Transfer preserved final salary pension to SIPP or not?

Albermarle

I have checked a previous post of Gazzabloom,
He identified a high performing fund in his Standard Life workplace pension . ASI UK smaller companies.
He was planning to invest 100% in it , based on its recent good performance of producing 16% a year.

Current figures are - year ending 31/03/19 + 0.8%
year ending 31/03/20 - minus 4 % 

GazzaBloom

coyrls said:

GazzaBloom said:

I'm in funds with a 20 year history of 14-16% average annual gains after fees.

I don't believe you.

Well you'd better believe it bright eyes, go do your homework on CityWire:

• ASI UK Smaller Companies Pension Fund
• Baillie Gifford American B Acc
• Polar Capital Global Technology I GBP

https://citywire.co.uk/new-model-adviser/fund/asi-uk-smaller-companies-fund/c7751
https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0GBR0506U
https://citywire.co.uk/new-model-adviser/fund/polar-capital-global-technology-fund/c11849

Baillie Gifford American B is up over 43% this year so far.

GazzaBloom

Thrugelmir said:

GazzaBloom said:

jimi_man said:

Just looking at the figures. You don't say what proportion of it is protected by Index linking, so I'll assume 50% of it at 2%. At age 55, with an average life expectancy of 86, that's 31 years, so that gives just over £200k in pension payments, plus the £35k lump sum - £235k. Coupled with the fees that you'd have to pay to transfer, it looks to me like a poor deal. 

If you take out the £35k from the £174k, then you're left with £139K to draw down £5500 per year, rising (proportionately) with inflation every year. That's 4%. I don't know if a continued 4% drawdown rate for the rest of your life, even if you live to be 100, is realistic? 

When you add in the spousal benefits, then it really looks like a poor deal. 

However as someone above said, it depends what other pension provision you have. If you have other (larger) DB pensions, with no need for this, then maybe that might swing it. 

That mostly makes sense but getting notably higher that 4% gains in good equity funds should be achievable over the long term. I'm in funds with a 20 year history of 14-16% average annual gains after fees.

Which funds are in invested in to have achieved these returns? 

see above post

GazzaBloom

Albermarle said:

I have checked a previous post of Gazzabloom,
He identified a high performing fund in his Standard Life workplace pension . ASI UK smaller companies.
He was planning to invest 100% in it , based on its recent good performance of producing 16% a year.

Current figures are - year ending 31/03/19 + 0.8%
year ending 31/03/20 - minus 4 % 

This fund has good years and bad years but averages in excess of 14% over the long term. I buy and hold long term, short term volatility doesn't concern me, not one bit.

AnotherJoe

GazzaBloom said:

I have a DC pension pot that I am building that will provide the main income in retirement. The preserved DB pension £5K is just extra. I'm taking it early at 55 even though there is a reduction in benefits taking before the scheme's normal retirement age of 65 as I have calculated it take 21 years to catch up with the £89K I can take from age 55-64, it's a no brainier to take it early even thought I will be taxed at 40% until I stop working.

I don't find the thought of managing a portfolio of buy and hold mutual funds in a SIPP with a regular drawdown particularly stressful.

Well then, see what i mean about stating the full picture? So you have a big sum elsewhere (or youve extrapolated you will havea big sum)

So, again similar to me except the extra for me is my DC pensions, and the DB + SP is the core. Plus taking the CETV would have blown through the LTA for me. Whereas the lower 20x multiple on DB means i just sneak under. Your gold plated pension transfer specialist will take those factors into account

AnotherJoe

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

Thrugelmir

AnotherJoe said:

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

That makes far more sense. 

GazzaBloom

Thrugelmir said:

AnotherJoe said:

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

That makes far more sense. 

I guess the point of my original post is that I believe that I can get a better return, with some risk and some expectations of future performance, by cashing out the DB pension (assuming the value is around the same as quoted a a year ago) by reinvesting it in these good mutual funds. 

GazzaBloom

AnotherJoe said:

I make their annualised cumulative performance

Polar Global since launch (18 years)  8.7% not inc $ - £ 

ASI smaller cos 5% over 20 years
Bailie Gifford 10% over 20 years

I'm not sure I agree with your annualised cumulative performance calculation for ASI UK Smaller Companies Pension Fund. I calculate it at 13.79% over it's 22 year history. Unless I've got something wrong?? I haven't calculated the others.

Year	% return	Calc
1998	0.120	1.120
1999	0.546	1.546
2000	0.182	1.182
2001	-0.150	0.850
2002	-0.242	0.758
2003	0.320	1.320
2004	0.215	1.215
2005	0.298	1.298
2006	0.435	1.435
2007	-0.024	0.976
2008	-0.335	0.665
2009	0.450	1.450
2010	0.473	1.473
2011	-0.096	0.904
2012	0.231	1.231
2013	0.378	1.378
2014	-0.085	0.915
2015	0.282	1.282
2016	0.034	1.034
2017	0.306	1.306
2018	-0.112	0.888
2019	0.457	1.457
	A	17.162
	B	0.045	1/22
	C	1.138	A^B
		13.79%	Annualised return

GazzaBloom

I've just checked back at my original assessment and research into the 3 funds I am invested in and I just used the last 10 years to calculate the annual returns, I ran the annualised returns calculations for each and I came out with the following numbers for 2010-2019:

• ASI UK Smaller Companies - 16.56%
• Polar Capital Global Tech - 13.68%
• Baillie Gifford American B - 16.71% 

Hence my statement that I invested in funds that could yield 14%-16% after fees (circa 2%)