Advice on investing personal pension for growth & eventual drawdown, please

Clueless56

I am 59 and in full-time employment and wish to continue until my SRA at 67.

I have 3 DB pensions:

1. payable at age 60 (£1,550 p/a + retirement grant of £4,650 which does not reduce the annual income)
2. payable at age 65 (£3,440 p/a or could take £16,465 max. lump sum + £2,470 annually)

3. my current CARE scheme payable at retirement (at SRA: £8,270 or could take £35,469.96 max lump sum + £5,320.50 annually)

I have checked my state pension forecast and NI contributions and have made up years spent contracted out, so £9,141 p/a using current figure

I also have £103,326 in a personal pension (Utmost, ex-Equitable Life) invested in cautious unit trust funds.  The unit trust fund charges are 0.7% and I think the returns seem OK - the fund was £99,700 one year ago and is now £103,326 net.  I can move to less cautious funds for higher growth without increase in charges.

I plan to take the first two DB pensions when they become payable (will decide on the lump sum/annual income split for number 2 closer to the time) and use them to overpay my mortgage (bought a house late in life) and possibly build up savings with a view to having all or most of my mortgage paid off by SRA or very soon thereafter. 

My questions concern the PP - I would like to move it to a drawdown scheme (no option with current provider) and to move it to funds that will generate more growth.  I don't see myself needing income from it though it would be good to have the option to draw down if something cropped out I hadn't planned for.  If not, my plan is to give my 2 children money from it at some time(s) in the future and leave the balance for them to inherit when I die.  (The finer details to be thought through in more detail once I retire.)

My questions are:

- Is there anything to be gained by moving the PP to, say, a SIPP or other wrapper that provides flexible drawdown now as opposed to waiting 8-10 years?

- I have established that my attitude to risk is 'balanced' and that I don't feel confident enough or have the time to invest myself, so would want some sort of managed service, I think.  Are there such SIPPs?

- Who can best advise me - an IFA or a specialist pensions adviser?

- If the latter, how do I find one?

- Is there anything else I should be considering?

Many thanks

Linton

- Is there anything to be gained by moving the PP to, say, a SIPP or other wrapper that provides flexible drawdown now as opposed to waiting 8-10 years?

Only if the move is justified  for other reasons - eg cost or choice of funds

- I have established that my attitude to risk is 'balanced' and that I don't feel confident enough or have the time to invest myself, so would want some sort of managed service, I think.  Are there such SIPPs?

There are individual funds that invest broadly for a given risk level: "multi-asset" funds.  You can buy those within any mainstream SIPP.
There are some SIPPS that provide a range of ready made portfolios.
You could employ an IFA to manage your portfolio specificaly for your requirements

For the amount of money you are talking about a single multi-asset fund could be the simplest, cheapest and most appropriate.

- Who can best advise me - an IFA or a specialist pensions adviser?

A "specialist pensions advisor" is either  an IFA or a FA (salesman).  For the amount of money you have a local high street IFA should be fine.

- If the latter, how do I find one?
N/A

- Is there anything else I should be considering?

Putting more money into your SIPP during the next 8 years.
You say you will use your SIPP if something turns up you had not planned for.  This is not a good idea since you could have the need for a cash lump sum at a time when equity prices are low and you dont really want to sell.  I suggest you keep a cash fund to cover most expeses that you could not pay out of onging income and plan to leave the SIPP for the long term.

Clueless56

Thank you, Linton, that's very helpful.

Albermarle

I think you need to be clear what you mean by managed.
You can have 'managed ' funds that are actively managed by the fund manager, with a view to using their skill ( hopefully ) to achieve a specific objective.
Or you can have more passive funds that just say have a fixed % in shares and a fixed regional % for example , such as the multi asset funds mentioned by Linton.
However if you pick one fund or the other  then effectively you are managing your portfolio/investments. A Sipp can not pick the investments for you , although they can make general suggestions  but not any kind of personalised recommendation.
So you either have to DIY or employ an IFA to do it for you.

Clueless56

Thank you, Albermarle.  To be honest, I don't really know.  Until a year ago, this was also  in a DB Scheme and so I'm having to try and learn about things that I never had to know about before.  I am probably not using the right terminology, but have decided to find an IFA to look at it and advise how best to achieve what I want from the pot of money.

Albermarle

 Until a year ago, this was also  in a DB Scheme and so I'm having to try and learn about things that I never had to know about before.

