Pension/investment advice

atush

If your IFA recomended option 2 you need a new one.

Like everyone said, it is the worst option.

Trinity_Phil

Doh...typo...meant to put option 3 :doh::doh:

Trinity_Phil

Hi folks...it's been a couple of months since my last post but things have been progressing behind the scenes.
Our IFA has been to see us a couple of times and has now sent his report through with his recommendations :-
Firstly, regarding the wife's £21,900 current pension with the Royal London, he is recommending switching this to a Prudential Retirement Account, but on the face of it (to a complete novice admittedly), it doesn't look a very good option to us once their respective charges have been deducted.
They are using a growth rate of 2.44% ( gross) in their projections which means in 11 years time when the policy matures, it would be worth £28,200, however after deducting all relevant charges (£5,400) the policy is only worth £22,800...a net gain of only £900 in 11 years !!!
Surely there are better options than that ??
Regarding the remainder of my lump sum, he is recommending that both me and the wife each take out a £20k "Life Insurance Policy within the Prudential" stocks and shares ISA. The supplied literature states that this is currently returning 5.5% gross ??
He is offering to fore-go their initial Establishment Fee of £500 per ISA and only going to charge us their 1% implementation fee of £400 + an annual service fee of £254.
What are peoples thoughts, please ??

Thrugelmir

Trinity_Phil wrote: »

They are using a growth rate of 2.44% ( gross) in their projections which means in 11 years time when the policy matures, it would be worth £28,200, however after deducting all relevant charges (£5,400) the policy is only worth £22,800...a net gain of only £900 in 11 years !!!
Surely there are better options than that ??

Projections are just that projections. In terms of longer performance absolutely meaningless. As no one knows what the future holds.

mgdavid

Trinity_Phil wrote: »

Hi folks...it's been a couple of months since my last post but things have been progressing behind the scenes.
Our IFA has been to see us a couple of times and has now sent his report through with his recommendations :-
Firstly, regarding the wife's £21,900 current pension with the Royal London, he is recommending switching this to a Prudential Retirement Account, but on the face of it (to a complete novice admittedly), it doesn't look a very good option to us once their respective charges have been deducted.
They are using a growth rate of 2.44% ( gross) in their projections which means in 11 years time when the policy matures, it would be worth £28,200, however after deducting all relevant charges (£5,400) the policy is only worth £22,800...a net gain of only £900 in 11 years !!!
Surely there are better options than that ??
Regarding the remainder of my lump sum, he is recommending that both me and the wife each take out a £20k "Life Insurance Policy within the Prudential" stocks and shares ISA. The supplied literature states that this is currently returning 5.5% gross ??
He is offering to fore-go their initial Establishment Fee of £500 per ISA and only going to charge us their 1% implementation fee of £400 + an annual service fee of £254.
What are peoples thoughts, please ??

I haven't read back over the whole thread but are you sure your 'IFA' is Independent or just an FA?
Is it just me but it seems odd that they've recommended not one but two Prudential products?

mark55man

that does sound odd. Your copper's nose has sniffed out a wrong 'un. It is highly likely your advisor is making more than you. good luck with your decision but you have done a lot of work to get so far, so don't baulk at overcoming a couple moredifficulties to get the right result for your retirement

Trinity_Phil

mgdavid wrote: »

I haven't read back over the whole thread but are you sure your 'IFA' is Independent or just an FA?
Is it just me but it seems odd that they've recommended not one but two Prudential products?

I did think it a bit strange that the two "best" products that he is recommending were both from the Pru, but the documentation he has sent us clearly states that they are independant.
Now I accept that nothing comes free in this life and fully expect having to pay for on-going financial services but £5,400 in fees for a net gain of £900 doesn't sound like a good deal to me !!
What I haven't mentioned is that the wife also has a current pension with the LGPS which currently stands at around £15k, so, if this is a better option, could we transfer her £21,900 pension into the LGPS pension fund for a better return ??
What about the ISA's....are they the best option ??

AlanP_2

Trinity_Phil wrote: »

I did think it a bit strange that the two "best" products that he is recommending were both from the Pru, but the documentation he has sent us clearly states that they are independant.
Now I accept that nothing comes free in this life and fully expect having to pay for on-going financial services but £5,400 in fees for a net gain of £900 doesn't sound like a good deal to me !!
What I haven't mentioned is that the wife also has a current pension with the LGPS which currently stands at around £15k, so, if this is a better option, could we transfer her £21,900 pension into the LGPS pension fund for a better return ??
What about the ISA's....are they the best option ??

LGPS normally only allows transfers in within 12 months of strating employment. You could ask but seems unlikely.

Trinity_Phil

Cheers AlanP....what would people recommend then ??

mark55man

Sorry Phil - I am no expert, and this is complex stuff - so if anythig below intersts you seek proper advice

so one thing that hasn't been covered yet is that when money is in DC pensions (not DB or annuity) it is actually quite tax efficient way of passing on inheritance if you have nominated beneiciaries - as is is not counted as part of your estate.

so I would think hard about just leaving your OH's £21K and any additional contributions from lump sums to grow using a your preferred investment approach (noting you can always get at it if circumstances change). My cautious passiveapporach would be something cheap and widescale like Vanguard Lifestrategy 60 or 80 - as this could be there growing for decades - but do your own research

if you take it out of the pension (even using the tax efficient methods outlined above) even if you put it in ISAs it becomes more definitiely part of YOUR money, and will be counted for care costs / IHT etc.

If you leave it in the pension basically when you die your money can be passed as a lump sum or as an income to your dependencies which could be your OH or your children. There is a break point at 75 (before hand all the money is tax free to your dependents, after 75 the money is passed on at the recipients marginal rate).

It doesn't matter if you have started to take the benefits from the fund or not (although there are other allownces that do matter discussed above) and there are limits to how big a pension can grow (although I suspect you and your OH are not in that zone yet)

You may disagree, but in my (very loose) personal planning any DC money that I haven't used before getting to my DB and State pension is for inheritance purposes as I think the current younger generation are worse off than we are, and I would want to redress the balance to as great an extent as possible via this mechanism. - but there are different ways to achieve this


don't get caught up in the decisions you need to make for the next year/5 years - to cut off any thing that might work on a decades/generational basis