Cash Lump Sum in Pension

Barking_Dogs

A few weeks ago I transferred my pension funds into a SIPP.  Most of these were not transferable so they were sold and I got the cash transferred into my SIPP.

At this point, I now have approx 60% in cash.  I'm not entirely sanguine about investing all this right now, what with things going on, but sitting there doing nothing it isn't working for me & its value is eroding with the rate of inflation.   

Are there any other sort of investments you can do within a typical SIPP that are more tied to interest rates, a bit like a cash ISA but within a SIPP?  At least it would be damage limitation.

I'm guessing I should be drip feeding into my existing funds regardless of what the state of the market is.  I'm 5 years from retirement so am feeling somewhat more cautious.

Albermarle

The problem here is that you were 100% invested in funds, but because of the transfer you are not.
In your previous pension were you considering changing 60% to cash, because you were worried about the market?
If not, then why are you considering it as an option now?

OK that is the rational argument, and your natural worry with all the bad news around is understandable, but you have to try and take the emotion out it.

 I'm 5 years from retirement so am feeling somewhat more cautious.
So presumably you were already in cautious funds before the transfer? Hopefully not because they have generally performed worse than higher risk ones recently.
How do you plan to take your pension.? If by drawdown then you are looking at a ( hopefully ) 25/30 year timeframe, not 5.

Are there any other sort of investments you can do within a typical SIPP that are more tied to interest rates, a bit like a cash ISA but within a SIPP?  At least it would be damage limitation.

Only if the markets went down further. If they went up it would be a mistake as you would miss the growth.

dunstonh

At this point, I now have approx 60% in cash.  I'm not entirely sanguine about investing all this right now, what with things going on, but sitting there doing nothing it isn't working for me & its value is eroding with the rate of inflation.   

The best time to invest is after a fall.  Most areas are down over 20% now.  It may not be at the bottom yet but its better than any other time in the last two years.  Would you have felt the same way about investing in that two year period?  I suspect not.  

Maybe its time to consider phasing back in.

Barking_Dogs

No, I wanted out of the previous pension because I was paying financial advisor a fee of 1% on top of the fees charged by the platform / funds (it was transact & you have to have it managed by somebody).  Then last year they failed to invest a lump sum I'd paid into my account so I decided to move.

No, my holdings were in  the moderately risky category.  I had considered changing my risk profile to lower risk a couple of years ago but glad I didn't now.

I'm largely invested in the Vanguard 60% Life Strategy fund in my SIPP.  I guess the question I have is how to invest the cash into this sum - not in one go, I'd assume, but over time.  Just don't know the best strategy for how long and how much to put in at what intervals 

Notepad_Phil

Personally as I'd have been 100% invested before then I'd get it invested back in again asap and still sleep soundly at night - my worry during transfers is always that the stock markets goes up whilst I'm not in the market, so the fact that prices will likely have fallen would make me happy.

But its what make you sleep soundly at night that is important, so maybe put 50% of it back in right now and then put in regular sums over the next year or so? Or some variation of the above.

xylophone

Have you obtained a state pension forecast to help with your planning?

https://www.gov.uk/check-state-pension

Barking_Dogs

Notepad_Phil said:

Personally as I'd have been 100% invested before then I'd get it invested back in again asap and still sleep soundly at night - my worry during transfers is always that the stock markets goes up whilst I'm not in the market, so the fact that prices will likely have fallen would make me happy.

But its what make you sleep soundly at night that is important, so maybe put 50% of it back in right now and then put in regular sums over the next year or so? Or some variation of the above.

Yes, I'm fortunate in that prices went down since the transfer.

I'm going to think about re-investing it in monthly instalments over the next 12 months .  And then?  Who knows....

Albermarle

I'm going to think about re-investing it in monthly instalments over the next 12 months .  And then?  Who knows

If markets go up over the next 12 months then this will be a bad decision, if they go down it will be a good decision .

You could hedge your bets by putting in 25% every 3 months .

Secret2ndAccount

Barking_Dogs said:

...
Are there any other sort of investments you can do within a typical SIPP that are more tied to interest rates, a bit like a cash ISA but within a SIPP?  At least it would be damage limitation.
...

Anybody got an answer to this?  For whatever proportion the OP decides to keep in cash, for whatever period, is there a product that, within a SIPP, gives a risk free return >0% ?

shortseller09

Anybody got an answer to this?  For whatever proportion the OP decides to keep in cash, for whatever period, is there a product that, within a SIPP, gives a risk free return >0% ?

It depends on which SIPP provider you're with. HL offer various cash options as does Investacc's Minerva SIPP although the latter has a £480 annual fee (but within it, for example, you can currently get a fixed two year deposit account at 3.75% with United Trust Bank).

Barking_Dogs

shortseller09 said:

Anybody got an answer to this?  For whatever proportion the OP decides to keep in cash, for whatever period, is there a product that, within a SIPP, gives a risk free return >0% ?

It depends on which SIPP provider you're with. HL offer various cash options as does Investacc's Minerva SIPP although the latter has a £480 annual fee (but within it, for example, you can currently get a fixed two year deposit account at 3.75% with United Trust Bank).

Thanks.  I'm with Interactive Investor & it seems they don't have any such offerings