan wrote: »

i realise this may be the case hence my not including it in my future plans-if it fails to return is there anything i can do?

Were you advised to invest by an FCA-regulated adviser? If so you can complain to the adviser and they must offer redress for selling an unsuitable investment; if they go bust you can claim from the FSCS. If (as I suspect) you were not advised to invest by an FCA-regulated adviser, you will probably have to write it off. Your only option would be to sue, and the chances of getting a judgment and successfully enforcing it are slim.

Also where can i find out more about how to invest in secured Bonds and what sort of return should i be looking for? Thankyou

"Secured bond" is a meaningless term used to dress up ultra-high-risk investments with a significant chance of losing 100% of your money. In the same way as your ultra-high-risk hotel room investment was dressed up as something other than it was to make you invest in it.

There is a plethora of such bonds around. You shouldn't touch them with a bargepole.

The fact that you asked the question proves my point - you should be very cautious because the fact that you invested in the hotel room indicates that you are vulnerable to being persuaded to invest in similar ultra-high-risk investments that could lose all your money. If I'd PMed you and told you how to invest in a secured bond paying 8% per annum you might have done it by now, and three years later you'd find you'd lost all your money again and I'd've disappeared with 20% of your money in commission. You would benefit from independent advice; if your current IFA is useless, find a better one.

ashpan

bostonerimus wrote: »

What are your underlying pension and ISA investments? What funds etc. If you don't know that you need to find out. You've already made one pretty big mistake with the property scheme. You need to find out how the rest of your money is invested and how much you are being charged by the IFA/penison companies........my worry is that you are paying big fees to the IFA and the DFM in addition to fund fees.

my pension is allocated as follows Cash 2%, fixed interest 24.5% property 9.8%, Uk Value and Income Equity 19.6%, Uk Growth 19.6%, Developed Markets Equity 24.5% (all PIM strategic passive) it has gained £7k in two years. Total Annual charge for the portfolio is .94% My advisor charges 1.9%

My ISA is invested with Met Life who have stopped taking further investments but IFA said its safe so not to move it.

Durban

jamesd wrote: »

Excellent! That means it should probably be first call to use your savings money, drawing on that to help fund the contributions.

Assuming crystalised benefits of £66,366 means that's the value used in the 25% calculation that means you could put in £22,122 of AVCs with tax relief and get all of that out tax free without reducing the defined benefit pension income.

I'm not sure how much longer you plan to work or how close you'll be able to get to fully exploiting this but it might be worth planning around it for when you stop work, if there's no great hurry.

However, I'm not an expert on the details of the LGPS and there are some real experts on it here who can correct and expand on the general description I just gave. If nobody adds something in a couple of days you might want to start a new discussion with LGPS in the title to attract those people, provide the LGPS details and refer to this discussion for the big picture.


There isn't normally any penalty for leaving an IFA these days, since they switched to a fee charging model. On older agreements they would often get commission for say five years and customers might have to reimburse that so they don't end up paying less than the full price for the service they originally received.

I think that both pension and ISA are in adviser-only products so you might need to transfer those.

This is an excellent thread and the advice from jamesd is always brilliant.
Regarding the LGPS AVC's - I think that there is an exit fee , a percentage , if you take them before 3 years - on a sliding scale?
I know there definitely is with Prudential.

I have just had a quick look at the Prudential LGPS site. It appears that this has now been changed and there may no longer be an exit fee although you would have to look into this properly.

As Jamesd said, LGPS AVC's would be excellent. Tax free on the way in and the whole lump sum tax free on the way out.

JimmyTheWig

ashpan wrote: »

i think ill look into this again, ive always been averse to drawing down from the private pension/ISA

Surely retirement is exactly when you should be drawing down the pension?