Basic Chat with an IFA

Linton

6022tivo wrote: »

I salary sacrifice 75% into a Aviva Fund that is pretty generic and company negotiated (Fee looks lowish) company pay their NI Saving and 10% as well.
I can log in and change funds if required.
I keep my salary to just under the Basic Tax Rate.

As far as I see it's savy and tax efficient, what else could they tell me to do?

- Perhaps the generic fund is too cautious and not giving sufficient return for you to reach your objective and so something different would be better for your circumstances.
- Perhaps you are putting too much into your pension and at risk of exceeding the Lifetime Allowance before you retire.
- Putting 75% of your income into a pension sounds a lot. It could be argued that there is no point in living on the breadline now and then having so much in your pension when you retire that you wont be able to (or would not know how to) spend it before you die.
- When do you intend to retire. If you havent thought about it, you should.
- Do you own your own home? If not you should seriously consider it.
- Dependents/spouse? If so what would happen should you die.

I also have an old works pension that is final salary and I've been told to leave this alone as they don't really do them anymore. So wondering if this is the same advice? The final figure does not appear to be going up with inflation though? Not sure if it should?

You would need a good reason to move out of a DB pension. If you dont have one, dont do it. How or if a DB pension increases over time should be explained in the scheme rules. Have you read them? When did you start and leave the DB pension scheme? The law has changed several times over the years.

6022tivo

Linton wrote: »

- Perhaps the generic fund is too cautious and not giving sufficient return for you to reach your objective and so something different would be better for your circumstances.
- Perhaps you are putting too much into your pension and at risk of exceeding the Lifetime Allowance before you retire.
- Putting 75% of your income into a pension sounds a lot. It could be argued that there is no point in living on the breadline now and then having so much in your pension when you retire that you wont be able to (or would not know how to) spend it before you die.
- When do you intend to retire. If you havent thought about it, you should.
- Do you own your own home? If not you should seriously consider it.
- Dependents/spouse? If so what would happen should you die.

First important point is I don't like to gamble, I don't want to risk too much for reward. May not make much sense to you guys, but it's a personal thing.
So HIGH risk stock market heavy investments I'm not keen on.

The Generic Fund is... Aviva Av MyM My Future Growth
Risk 4?
The annual charge is 0.35%.
I can switch around and move funds around to hundreds (No proper understanding of this)
I pay 75%ish of my salary in through salary sacrifice, my company pay 10% in, they also pay their saving of NI which is very kind of them (As not required apparently).
I have been told (Not sure if true) my maximum pension pot is limited to £1m? I will never make that value.

I have a DB old pension of which the details are.
Started in 1998, left the company in 2010, pensionable service 9yr 2m, changed from full time to part time somewhere during that.
The Plan is contracted-out of the State Second Pension (S2P):
Plan increases by 5% or RPI per year.
Pensionable Remuneration used in Calculation £21k Per Annum
Your benefits become payable from xx/xx/2039
Total Pension at leaving £3k Per Annum
This never appears to change everytime I log in and check??
However when I go to the projection page, I can select 65 as a retirement age and it says - Gross Retirement Pension £5k Per Annum
or £19k tax free cash and a adjusted pension of £3k per annum?It also offers a transfer out value of £156k which appears very high?



I have no end game.
I just want to be efficient.
I own a house.
I have no debt.
I have other cash isa's.
I have many index linked savings (NSI) I can fall back on if needed.
I live very conservatively, and have no interest in spending or buying anything at the moment.
I can still save and live happily on my £11kish income.

Flobberchops

I only skimmed but I think I agree with the general consensus - if you want an IFA's advice then play by IFA rules. If it was industry standard to make £100 for an "informal chat" then they would all be doing it. In reality I expect that would lead to all kind of litigation that simply wouldn't be worth the risk.



Informal chat -> £100 profit -> Get sued because some guy misconstrued your mentioning of cryptocurrency as advice to plough their life savings and pension into "the next Bitcoin" -> £50,000 loss.


If you just want a chat or a sounding board then, as suggested, post here for free. You'll have to decipher the noise to signal ratio yourself!

Linton

6022tivo wrote: »

First important point is I don't like to gamble, I don't want to risk too much for reward. May not make much sense to you guys, but it's a personal thing.
So HIGH risk stock market heavy investments I'm not keen on.