Normally it is not a good idea to transfer out of a DB scheme , unless you have good knowledge of investing,

Presume you had to pay for advice before you were allowed to transfer out ? Often the advisor who does this will want to also manage your investments going forward . Partly because it is new business for them but also to ensure you do not make some big mistakes and then sue them for letting you transfer out of the DB scheme in the first place .

Clueless56

Hi Albermarle, I didn't transfer out.  It was Equitable Life and it was sold to Utmost at which point the guarantees were lost.

Albermarle

Clueless56 said:

Hi Albermarle, I didn't transfer out.  It was Equitable Life and it was sold to Utmost at which point the guarantees were lost.

Ok , a special case. FYI most IFA's will offer a free session to begin with . However it is more of a get to know each other session to see whether the relationship will suit both parties and to discuss fees .
These might be about £2K initially and then 0.75% pa + the pension costs , which might be around the same as you pay now .They would do everything for you.
Or you could have a one off advice session for a price and then you would have to go and make the actual recommended investments yourself ( and monitor them )

JohnWinder

Clueless56 said:

My questions concern the PP - I would like to move it to a drawdown scheme (no option with current provider) and to move it to funds that will generate more growth.  I don't see myself needing income from it though it would be good to have the option to draw down if something cropped out I hadn't planned for.  If not, my plan is to give my 2 children money from it at some time(s) in the future and leave the balance for them to inherit when I die.  (The finer details to be thought through in more detail once I retire.)

My questions are:

- Is there anything to be gained by moving the PP to, say, a SIPP or other wrapper that provides flexible drawdown now as opposed to waiting 8-10 years?

- I have established that my attitude to risk is 'balanced' and that I don't feel confident enough or have the time to invest myself, so would want some sort of managed service, I think.  Are there such SIPPs?

- Who can best advise me - an IFA or a specialist pensions adviser?

- If the latter, how do I find one?

- Is there anything else I should be considering?

Many thanks

This is not my 'special subject area' so just ignore the obviously mistaken bits.

You think you might need someone to 'manage' your investment(s). But I think you already do in the sense that others have mentioned: you've chosen where in Utmost to put your money, and Utmost is choosing the securities to match your broadly indicated wishes. That seems to me to be no different from having the funds somewhere else that you choose because the money is more accessible or the investment options are better, or the service is better etc, and choosing the 'fund' as you did with Utmost. That the Equitable collapse that forced you into your situation has allowed you to see that you can do it.

I would have thought you could take as little or as much out of your Utmost fund right now, next month and next year, but I guess by 'drawdown' you mean have the money trickled out to you regularly without pages of form filling every time.

You're paying about £700/year for not exactly stellar service from Utmost. Before you move elsewhere, keep an eye on what the charges will be. You might find a better product for £300/year less. You've got an estimated 25 years left in your life, during which time £300/year more remaining in an investment, and added each year, returning 3%/year will give you an extra £130,000 at the end for your children. Use a compound interest calculator on the web.

Many people using a financial advisor like to have some understanding of financial planning and investing notions so they can be comfortable that they're not being diddled or even taken advantage of. And the more understanding they have of the subject the more comfortable they can feel. One can get to a point with such understanding that using a financial advisor becomes unnecessary; unfortunately most people need a bit of time and effort to get to such a point. Even those who get to that point can still benefit from an advisor if they are prone to rash decisions (the client, not the advisor!) because the advisor can protect them from themselves during financial crises like we've just been through. Do you need a steady hand to hold? And put the cost of a financial advisor into your compound interest calculator.

Clueless56

Thank you both.  I do just want to have some reassurance that I haven't missed anything obvious in my planning; also, that I am viewing the fees/charges and returns/yield realistically.  Although my fund as currently invested hasn't made a huge amount over the last year, it has been cautiously invested and the gain hasn't been reduced by much as the fees are reasonable and clear.  While I have been researching, I have found a lot of products that appear to indicate potential higher returns yet their pricing structures often appeared rather opaque - a higher annual charge plus trading fees etc. and I struggle with whether it is worth it or whether any gains will be so reduced by the fees that it would make no real difference in the long run.  

I definitely think a chat with an IFA should clarify to me how much hand-holding I may need and thank you, Albermale, for giving me a rough guide to the cost of that advice.  

Albermarle

Although my fund as currently invested hasn't made a huge amount over the last year, it has been cautiously invested 

That a cautiously invested fund has come out of this tricky year with a small gain , is not really a bad result at all.

Remember that your investments should be aligned with your objectives/age/risk tolerance . It is not always the case that going for higher returns is the right strategy.