55 next month, investment decisions

peterg1965

Good morning All,

As the title suggests, I am 55 in about 3 weeks and intend to take 25% PCLS from my SIPP,  SIPP value circa £255,000.  The money is currently in a Minerva SIPP with InvestAcc and the pot is in a variety of fixed rate deposit accounts which all mature between now and mid Oct.  I transferred to Minerva two years ago to avoid any last minute volatility in the value (previously invested in OEICs with HL).  This pension will use about 24% of my LTA, having already used 61.5% with my final salary AFPS pension.

I wouldn't mind some thoughts on what to do with the £191,000 drawdown pot, which I don't intent to start to access for a few years. I will continue to put circa £20k pa into my SIPP alongside the £11.5K pa going into my company DC scheme (£61,500 value at present)  I am now in the 'conservative' end of the risk spectrum.  I will be retiring as soon as I have saved enough in the SIPP and DC pension to use up the remaining 15% of the LTA. - likely in three years time.

I need help regarding the £191,000 (and future contributions to the SIPP) I have been considering splitting it 50:50 between Vanguard VLS20 and VLS80.  Reasons for this are that the ongoing costs are small, it will make my investments straightforward and the money is nicely spread across the range of Vanguard passive funds, although I am not too sure if there is much overlap between the VLS 20 and 80.  Past performance of the VLS20 fund through the turbulence of this year has also been decent, which indicates that it will provide a modicum of protection against future volatility.

The alternative is to move back into a (7/8 fund) OEIC active fund portfolio, which given that the markets are still in the dip caused by Covid-19, could be an option. There is also something in between these two options.

When I do access the drawdown funds - probably in 2023, my intent to is withdraw £25k a year until the State Pension kicks in at 67 in 2032, then reduce the withdrawal to £10k a year.  So I can afford to take more risk on at least £100k of the pot as it will not be touched until 2032 at the earliest.  If I could have got fixed rate savings  in the range 2-2.5% (which were available 2 years ago!) that's where I would be putting at least £150,000 of the money.

Any thoughts/pointers appreciated.

L9XSS

I have about 170k in a SIPP and have invested sums in VLS20 and VLS80. Whilst not close to the LTA I’m intending to take 25% TfLS then utilise drawdown (I believe Vanguard will have this in place next year). I agree the Vanguard charges are very competitive and the spread of risk between the 2 life strategies seems to suit me. I’m planning on bridging a 7 year gap from 58 to 65 before I can’t access DB pension then SP.
im sure more knowledgeable posters will review your plan in more detail.

Albermarle

First question is why are you accessing the 25% PCLS at this time? Have you a specific use or plan what to do with it ?
Otherwise I do not quite follow the logic of keeping your SIPP in cash deposit accounts to avoid 'last minute volatility' ,and then looking to invest it again for drawdown. The main reason to avoid last minute volatility is if you plan to buy an annuity.
If you are wanting to be invested for drawdown then normally you stay invested before going into drawdown ( and leave the PCLS in the pension also invested until you need it) Or if you are a cautious type leave it in cash deposits all the time.
which given that the markets are still in the dip caused by Covid-19, 
Many markets have almost fully recovered and maybe heading for a second dip . Nobody knows .

Dox

peterg1965 said:

As the title suggests, I am 55 in about 3 weeks and intend to take 25% PCLS from my SIPP,  SIPP value circa £255,000.  

Why? Just because you can't doesn't mean you should, unless you have a better home for the cash - and your question suggests you may not be (for want of a better term) a 'sophisticated' investor.

peterg1965

I have need of the tax free money, and it has always been my plan to take it at 55.  I also want to crystallise the SIPP now to get a lower % against LTA which gives me enough remaining to continue being able to pay into both the SIPP and DC work pension for the next three years or so. I have a careful juggling act with income tax from job/DB pension in payment, to avoid losing my personal some/all of my personal allowance. 

Albermarle

I have need of the tax free money,

OK - a lot of posters just take it 'because it is there ' - hence the questions.

garmeg

Dox said:

peterg1965 said:

As the title suggests, I am 55 in about 3 weeks and intend to take 25% PCLS from my SIPP,  SIPP value circa £255,000.  

Why? Just because you can't doesn't mean you should, unless you have a better home for the cash - and your question suggests you may not be (for want of a better term) a 'sophisticated' investor.

Presumably to mitigate any LTA issues given he has less than 40% LTA left.

peterg1965

Thanks for the replies so far.

Whats the views on going 50:50 with Vanguard VLS20 and VLS80? I know it isn't very sophisticated, but it might suits my needs.  

Audaxer

peterg1965 said:

Whats the views on going 50:50 with Vanguard VLS20 and VLS80? I know it isn't very sophisticated, but it might suits my needs.  

If you want 50% equities and a simple solution that sounds okay, but any reason you are not choosing VLS40 and VLS60 to get the same 50% equities? 

peterg1965

Audaxer said:

peterg1965 said:

Whats the views on going 50:50 with Vanguard VLS20 and VLS80? I know it isn't very sophisticated, but it might suits my needs.  

If you want 50% equities and a simple solution that sounds okay, but any reason you are not choosing VLS40 and VLS60 to get the same 50% equities? 

I believe there is too much overlap between VLS 40 and 60. They are too close together, both are a 4 out of 5 risk (on the vanguard risk scale and both termed 'moderate'.  

peterg1965

This is one of my alternate options as an active fund portfolio, that I came up with a few years back when doing some research/planning.  I'm not sure how this has faired over the last 6 months, so I need to look.  This is primarily an income drawdown portfolio.