The Generic Fund is... Aviva Av MyM My Future Growth
Risk 4?
The annual charge is 0.35%.
I can switch around and move funds around to hundreds (No proper understanding of this)
I pay 75%ish of my salary in through salary sacrifice, my company pay 10% in, they also pay their saving of NI which is very kind of them (As not required apparently).
I have been told (Not sure if true) my maximum pension pot is limited to £1m? I will never make that value.

I have a DB old pension of which the details are.
Started in 1998, left the company in 2010, pensionable service 9yr 2m, changed from full time to part time somewhere during that.
The Plan is contracted-out of the State Second Pension (S2P):
Plan increases by 5% or RPI per year.
Pensionable Remuneration used in Calculation £21k Per Annum
Your benefits become payable from xx/xx/2039
Total Pension at leaving £3k Per Annum
This never appears to change everytime I log in and check??

It wont change. It is simply an historical statement of the position when you left the scheme.

However when I go to the projection page, I can select 65 as a retirement age and it says - Gross Retirement Pension £5k Per Annum

This is the number that matters. It seems to be based on £3000/yeear in 2010 increasing by 2% inflation until 2039.

or £19k tax free cash and a adjusted pension of £3k per annum?It also offers a transfer out value of £156k which appears very high?

£156K is 30X current value of future pension which is not particularly generous. Bearing in mind your level of caution in my mind it would be foolish to think of trying to take the money.

I have no end game.
I just want to be efficient.
I own a house.
I have no debt.
I have other cash isa's.
I have many index linked savings (NSI) I can fall back on if needed.
I live very conservatively, and have no interest in spending or buying anything at the moment.
I can still save and live happily on my £11kish income.

When you retire you will have SP of about £8.5K and a DB pension of say £3.5K at current prices which should be more than enough to provide you with your £11K income. What are your pension savings for? Your lack of an end game is a serious omission. Given what you say you are likely to die leaving a large sum of money. Is that the end game, do you have a beneficiary in mind? It doesnt sound like an efficient use of your money.


Note - figures corrected.by edit.

6022tivo

Linton wrote: »

When you retire you will have SP of about £8.5K and a DB pension of £5K at current prices which should be more than enough to provide you with your £11K income. What are your pension savings for? Your lack of an end game is a serious omission. Given what you say you are likely to die leaving a large sum of money. Is that the end game, do you have a beneficiary in mind? It doesnt sound like an efficient use of your money.

How can I define an end game, the end could be tomorrow? I genuinely don't have one.
Some of the cash isa / index linked things will help my Son buy a house, I'm thinking 100k of it to help him on the ladder that will be pretty soon.
He will be my beneficiary, him and his children.
I will have to look into inheritance tax, I believe my allowance in my situation (Some unused from my late spouse) is around £550k, then I think there are new rules about leaving my house to my children which will help.
Not sure how pension funds are subject to inheritance tax.

AnotherJoe

6022tivo wrote: »

First important point is I don't like to gamble, I don't want to risk too much for reward. May not make much sense to you guys, but it's a personal thing.
So HIGH risk stock market heavy investments I'm not keen on.
The thing is, risk changes depending upon timescale. Lets say 100% general global investments (nothing selected by a Woodford or a Train or a Smith) . Very high risk over a day or a year. Much less risk over 5 years almost none over 10 and over 20 years less risk than putting in what you might think is "safe" investments that coudl get eaten by inflation..
The Generic Fund is... Aviva Av MyM My Future Growth
Risk 4?
The annual charge is 0.35%.
I can switch around and move funds around to hundreds (No proper understanding of this)
I pay 75%ish of my salary in through salary sacrifice, my company pay 10% in, they also pay their saving of NI which is very kind of them (As not required apparently).
I have been told (Not sure if true) my maximum pension pot is limited to £1m? I will never make that value.

I think you are saving around £38k a year into your pension then, overall.If you get say 5% a year growth (which is only 1% above what you can get from a dividend fund so nothing wild) , and increase your savings by 2% a year with inflation, over 20 years that would be £1.7M aprox in 20 years and you'd hit a million in just 15 years.


