New SIPP for the wife

burner03

She's a part time (0.6 FTE) school teacher and we want to utilise her personal allowance fully from when she's likely to retire (guessing 58-60) to SPA.
She's currently 41 and has following current benefit statement:

Total Annual Pension Amount

(See breakdown below)

£10,924.90

Arrangement	Normal Pension Age	Normal Pension Date	Annual Pension Amount
80th Final Salary	60 years	13/04/2039	£5,481.35
Career Average	68 years	13/04/2047	£5,443.55

Looking to open a SIPP for the wife to bridge gap between early retirement and NPA and state pension. Ideally we wouldnt want to access her DB scheme early and suffer an actuarial reduction.
In respect of the SIPP, we want to invest in low cost global investments over the next 18 odd years starting at nil balance and chucking in small lump sums annually of ~£5k p.a.
Any recommendations?

NedS

Vanguard maybe. They have a new low cost SIPP platform with a range of low cost global funds.

xylophone

This spreadsheet might help  https://forums.moneysavingexpert.com/discussion/5583030/coolly-comparing-investment-platform-charges-snowmans-spreadsheet/p1

-  https://forums.moneysavingexpert.com/discussion/6171267/vanguard-or-interactive-investor-sipp-to-hold-vanguard-fund#latest

https://monevator.com/low-cost-index-trackers/

83705628

Yeah Vanguard's fine. They may be the cheapest for the kind of sums you're talking about, AJ Bell would be 2nd cheapest, and as it grows you could look at moving to Interactive Investor because their fees are fixed whereas VG and AJB charge a % of your assets.

Personally I use, like and prefer Vanguard to other platforms. They're very open and show all the information you need in easy to find places on the website, they don't have 1000s of funds to chose from just what you need, they don't charge you to buy and sell, and the customer service tends to respond either the same or the following working day.

Your plan seems fine, to avoid market timing I personally stick to making contributions to my ISA at New Years or on the last/first day of the month.

If she's 41 then she can access the SIPP from 57 (or will it be 58 by then?) so you can afford the risk of a higher equity allocation, what funds are you looking at?

Actuarial reduction tends to even out if you have average life expectancy so don't be put off by the reduction. If you have reason to expect lower than average life expectancy, taking it early makes sense, if you have reason to expect to live longer than average, maybe taking it later might make sense.

Have you considered buying additional pension or increasing her accrual rate in the teacher's pension?

Albermarle

Slightly more expensive than Vanguard but probably even more simple to operate.
https://www.pensionbee.com/

DairyQueen

Actuarial reduction tends to even out if you have average life expectancy so don't be put off by the reduction. If you have reason to expect lower than average life expectancy, taking it early makes sense, if you have reason to expect to live longer than average, maybe taking it later might make sense.

There are plenty of reasons not to take a DB early. It depends on the individual's circumstances and plans. Projected life expectancy is just one factor to consider. Others include: %age early retirement penalty, income streams versus income tax, inheritance, income flexibility, spouse's financial situation.

83705628

DairyQueen said:

Actuarial reduction tends to even out if you have average life expectancy so don't be put off by the reduction. If you have reason to expect lower than average life expectancy, taking it early makes sense, if you have reason to expect to live longer than average, maybe taking it later might make sense.

There are plenty of reasons not to take a DB early. It depends on the individual's circumstances and plans. Projected life expectancy is just one factor to consider. Others include: %age early retirement penalty, income streams versus income tax, inheritance, income flexibility, spouse's financial situation.

/
Is the longer and better answer.

burner03

tcallaghan93 said:

Yeah Vanguard's fine. They may be the cheapest for the kind of sums you're talking about, AJ Bell would be 2nd cheapest, and as it grows you could look at moving to Interactive Investor because their fees are fixed whereas VG and AJB charge a % of your assets.

Personally I use, like and prefer Vanguard to other platforms. They're very open and show all the information you need in easy to find places on the website, they don't have 1000s of funds to chose from just what you need, they don't charge you to buy and sell, and the customer service tends to respond either the same or the following working day.

Your plan seems fine, to avoid market timing I personally stick to making contributions to my ISA at New Years or on the last/first day of the month.

If she's 41 then she can access the SIPP from 57 (or will it be 58 by then?) so you can afford the risk of a higher equity allocation, what funds are you looking at?

Actuarial reduction tends to even out if you have average life expectancy so don't be put off by the reduction. If you have reason to expect lower than average life expectancy, taking it early makes sense, if you have reason to expect to live longer than average, maybe taking it later might make sense.

Have you considered buying additional pension or increasing her accrual rate in the teacher's pension?

Thanks all.
We already have S&S ISAs with Vanguard LS 80, so will probably go for the Vanguard SIPP too.
Regarding investment, looking at either the LS 100 or the FTSE Global All Cap Index Fund.
Think she'll be able to drawdown from 58. She's already bought £3k additional pension in her teacher's pension - the SIPP is to bridge from retirement to when DB/SP ages kick in.

83705628

burner03 said:

tcallaghan93 said:

Yeah Vanguard's fine. They may be the cheapest for the kind of sums you're talking about, AJ Bell would be 2nd cheapest, and as it grows you could look at moving to Interactive Investor because their fees are fixed whereas VG and AJB charge a % of your assets.

Personally I use, like and prefer Vanguard to other platforms. They're very open and show all the information you need in easy to find places on the website, they don't have 1000s of funds to chose from just what you need, they don't charge you to buy and sell, and the customer service tends to respond either the same or the following working day.

Your plan seems fine, to avoid market timing I personally stick to making contributions to my ISA at New Years or on the last/first day of the month.

If she's 41 then she can access the SIPP from 57 (or will it be 58 by then?) so you can afford the risk of a higher equity allocation, what funds are you looking at?

Actuarial reduction tends to even out if you have average life expectancy so don't be put off by the reduction. If you have reason to expect lower than average life expectancy, taking it early makes sense, if you have reason to expect to live longer than average, maybe taking it later might make sense.

Have you considered buying additional pension or increasing her accrual rate in the teacher's pension?

Thanks all.
We already have S&S ISAs with Vanguard LS 80, so will probably go for the Vanguard SIPP too.
Regarding investment, looking at either the LS 100 or the FTSE Global All Cap Index Fund.
Think she'll be able to drawdown from 58. She's already bought £3k additional pension in her teacher's pension - the SIPP is to bridge from retirement to when DB/SP ages kick in.

/
Sounds perfectly sensible to me.
Dairy Queen has some very good and more detailed points about actuarial reduction to take into account.

IMHO I personally prefer LS100 to the FTSE Global All Cap because it upweights the UK and the return outlook is a bit higher for the UK vs global equity (https://www.institutional.vanguard.co.uk/portal/site/institutional/uk/en/vanguard-economic-and-market-outlook, starcapital.de). But they're both good funds and you're unlikely to notice a difference between the two IMHO