SIPPs

Clive_Woody

kidmugsy wrote: »

We find them cheap enough for our small SIPPs: the secret is not to buy "funds" but to use ETFs or shares.

HL certainly seem to get a lot of positive press across the investment and pension boards on here. Sounds like a good starting point for looking at next steps.

BLB53

Any suggestions on where to start looking for personal/stakeholder pensions if these could be preferable to a SIPP?

These are offered by the big insurers such as Aviva, L&G etc. however the available funds are limited and the charges are typically ~1.0%.

If you would be happy with Vanguard Lifestrategy you can open a SIPP with e.g AJ Bell Youinvest and your costs would be less than 0.5% p.a. This may not seem like much but it will save you quite a bit as time passes and your fund grows.

When Vanguard launch their own SIPP it will likely charge even less.

Clive_Woody

BLB53 wrote: »

These are offered by the big insurers such as Aviva, L&G etc. however the available funds are limited and the charges are typically ~1.0%.

If you would be happy with Vanguard Lifestrategy you can open a SIPP with e.g AJ Bell Youinvest and your costs would be less than 0.5% p.a. This may not seem like much but it will save you quite a bit as time passes and your fund grows.

When Vanguard launch their own SIPP it will likely charge even less.

Thanks and I really appreciate your patience answering what must be very basic questions.

Presumably with a SIPP, and managing your own investments within this, the "normal" route as you approach retirement age is to move from higher risk (VLS100*) down to lower risk (VLS20) to avoid the risk of sudden downturns in the market.

*I appreciate that VLS may not be the best example but given my current state of investment knowledge are the most appropriate examples I could think of

BLB53

Presumably with a SIPP, and managing your own investments within this, the "normal" route as you approach retirement age is to move from higher risk (VLS100*) down to lower risk (VLS20) to avoid the risk of sudden downturns in the market.

To some extent it depends upon your risk profile and tolerance for market volatility. Some people will find the 100 equity exposure too high and prefer the 80 or 60 for much of the journey to retirement.

Also many will move to drawdown and will still require some growth from their investment for 20 or 30 yrs after retirement so 20 may not be appropriate.

Vanguard offer their Target Retirement funds which are similar to VLS but have an in-built 'glide' which reduces the equity exposure gradually.

Have a read on the Vanguard site
https://www.vanguardinvestor.co.uk/investing-explained/investment-fund-types

Clive_Woody

BLB53 wrote: »

To some extent it depends upon your risk profile and tolerance for market volatility. Some people will find the 100 equity exposure too high and prefer the 80 or 60 for much of the journey to retirement.

Also many will move to drawdown and will still require some growth from their investment for 20 or 30 yrs after retirement so 20 may not be appropriate.

Vanguard offer their Target Retirement funds which are similar to VLS but have an in-built 'glide' which reduces the equity exposure gradually.

Have a read on the Vanguard site
https://www.vanguardinvestor.co.uk/investing-explained/investment-fund-types

Thanks, so potentially something like the VG Target Retirement Fund held within a SIPP would give a simple option for a pension.

Is the tax relief paid immediately upon depositing the funds or does this happen at the end of the tax year?

MallyGirl

The problem with the Vanguard target retirement funds is that they are inflexible - what if you change your mind and want to work one year more, or less. Also they start quite aggressive in terms of risk and then drop to really quite conservative.

NoMore

Clive_Woody wrote: »

Is the tax relief paid immediately upon depositing the funds or does this happen at the end of the tax year?

Depends on the provider, some pre fund so its added right away for you to invest, and then they claim the tax relief at later date. Others wait until the claim is deposited before allowing you to invest, usually 4 to 8 weeks after initial deposit.

dunstonh

Thanks, so potentially something like the VG Target Retirement Fund held within a SIPP would give a simple option for a pension.

I really dislike the vanguard TR funds.

a) they are more expensive than the VLS funds (which are more expensive than the underlying funds).
b) cheaper alternatives are available (although perhaps not on the non-advised side)
c) lifestyle funds make adjustments based on a fixed diary. So, there is no personalisation.
d) the V TR funds start at a risk level that is higher than the average UK consumer and drop below the level of the average UK consumer quite early on in the risk reduction stage. So, you need to decide if your risk level and timing fits the fund.

Is the tax relief paid immediately upon depositing the funds or does this happen at the end of the tax year?

If pre-funded, it is immediate. If it not pre-funded then about 6 weeks later. Most DIY pensions do not pre-fund the tax relief.

Clive_Woody

Thanks, so sounds like VGTR is an over simplification and lacks flexibility.

My wife's pension pot would be a relatively modest portion of our overall retirement plans, but the tax relief would be nice, so we would be comfortable taking a higher risk approach with this pot to potentially see greater growth to boost it further. Possibly start with a VLS80 and then switch some to lower equity versions VLS40/20 when it feels right.

The more I think about it, the more I think we could benefit from professional advice as the benefits could outweigh the costs of advice. Depending on ongoing choices I make regarding funding my pension savings the lifetime allowance could come into play and my wife stands to receive a significant inheritance (hopefully not for a long time). The mortgage is almost gone and I am a good 20+ years from retirement so plenty of time to make a difference. Hmmmm....

atush

woolly_wombat wrote: »

Does your wife work in a state school? If so then is she a member of the LGPS (Local Government Pension Scheme).

LGPS, if eligible, should be her first port of call, topped up with Sipp/personal pension/stakeholder pension.

Ths is what I was thinking. she should join the employer pension whatever it is