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Combine pensions or sipp or what?

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savingholmessavingholmes Forumite
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DH has three pension pots plus one through his current work

1) About £1200 pot - DH needs to find details
2) £5988 - it grew £535 but had charges of £143
3) £26115 - it grew £2073.99 and had charges of £252
4) pension due to be worth £4K pa at 67

I think as a minimum we need to combine the first 3 pots - but am considering whether we should move it to a SIPP. We are 49 and interested in moving to the country ideally no later than 55 (2025). We would expect to work in some capacity but are less likely to retain such relatively high income and therefore access to those pension funds could really help.

I have DB pensions that I can access at 67 1) deferred £5K+ and 2) £7.3K (already) and I would continue to contribute to this until we move plus we should both get full state pensions worth approx £17K combined. I could take my pension from the second one of them early but would have a 44% reduction. This is not my current plan - but may consider later.

We are currently repaying debt but expect to resolve that by Nov 20. It would then take us to the summer of 2021 to save up a 6 month emergency fund. After that if we kept our current jobs we could put £1800-2250 per month (OH's salary) towards either the mortgage or investments. With the 20% uplift due to tax relief of going down the sipp route - is that better than trying to repay mortgage with the money and what are the pros and cons?
During 2020: Target 1) Reduce debt from £25.1K @ 0% Now down to £17.129 Target 2) Overpay mortgage - now @ £780 OP Target 3) Improve pensions Target 4) Declutter 52 bags - Done with help of skip & other regular charity collections. 5) Build/maintain EF/Savings pots at £1K or more by 31/12/20
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  • edited 26 August 2019 at 11:09AM
    Dazed_and_confusedDazed_and_confused Forumite
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    edited 26 August 2019 at 11:09AM
    Have you actually checked your State Pension forecasts on gov.uk?

    Given your relatively young age you are highly likely to be able to reach £168.60 providing you are earning enough each year to add additional qualifying years but plenty of posters on here have made assumptions they will get the full £168.60 and been surprised when they check the reality on gov.uk.

    Make sure you read past the headline figure (almost certainly £168.60) to see what you have both accrued to date (should be updated to 05:04:2019 by now).

    And it's a 25% uplift, not 20%. You add say £1,000 into a relief at source scheme and the pension company (courtesy of HMRC) add £250. Gross contribution is £1,250. Of which 20% was the basic rate tax relief.

    How much is your current "relatively high" income? Are either of you paying 40/41% tax?
  • savingholmessavingholmes Forumite
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    Providing we both make another 6 years worth of NI contributions we will qualify for full state pensions. I have checked both our state pensions.

    I am under the threshold for higher rate tax - but hope to get closer / perhaps exceed in the near future. We take home approx £4.9K pcm between the two of us.
    During 2020: Target 1) Reduce debt from £25.1K @ 0% Now down to £17.129 Target 2) Overpay mortgage - now @ £780 OP Target 3) Improve pensions Target 4) Declutter 52 bags - Done with help of skip & other regular charity collections. 5) Build/maintain EF/Savings pots at £1K or more by 31/12/20
  • LintonLinton Forumite
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    At first sight your husbands pensions appear to be pretty small though your DB pensions seem reasonably large.

    Have you calculated
    1) how much income you need to live on?
    2) Where the income is coming from, particularly before you both get your SPs and DB pensions. Do you have other savings?
    3) What happens if one of you dies?
  • savingholmessavingholmes Forumite
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    Thanks for the replies

    If we worked to age 67 - we would retire on around £51K plus (including state pension) any additional benefits we create from other investments. If we moved to the country at age 55 we either need jobs that bring in around £2.7-3K net pcm or some passive income streams that reduces that requirement... or B&B income or similar - potentially more if we are planning to repay mortgage...

