40K yearly Pension - Is it safe to have all your eggs in one basket ?

RichyB71

Albermarle said:

MoJoeGo said:

I have an older relative that's with them too, and I think after a while, the ego has been massaged to the point where they feel there can't be anything better. Or that it's "reassuringly expensive". Or maybe it's just Stockholm syndrome...

With apologies for the misquote... SJP is the opium of the pensioners 

Same with one my relatives , they think the sun shines out of their SJP advisors rear end .

I must admit i was the youngest there on the yearly golf day  

MallyGirl

MoJoeGo said:

I have an older relative that's with them too, and I think after a while, the ego has been massaged to the point where they feel there can't be anything better. Or that it's "reassuringly expensive". Or maybe it's just Stockholm syndrome...

With apologies for the misquote... SJP is the opium of the pensioners 

Same with my Mum - she and her husband have taken out some complicated single payment annuity thing to try and avoid inheritance tax for the kids. I had to sign a whole heap of paperwork as a beneficiary but I really don't understand it and I suspect they don't either. All very shiny though

MoJoeGo

MallyGirl said:

MoJoeGo said:

I have an older relative that's with them too, and I think after a while, the ego has been massaged to the point where they feel there can't be anything better. Or that it's "reassuringly expensive". Or maybe it's just Stockholm syndrome...

With apologies for the misquote... SJP is the opium of the pensioners 

Same with my Mum - she and her husband have taken out some complicated single payment annuity thing to try and avoid inheritance tax for the kids. I had to sign a whole heap of paperwork as a beneficiary but I really don't understand it and I suspect they don't either. All very shiny though

Well I'm sure they said it was all above board, but it does on the face of it sound like one of those tax avoidance schemes that HMRC like to go after these days...

If it did work and was totally legit, you'd think that it would be something any decent IFA would be able to arrange on a large estate (which is me of course fishing for comment from Dunston et al  )

Malthusian

MallyGirl said:

Same with my Mum - she and her husband have taken out some complicated single payment annuity thing to try and avoid inheritance tax for the kids. I had to sign a whole heap of paperwork as a beneficiary but I really don't understand it and I suspect they don't either. All very shiny though

Buying an annuity generally does reduce Inheritance Tax liability but that's because there isn't usually anything left for the kids on death to pay IHT on.

Were you not advised to take independent legal advice before signing?

I can't comment on whether the scheme is likely to work, because I have no idea what it involves, but if the beneficiary doesn't understand it (despite having signed paperwork), that's never a good sign.

Often the beneficiary of a future estate wouldn't be expected to understand how their parents' estate planning worked because it's none of their business (it's their parents' money and inheritances don't exist until the benefactor/ess snuffs it). But it's different in this case because you were asked to sign paperwork.

MallyGirl

No we weren't advised to get advice - just got a pack with a lot of post its saying 'sign here'.
I think it is using the principle that they used a load of capital as a one off purchase for an annuity/policy that pays out to the kids on the death of the second one out of Mum and her husband. The house is probably going to be worth about £1m so I think they wanted to shield other more liquid assets from IHT, whilst ensuring they enjoyed a nice life in the meantime. Later life marriage so they sold her house.
I am slightly more savvy than I was when this was put in place - maybe?

RichyB71

RichyB71 said:

Dear Forum, 

It seems like general rule of thumb these days is to consolidate pensions. However when we talk about other investments people talk about having a portfolio spread across various assets. I have a good sized pension and contribute £40K per year through my limited company. The pot on retirement will be in excess of £1 million and that makes me nervous. Will it reach its potential ? Have a chosen to partner with the correct provider ? I don't expect to have a crystal ball solution to my financial future but it feels scary having one company in control of all that investment pot. I'm currently with St James Place. Performance seems to be tracking just below 5% growth per year. The fees are not transparent and I have a meeting booked to go through the historical charges. What are people's feelings about spreading investments across more than one pension provider. As discussed I'm a Limited Company owner so I don't plan to be moving from job to job in the coming years. I don't want to mess around with property, self managed stocks and shares, bitcoin, gold...etc I just want a good old fashioned pension. But one.....can I trust my future to just one company ?

