Over 40 and wanting to Transfer a LISA

masonic

Alexland said:

Aah in which case it could be a bug rather than a matter of policy. I would like slightly lower LISA costs (and not having to faff around with scheduled ETF trades) but I really don't like the random impact of cash transfers and it's not enough of a saving to be worthwhile.
I am currently doing cash transfers of the kids JISAs to Fidelity and so far the market is at about the same level as they were sold at a few weeks ago.

Yes, that is the only thing holding me back. But when I have another £16k allowance to invest in my S&S ISA I can reduce the risk by placing a balancing trade for part of the investment sold, and I can hopefully pick a time of low volatility and free of Covid-related delays.

Alexland

OP got back to me and says they will phone EQi tomorrow and give it a go transferring.

masonic

I suppose it doesn't hurt to have more than one person contact them as it shows there is interest. I couldn't tell whether my message sent through their contact form was sent correctly, so I ended up emailing them as well. It will be interesting to see if I get two responses, and if I do whether they say the same thing!

chamelion

Isn't pension contribution better than Lisa? 

Alexland

chamelion said:

Isn't pension contribution better than Lisa? 

Depends on circumstances. For a basic rate taxpayer with no (further) employer matched contributions or access to salary sacrifice (to save the national insurance) then it's the same 25% uplift but a LISA has no tax on withdrawal. Or if you just have lots of money you might want to use both allowances.

masonic

It also depends on the quality of the employer pension scheme on which you can receive salary sacrifice. If the investment choices are low quality and/or the pension has high charges (not unusual for an uncapped 1% annual charge for example), the extra returns in a LISA over the years could cancel out any tax benefit for basic rate taxpayers, for the part of their retirement income that falls above the personal allowance.

For example, a 40 year old BR taxpayer contributing £5882 of gross income into a pension will get £5882 in their pension, while if they contributed to a LISA, they would pay in £4000 of net income which would only become £5000 after the bonus is paid. Comparing that £5882 to £5000 over 20 years...

• In an average pension scheme invested in house funds taking 1% per year, the effect of platform charges would reduce £5882 to £4810.
• In a good pension scheme in the default fund taking just 0.75% per year, the effect would reduce £5882 to £5059+growth.
• In an excellent pension scheme taking just 0.25% in platform/fund fee per year, the effect would reduce £5882 to £5595+growth.
• In a capped fee LISA with freedom of investment choice and low cost trackers taking 0.1% in fund management charges, £5000 would reduce to £4900+growth.

Then, looking at money coming out, nothing is taxed on either pension or LISA for income up to the personal allowance. Above the personal allowance, the LISA continues to give an untaxed £4900+growth, while the pension (allowing for 25% tax free lump sum) gives at today's rates between £4088+growth net (from £4810 gross) and £4755+growth net (from £5595 gross). So the LISA wins out even before benefits of greater fund choice in the LISA are taken into account (they may make no difference in the 'excellent pension scheme' case).

For someone who is 49 and making their last contribution, the figures over 10 years are £4950+growth for LISA vs £4876+growth for excellent pension.

masonic

Alexland said:

OP got back to me and says they will phone EQi tomorrow and give it a go transferring.

I now have written confirmation that EQi will accept transfers from those over 40. The only way to do this is via the downloadable pdf transfer form, which can be completed electronically, printed and posted to them. Account is opened when transfer is processed.

Alexland

masonic said:

I now have written confirmation that EQi will accept transfers from those over 40. The only way to do this is via the downloadable pdf transfer form, which can be completed electronically, printed and posted to them. Account is opened when transfer is processed.

OP just PMd me and said they proceeded and I asked they keep us updated via this thread.

Not really worth taking £25k each out of the market to save £9.50 pa each on our trading pattern.

Better to keep it as a backup incase AJ Bell do anything (in additon to the recent price rise) to upset us.

tryingtogetmyheadaround

Thanks, for bringing EQi to my attention I sent all the paperwork in to transfer my LISA over to them on 30th December and I have just received an email (6th Jan) my account is now open. I have to wait a few more days for login details via the post but all looks good so far.
I was thinking no company would take transfer a LISA for an over 40!! But looks like we have one and it appears to be easy to action.

Alexland

Cool excellent well done and thanks for confirming they accepted your application.

We now know what to say to other people in the same situation.