Request for help - Trying to sort out my finances?

Mr_Proctalgia

Hello all.
This is a bit of a cri de coeur, I decided to go through my pensions and stuff and think that some of them are not doing at all well so would welcome any advice you may have to offer as I would like to either simplify or improve my future financial standing as best I can.

My current situation is as follows

I am working full time but not earning huge amounts.
My mortgage is paid off and my house deeds are locked in (my) safe.
I am single.
I do not have a will written yet.
I am 52 years old

I have a deferred Army pension that kicks in in Aug 2015 (@12/22 of an OR3 rate and 3 times annual pension as a "grant")
I have a personal pension with HSBC going back years but is only worth £22334 as of last statement - I pay in £1558pa WITH tax relief but it goes up little past this amount per annum - Should I shift it elsewhere

I have a small pension with AXA from my last job that went up over 30% pa despite nothing being paid into it.


My new employer (IKEA) has a pension scheme that is 6.5% them and 4.5% me, and, obviously I will be making the best of this.


My NI contrbutions statement says I have an indicated penion of £114pw and that I have 33 years of NI contributions ( but have said I can pay some extra ( I have taken most of this year off as a 7 day weekend - Not signed on, not claiming either)
I am not contracted out of Serps/S2P except for the time I was in the Army - 1973 to 1985 (and no choice in the matter either)

I have some smallish credit card bills and just about enough in the bank to cover them, but they are at 0% till next August anyway so not worried and will shift them as far as I can in due course.

As I am but a simple person, not daft, but not wise in the ways of financial things what can I do to maximise my last years. Having taken almost a year off I have learned that it isn't all its cracked up to be, so will possibly be working part time as I get a little older, letting it all slip isn't in my nature and I think my hard earned pennies could be doing better.

What do the panel think??

TIA.

EdInvestor

# Pay into IKEA pension as planned

#Consider moving old pensions (assuming they don't have guarantees) to an execution only SIPP (eg https://www.h-l.co.uk) and invest money in quality funds

#Otherwise max out self select ISA, also using e/o provider

#On target for state pension as min no of years is coming down to 30 from 2010 so no need to pay more.

shaunrc

Hi Mr Proctalgia

Firstly I work as an IFA and am regulated therefore please take this as help rather than advice.

If you came to see me I think there would be 3 priorities.

1. To check your existing pensions and the charges on them
2. To have a discussion around investment and what you would be comfortable with which has 2 sections. One is for the money built up already and the other is for new money.
3. Join the new scheme because of the company contribution.

Once you have done that it would be clear where you should head which may but also may not be where Ed has suggested.

In general you are reasonably sorted although a will is a good idea, it may as well be you who chooses who gets your money! You are right about a year off, I had one when I left the City and it is not always as fun as you might think,for a start all my friends were at work.

Mr_Proctalgia

Thanks for the information so far given. I have had a read of the HL site and parts of it made my eyes bleed!

I have just re-read my last HSBC (EX Midland Life) statement and there is no mention of charges on the statement. Is this because they have a bid/offer spread on the units that I hold or not? Or is it because the charges were front loaded? - Should I give them a call?

That being said my statements are imminent for this year so I will wait a few more days to see what has happened this year.

I think I like the idea of new money/old money but could this mean more
charges for me?

I am not risk adverse with regard to this pension as I have some backup if need be - That being said I would not be best impressed if it were to be totally lost.

Should I switch my monthly savings to the AXA pension instead of the HSBC one and, how can I check how well it has been managed so far, or should I consider moving things over to the IKEA pension if it turns out to be a good one (Will have to wait till Feb for that though)

Thanks for the help so far and, sorry for all the questions.


Edited for more information.

I have spoken to HSBC and they say:-

I am paying 1%AMC
5% Bid Offer spread
I get 105% allocation an my regular unit purchases so perhaps it isn't that bad after all???

dunstonh

Thanks for the information so far given. I have had a read of the HL site and parts of it made my eyes bleed!

It is meant for the more experienced investor and it is more expensive than conventional pensions.

Should I switch my monthly savings to the AXA pension instead of the HSBC one and, how can I check how well it has been managed so far, or should I consider moving things over to the IKEA pension if it turns out to be a good one (Will have to wait till Feb for that though)

That is too specific to say and we would fall foul of FSA regs if we did.

I am paying 1%AMC
5% Bid Offer spread
I get 105% allocation an my regular unit purchases so perhaps it isn't that bad after all???

Its a legacy personal pension that has been made to almost mirror stakeholder charges. You can do better on charges and probably fund choice.

If you are not up for doing it yourself you should get an IFA to do it for you.

EdInvestor

Have you looked at the tax position past retirement?

If you already have an army pension, a state pension and a couple of other pensions, you may be a lot better shifting new money into ISAs.

You'd be wise to get an estimate of your retirement income sorted before throwing any more money into the pension wrapper.(If you are not contracted out of the state 2nd pension, your income there may be much higher than you expect.)

Remember pensions are taxed in retirement: income in ISAs is not, and direct investments may not be either.Too much income in pensions can be a big mistake.

The other mistake you're making is not understanding that the most important thing about pensions is what funds your money is invested in.You need to control this.I'm afraid that these days there's no way to avoid learning about investments, because even if you use an advisor, they are not necessarily going to act in your best interests - because what benefits you might not benefit them.