Just getting back to my original thread here...I finally received the historical information on charges from SJP. During the wait time my advisor departed SJP ( no communication from SJP on this ). The details on the charges were disturbing to say the least. I'll try and sum it up below: 

Over 5 Years - 24K of actual fund growth - with 6K of charges. On average around 1.65% of the fund value each year disappeared. ( never did that show in ££ figures on any of the statements ) plenty of pointless fund pie charts never a section on charges. 

As you can imagine, I'm on one hand glad I started looking into this now, and on the other really unhappy with the charges considering the level of performance and lack of any real advice during the period ( other than the occasional read through of figures ) Last year that one chat and a cup of tea cost me over £1000. I've worked out that even with 5% fund growth over the next 10 years, subject to my investments being on plan SJP charges will exceed £40K in the next decade if I had remained with the company. WOW!!!

My next job is to manage the transfer from SJP to another provider. The encashment price is £3.5K less that the funds value so I'm going to take an even bigger hit when I make the move. More money to the SJP charge pot. 

At the beginning when an advisor says the costs are 1.5% you think " hey thats not much " however considering how competitive the market is now and the actual long term cost to the fund, that 1.5% is ... it's something that I wish I'd considered much earlier. 

jamesd

MallyGirl said:

No we weren't advised to get advice - just got a pack with a lot of post its saying 'sign here'.
I think it is using the principle that they used a load of capital as a one off purchase for an annuity/policy that pays out to the kids on the death of the second one out of Mum and her husband. The house is probably going to be worth about £1m so I think they wanted to shield other more liquid assets from IHT, whilst ensuring they enjoyed a nice life in the meantime. Later life marriage so they sold her house.
I am slightly more savvy than I was when this was put in place - maybe?

A single payment deferred annuity might fit the bill for that but I don't know that those are available in the UK.

The paperwork might have been telling you about current or future use of some of your lifetime allowance and committing you to use them for some sort of service at the point of payment commencing.

[Deleted User]

MallyGirl said:

MoJoeGo said:

I have an older relative that's with them too, and I think after a while, the ego has been massaged to the point where they feel there can't be anything better. Or that it's "reassuringly expensive". Or maybe it's just Stockholm syndrome...

With apologies for the misquote... SJP is the opium of the pensioners 

Same with my Mum - she and her husband have taken out some complicated single payment annuity thing to try and avoid inheritance tax for the kids. I had to sign a whole heap of paperwork as a beneficiary but I really don't understand it and I suspect they don't either. All very shiny though

Yep. There will be no inheritance tax. Assuming they die after the age of 75 you will have to pay income tax at your marginal rate.  Could be a lot. We don’t have details of the policy and I am no expert but typically income tax becomes an issue.  I would chat to a good tax specialist before jumping into something like this. Signing financial paperwork without reading and understanding isn’t ideal. 

MallyGirl

Deleted_User said:

MallyGirl said:

Same with my Mum - she and her husband have taken out some complicated single payment annuity thing to try and avoid inheritance tax for the kids. I had to sign a whole heap of paperwork as a beneficiary but I really don't understand it and I suspect they don't either. All very shiny though

Yep. There will be no inheritance tax. Assuming they die after the age of 75 you will have to pay income tax at your marginal rate.  Could be a lot. We don’t have details of the policy and I am no expert but typically income tax becomes an issue.  I would chat to a good tax specialist before jumping into something like this. Signing financial paperwork without reading and understanding isn’t ideal. 

sadly that ship has sailed - was done a good few years ago.
He is already over 75. She is hale and hearty and only 19 years older than me at 73. It sounds like it could be the trigger to retire if income tax comes into things - I keep in basic rate via a hefty pension sal sac. I will see if I can find out more about what the product is so at least I am prepared when it hits

[Deleted User]

Again, you may want to find out the implications and seek advice before taking a major action, like retirement