I have a DB old pension of which the details are.
Started in 1998, left the company in 2010, pensionable service 9yr 2m, changed from full time to part time somewhere during that.
The Plan is contracted-out of the State Second Pension (S2P):
Plan increases by 5% or RPI per year.
Pensionable Remuneration used in Calculation £21k Per Annum
Your benefits become payable from xx/xx/2039
Total Pension at leaving £3k Per Annum
This never appears to change everytime I log in and check??
However when I go to the projection page, I can select 65 as a retirement age and it says - Gross Retirement Pension £5k Per Annum
or £19k tax free cash and a adjusted pension of £3k per annum?It also offers a transfer out value of £156k which appears very high?

I have no end game. <

---

Not even when you wish to retire?
I just want to be efficient.
I own a house.
I have no debt.
I have other cash isa's.
I have many index linked savings (NSI) I can fall back on if needed. Is that many in the context ofa years expenditure or 20?
I live very conservatively, and have no interest in spending or buying anything at the moment.
I can still save and live happily on my £11kish income.

So, as above, you would definitely seem to be in "danger" of hitting the LTA, though whether that stupid limit is still there in 20 years time, who knows. Hopefully not.


You are squirreling away a lot of money but with no clear end point in goal, there may be better ways of doing it. If you decide you wish to retire say 10 years earlier than you can get your money out of a a pension, putting less into a pension and more elsewhere might be a good plan.


I think you need much more than a one hour chat over coffee.

Simby

Linton wrote: »

It wont change. It is simply an historical statement of the position when you left the scheme.
This is the number that matters.
£156K is 30X current value of future pension which is not particularly generous. Bearing in mind your level of caution in my mind it would be foolish to think of trying to take the money.


When you retire you will have SP of about £8.5K and a DB pension of £5K at current prices which should be more than enough to provide you with your £11K income. What are your pension savings for? Your lack of an end game is a serious omission. Given what you say you are likely to die leaving a large sum of money. Is that the end game, do you have a beneficiary in mind? It doesnt sound like an efficient use of your money.

I wonder how unusual the no end game part is, it could be said also have no end game other then to have 40x living in a pension ( I have a DC) and at least 700k in investments outside a pension... I own my house.

I have no financial end game other then to be safe from homelessness and to be able to fund myself and my care.

I also suspect I am not using my finances efficiently but for me being financially secure lets me sleep at night.

6022tivo

AnotherJoe wrote: »

So, as above, you would definitely seem to be in "danger" of hitting the LTA, though whether that stupid limit is still there in 20 years time, who knows. Hopefully not.


You are squirreling away a lot of money but with no clear end point in goal, there may be better ways of doing it. If you decide you wish to retire say 10 years earlier than you can get your money out of a a pension, putting less into a pension and more elsewhere might be a good plan.


I think you need much more than a one hour chat over coffee.

My pension payments are a little less than £38k, I think the 75% is after the LEL. I've only been doing this the last couple of years. I don't think I will still be in this job to get near the LTA.
No end game retirement age. I fear it a little as I will be pretty bored. My current job is less than 30 hours a week, and not stressful. I'd do it for something to do until I couldn't. Be that 55 or 75?


As I understand it, if I lost my job I can take some of this pension back (25% is it? Tax free at the age of 55). I could then live on that for a bit if I needed to.
I honestly don't know what the future has in scope for me. Maybe a small business to keep me occupied?

AnotherJoe

Simby wrote: »

I wonder how unusual the no end game part is, it could be said also have no end game other then to have 40x living in a pension ( I have a DC) and at least 700k in investments outside a pension... I own my house.

I have no financial end game other then to be safe from homelessness and to be able to fund myself and my care.

I also suspect I am not using my finances efficiently but for me being financially secure lets me sleep at night.

Do you have a target date when you will retire, stop earning, and start spending your pension? And how much income you'd need then ?

In my mind, that would be your end game.
The alternative is you intend to work until you are too ill to, or drop dead.

Simby

AnotherJoe wrote: »

Do you have a target date when you will retire, stop earning, and start spending your pension? And how much income you'd need then ?

In my mind, that would be your end game.
The alternative is you intend to work until you are too ill to, or drop dead.

I have calculated pension fund needs to be 40 times living expenses ( or 25 depending on who’s advice your follow) plus 700k in liquid investments outside a pension.

Once I get there I will retire projections say age 57 or thereabouts ...so yes you are right I guess that is the end game financial freedom .