MUSINGS OF A NEWBIE

natsplatnat

Hi cloud_dog,

the answers to your (2) questions are "no" to Salary Sacrifice and "yes" to the defined contribution scheme (if my understanding of a DCS is that the pot worth at retirement is based on contributions paid in and investment performance).

6022tivo

Alexland said:

You would need to consider the minimum scheme age for accessing the pension (which might increase) 

This is important. 
I was always told it's 55, but I've been researching and for me it's 57 (I missed the cut off by a few months). 
Sad times...  

Alexland

natsplatnat said:

So, I guess I am wondering if I should stay on Adventurous for now and indeed for how long (the glidepath will kick in in around 12 years time)?

You don't seem overly concerned by last year's crash (maybe you weren't looking or thinking about it at the time which helps) so it doesn't seem unreasonable that you would continue the adventurous asset allocation for at least another decade. Reducing pension stock market exposure at age 40 isn't really necessary as you probably have around 2-3 economic cycles recover from any negative periods which are usually good news in the accumulation phase (although they worry some people) as during crashes and corrections your regular contributions would be buying more units while they are cheaper.

6022tivo said:

I was always told it's 55, but I've been researching and for me it's 57 (I missed the cut off by a few months).

It's worth reading this thread as the government are proposing that members of schemes with an unconditional right of access at 55 on the day the consultation was published could get a protected retirement age of 55. It made me happy just to think it might happen. Those of us wanting to retire as soon as possible should avoid doing transfers involving such schemes until the rules become final and understood.

https://forums.moneysavingexpert.com/discussion/6240982/increase-to-minimum-pension-age-from-55-to-57-new-hmt-consultation/p1

natsplatnat

Alexland said:

You don't seem overly concerned by last year's crash (maybe you weren't looking or thinking about it at the time which helps) so it doesn't seem unreasonable that you would continue the adventurous asset allocation for at least another decade. Reducing pension stock market exposure at age 40 isn't really necessary as you probably have around 2-3 economic cycles recover from any negative periods which are usually good news in the accumulation phase (although they worry some people) as during crashes and corrections your regular contributions would be buying more units while they are cheaper.

Ha ha! My thought during the crash was "well ... my money is in there, there's nothing I can do about it - It's AGES until I retire, it will even itself out!" I wish this made me sound chilled, but honestly in my mind it fell into the 'out of my control' category! I think if I had physically seen the money leaving my current account to go into the pot I might have been a bit more worried, but it's a case of out of sight - out of mind.

I guess now I'm thinking about whether I want to have some input in where my money is invested, or carry on with 'out of my control'!

Albermarle

Retirement age is (currently set) to 68 (I am just shy of 41).

The pension offers 3 standard investment profiles, each has a 15 year glidepath...
Although these lifestyle/glidepath pensions are common , they are not really very useful.
The most obvious issue is that most people when they retire with this type of pension , go into drawdown. In simple terms you take an income from the pension whilst hoping it lasts as long as you do . For this to have a realistic chance of happening , the pension has to remain invested and seeing some investment growth . So gliding down to a zero risk/cash pension at retirement is not a good idea.
A more normal typical trend would be to start to derisk /reduce % equity as you get older but only down to a certain level ( say 50% equites ) It maybe you can get glidepath pensions that do this but I think most end up with no/low equity %

ChilliBob

FYI topcsshback, as Alex says, have cashback for Fidelity at 160 if you out 20k in there, so a decent wedge of cashback and a decent provider it's recently been boosted from 145 which I thought was already decent 

jimjames

Albermarle said:

Retirement age is (currently set) to 68 (I am just shy of 41).

The pension offers 3 standard investment profiles, each has a 15 year glidepath...
Although these lifestyle/glidepath pensions are common , they are not really very useful.
The most obvious issue is that most people when they retire with this type of pension , go into drawdown. 

This is a really good point and potentially could start causing issues for providers in the future as moving to pure cash age 60 when you are looking at drawdown and wanting your money to last 20+ years isn't likely to be the most financially beneficial option.
So I'd definitely stay at adventurous, I'm older but still fully invested with 0% bond allocation

natsplatnat

Okay, so based on your comments my thinking is to stick with 'adventurous' for 10-15 years (puts me at 50 - 55yo) and then look at the self-investment fund options where I choose what fund(s) my money is invested in as these don't have a glidepath but I can reduce the risk on some portion of it.

I agree that the idea of having everything at 'cash' when I come to 68 isn't that appealing.

Thank you all for your comments - everthing makes so much more sense now and I can see what I should be considering.

Nats

pepperwand

This has been a really interesting thread to read, lots of food for thought.

For what it's worth I pay £100 a month into a S&S ISA with Nutmeg. It's my first foray into any form of investing so my train of thought was to go for something managed for me where I just choose the level of risk I'm comfortable with and let it do it's thing. It's doing quite well at the moment, currently up 21% but all that's meaningless really as I'm leaving it there for the long term. I'm sure there are better ways I could be approaching savings but it was simple to set up and actually made me take the first step.

In a similar vein I'm also in the higher risk default product for my workplace pension (I'm 33.) I'm trying to educate myself more in these matters but as I'm just starting out I've been more comfortable with others managing the portfolio for me.

natsplatnat

pepperwand said:

This has been a really interesting thread to read, lots of food for thought.

Indeed! Hope it helps others rather than just me!  There is an awful lot to learn, and I'm quite enjoying reading about it all.

Okay, so a little addition from me.... over the weekend I did a good scour of my wpp portal - I'm happy to continue with my adventurous investment and plans are in place to up my contributions from next month. However, I did notice that the dates my payroll deductions reach my provider are all over the place... and quite a few outside the deadline date. Looking at it, occasionally this has worked in my favour (unit price lower) but generally over the last 3 years these delays have cost me approx 2.5 units. Not a lot in the grand scheme of things but could be, compounded over the remaining duration of my investment. Email to our FD to look at sent yesterday.

On the savings side, I am going to continue with my current monthly amount until I get to the next round 10k (round numbers make me happy). I will then reassess whether I divert some of this monthly amount into a 'do it for me' S&S ISA. I think I probably will.

As my signature says... "I love a good plan!"