    I
    During 2020: Target 1) Reduce debt from £25.1K @ 0% Now down to £17.129 Target 2) Overpay mortgage - now @ £780 OP Target 3) Improve pensions Target 4) Declutter 52 bags - Done with help of skip & other regular charity collections. 5) Build/maintain EF/Savings pots at £1K or more by 31/12/20
  • AlbermarleAlbermarle Forumite
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    1) About £1200 pot - DH needs to find details
    2) £5988 - it grew £535 but had charges of £143
    3) £26115 - it grew £2073.99 and had charges of £252
    4) pension due to be worth £4K pa at 67
    It would see that no 4) is a DB pension so probably best left alone until it is taken .
    It would be easier administratively to combine the other three . Also as they are probably old pensions they will not support some options for when you want to take the money
    This could be by transferring all to a new pension ( which is what you are considering ) or alternatively transferring into the current employer pension. It will depend on exactly what type of workplace pension it is though. ( presume it is DC and not DB?)
    Often workplace pensions are relatively simple and have a discount negotiated by the employer . Usually they are happy to accept transfers in but it depends on the type of pension you will need to check . Also check that when employment ceases the pension then just becomes a personal pension ( usually this is the case)
    If so you can then compare the charges with opening a new SIPP.
    SIPP's are a bit more complicated to operate than a typical workplace ( or ex workplace ) pension for an inexperienced investor.
  • Important update! We have recently reviewed and updated our Forum Rules and FAQs. Please take the time to familiarise yourself with the latest version.
  • savingholmessavingholmes Forumite
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    Thanks - number 4 is defined contribution. OH pays around 6.7% and gets a 4% match. It doesn't perform particularly well - possibly as he put everything in low risk funds. He's seeing a pension adviser about that in September. HR have also committed to reviewing the pension provider.
    During 2020: Target 1) Reduce debt from £25.1K @ 0% Now down to £17.129 Target 2) Overpay mortgage - now @ £780 OP Target 3) Improve pensions Target 4) Declutter 52 bags - Done with help of skip & other regular charity collections. 5) Build/maintain EF/Savings pots at £1K or more by 31/12/20
  • AlbermarleAlbermarle Forumite
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    Thanks - number 4 is defined contribution
    4) pension due to be worth £4K pa at 67
    Then I presume this 4Kpa is the projection of what it will pay at age 67 ?
    In this case this projection might be a little pessimistic - they usually are.
    The low risk funds are much more likely to be causing the poor returns, than the actual pension provider them selves .
    If you move to another provider, including a SIPP, but again with low risk funds , you will probably get pretty much the same result.
  • savingholmessavingholmes Forumite
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    I have since got a cetv on my defined benefits pension. I am 49.5. They would offer me a DB pension of £6K per year with £35K cash at age 60 or £7.7K if I wait to 65 (nots sure what cash they would then give me. The CETV has come in at £325K. I think I should move it to a sipp - as a) the DB part of the pension isn't very generous b) the TFLS isn't very generous either and c) if I was to die within 5 years of drawing it my spouse would only get half of the pension.

    We want to potentially retire at 55, take TFLS and live off various pensions. We are planning to add most of DH's salary to a SIPP between now and then.He's roughly the same age. It looks to me like I'm way better of taking the CETV - is there anything I'm missing?

    Also I know I have to see an IFA - do you have any advice on acceptable charges for doing the paperwork and where I should get one from?
    During 2020: Target 1) Reduce debt from £25.1K @ 0% Now down to £17.129 Target 2) Overpay mortgage - now @ £780 OP Target 3) Improve pensions Target 4) Declutter 52 bags - Done with help of skip & other regular charity collections. 5) Build/maintain EF/Savings pots at £1K or more by 31/12/20
  • Dazed_and_confusedDazed_and_confused Forumite
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    Only you know what is acceptable.

    Going off other threads on here I suspect you are looking at £5-10k. If it were £10k would that be acceptable?
  • savingholmessavingholmes Forumite
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    I've heard some people say 1% of the value? Does that sound right?
    During 2020: Target 1) Reduce debt from £25.1K @ 0% Now down to £17.129 Target 2) Overpay mortgage - now @ £780 OP Target 3) Improve pensions Target 4) Declutter 52 bags - Done with help of skip & other regular charity collections. 5) Build/maintain EF/Savings pots at £1K or more by 31/12/20
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