If you have no idea what the advisor is talking about, then you are far more likely to be treated like a mug punter and ripped off, sad to say.:(

dunstonh

Remember pensions are taxed in retirement: income in ISAs is not, and direct investments may not be either.Too much income in pensions can be a big mistake.

The tax paid is one issue but then the other is that as far as income provision is concerned, nothing beats a pension from age 65 for provision of a guaranteed income for life.

because even if you use an advisor, they are not necessarily going to act in your best interests - because what benefits you might not benefit them....
...If you have no idea what the advisor is talking about, then you are far more likely to be treated like a mug punter and ripped off, sad to say.

Ed has a bias against advisers and her views do not relect the majority. As long as you see an IFA and not a tied agent (and it has been a tied agent that you have seen by going to Midland/HSBC) then you shouldnt have a problem. Every profession has its bad apples but IFAs have the lowest number of complaints of any advice distribution channel. Plus, with modern pensions, the IFA remuneration is often in line with the investment performance so the advisers interests are aligned with yours.

Ed's bias is highlighted by suggesting you look at HL. This option is more expensive than a stakeholder and many personal pensions that an IFA could arrange on maximum commission, let alone an IFA that works with discounts.

I'm not saying you need to use an IFA as you dont. However, based on what you have said, there is certainly scope to improve charges and funds and if you dont know what you are doing, then that is what an IFA is there for.

EdInvestor

dunstonh wrote: »

Ed's bias is highlighted by suggesting you look at HL. This option is more expensive than a stakeholder

Well of course.A stakeholder only offers bog standard inhouse insurance company funds normally. With a HL Sipp you get access to the best quality funds.


...

...and many personal pensions that an IFA could arrange

A PP investing in similar quality external funds (not that any penion will offer them all) will usually be more expensive than the HL SIPP and will offer versions of the funds that reduce your returns.

dunstonh

Well of course.A stakeholder only offers bog standard inhouse insurance company funds normally. With a HL Sipp you get access to the best quality funds.

the best quality funds are only those that you know what to pick and keep under review and switch periodically. If you do that and dont mind paying more for it then fair enough. HLs charges are going to be typically double the charges on the L&G stakeholder for example.

Personal pensions can do the best of both worlds by offering stakeholder funds as well as the most popular external funds and you usually find these still come out cheaper than a SIPP. Indeed, some personal pensions can come out cheaper than a stakeholder.

A PP investing in similar quality external funds (not that any penion will offer them all) will usually be more expensive than the HL SIPP and will offer versions of the funds that reduce your returns.

Im afraid that is incorrect. Some funds will be more expensive, some cheaper. For anyone that is medium risk or lower they will find that the personal pension usually comes in cheaper. For higher risk investors, they will probably find that use of a fund supermarket pension or SIPP is the better option.

If you are not going to use the features of a SIPP then you will normally find that the SIPP is the most expensive option. If you use the features then it can be money well spent.

Mr_Proctalgia

Thanks for all the information so far.

I am off to see an independant IFA for a no cost "Tea and Biccies - Bring all yours stuff" meeting on Weds as a fact finding mission. I then specifically stated that I wanted advice based on fee only or any commision rebated to the fee only level and they seemed more than happy to deal that way. So we shall see.

I really appreciate what you guys have said as the thought of being over pensioned never even entered my head, and may be very important (I think :undecided) - Interesting times ahead!

I will keep the thread updated but please bear with me as I am in a period of odd shifts at work so it may not be instant.

Thanks to all you experts.:T It is appreciated.

Mr_Proctalgia

I have had my fact finding meeting now, all 2 1/2 hours of it . Never in my life did I realise just how much detail would be needed! The main gist of it being my views about risk, and, what if any, fall back positions I would have if the wheels came off my wagon.

Permissions have been signed to get transfer valuations on my current pensions and rough valuations have been looked at with regard to possible tax issues once I am in retirement. (You were correct EdInvestor, it could be a close run thing).

My particular IFA will not himself recommend a particular fund or pension provider to me, he will pass the collated information when it all arrives to their back room where they directly employ "Para Planners" to do the whole of market research given my individual circumstances and attitudes, he says that I an unlikely to hear much about this till Christmas has passed as the Pension providers can be a bit slow and the research typically takes two weeks or so.

He did categorically say: Get the IKEA pension up and running ASP (Free Money). Leave the Army pension well alone, it is impossible to beat ATM, and, doing anything with it could be construed as miss-selling, and get an ISA up and running, not any ISA, a local easy access one as a half a percent is neither here nor there in the first year of so and that "rainy day" money is more important just now - The tax free wrapper is a bit of a bonus.


They will be running my pension fund on some computerised programme that checks investments minute by minute but are waiting for some codes or similar to be sent (Fund Codes :question:) I forgot the name of this - Can anyone remind me?


I was told that my situation was "A bit out of the ordinary for this area" (Ex mining town - Low income and property prices area) A lot of their fund management is typically for around £10kish and people have mortgages and debts (and spend any lump sums they get on TV's and X Boxes) So when I receive his advice I will post the gist of it on here again for comment.

Thanks for reading so far.