Private Pension

ChainsawCharlie

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Dazed_and_C0nfused

What exactly have you invested in in a cash ISA?

Dazed_and_C0nfused

ChainsawCharlie said:

Hi thanks for your reply, we have several cash Isa's's totalling around £80,000 some 1.75% some only 0.70%
But our main concern is the Aviva pension

So not invested as such, savings.

barnstar2077

You won't need access to the whole pot in six years time.  Why not divide it up into sub pots (I just mean in different funds) and invest them depending on when you will need access to the money?  With your time frame an IFA will just eat more of your pot in my opinion.

Albermarle

So our problem is the Aviva pension which currently has an admin fee of 0.40%

Presume this 0.4% + fund costs . If so you could move it to somewhere a bit cheaper , although the difference would be small compared to investment performance swings.

If you went to a good IFA , they will charge maybe £2K initial ; 0.7% ongoing ; pension charge 0.2% ; fund charge 0.3% on average . So approx 1.2% . A FA/wealth manager would be more expensive and not recommended.

You should be clear you do not employ an IFA to beat the market, but to advise you on tax matters and family finance generally and to construct a portfolio that is suitable for your age , objectives and risk profile.

If you want to carry on and DIY , the obvious question is how you should  invest the £180K in the Aviva pension. This comment was a bit vague  I am currently investing in aviva funds invested in diversified bonds etc.

ElephantBoy57

ChainsawCharlie said:

Hi folks,
My wife and I are struggling at the moment trying to decide whats best, and would be great if anyone here could offer their kind assistance.
We have £180,000 in an Aviva private pension, where we are able to switch funds ourselves, and savings of around £110,000(INVESTED IN CASH ISAS)

I am sure someone will correct me if I am wrong, but surely that would be better in a SIPP, to get the 20% tax relief?

I would invest in shares myself, but that carries more risk.

Albermarle

ElephantBoy57 said:

ChainsawCharlie said:

Hi folks,
My wife and I are struggling at the moment trying to decide whats best, and would be great if anyone here could offer their kind assistance.
We have £180,000 in an Aviva private pension, where we are able to switch funds ourselves, and savings of around £110,000(INVESTED IN CASH ISAS)

I am sure someone will correct me if I am wrong, but surely that would be better in a SIPP, to get the 20% tax relief?

I would invest in shares myself, but that carries more risk.

They have both retired recently and have received redundancy payments , so it depends on how much taxable income they have earned this year as to how much they could gain from the tax relief. Apart from that caveat  though it would for sure be an idea worth considering.before April 5th 2021.

tacpot12

Well done for working out a plan to get you to state retirement age without touching the Aviva pension.

This means that your Aviva pension is going to be used to support you and your wife for the 30+ years after you reach state retirement age. If these pension savings aren't invested in an asset class that has historically shown itself able to beat inflation over long periods, its purchasing power will reduce, which is the issue you are concerned about.

Realistically, you need to be invested in something more risky. You have substantial cash reserves in the Cash ISA. So you could plan to invest in equities, and rather than selling during market downturns, draw on your cash reserves, and then sell shares when the market has recovered to restock your cash reserves. This would allow you to cope with the volatility of equities, while benefiting from their ability to beat inflations.

One way to avoid need an IFA is just to switch funds within the Aviva Pension. The Aviva funds are unlikely to outperform the the very best funds, but you don't need them to, you just need them to beat inflation by a percent. A Global Equity fund is likely to give the best prospects for growth. You can use the Trustnet website to get an insight into the relative performance of funds, if the Aviva website doesn't make this easy. 

You may have the ability to move some cash from the ISA to the pension if you want to do this, and to get some tax relief on the amount you move which will further boost their value. The extra money has at least 6 years to grow as well. 

barnstar2077

My post on here is one possible solution.  I  strongly advise that you take the time to read up a bit more before you do anything though.  There are other options out there to DIY, Hargreaves Lansdown, Interactive Investor, Fidelity etc would give you more fund options.  I personally don't see that as an advantage myself though, as I have a tendency to meddle!  For me the LS funds on Vanguard are more than enough.

SJP and finding a better alternative - Page 2 — MoneySavingExpert Forum

Albermarle

There is basic investment guidance on the Aviva website and on this website (and many others ) 
Plus you can keep an eye on this forum for relevant threads .
As said no need to rush to make changes . Improve you knowledge level first .

gadgetmind

A copy of "Smarter Investing" by Tim Hale could be the best money you'll ever spend. If you use sensible asset allocation for that pension and the ISA, then you should be able to withdraw 3-4% pa without excessive risk of the pot running out. Having as much cash as you have makes little sense. We're now retired, and are lucky enough to have well-stocked SIPPs+ISAs, but we have sub 5% in cash, and most of this is in CPI index linked NS&I bonds. You definitely need some "rainy day" cash, but not as much as you have. And I might have missed it, but what's your asset allocation in the pensions?