Putting pension into a trust

WSB

Hi, 
I am 51 and still working. 
Was discussing with my pension advisor putting my kids along with my wife as nominated beneficiaries and he suggested also putting the pension into a trust to help shield it from future inheritance tax when I die. 
My friend who is also a financial advisor strongly advised not to put into trust (just do the nominations) as I'd incur more tax myself.
Feeling a bit torn now, so wanted some other opinions. 
Thanks 

dunstonh

Was discussing with my pension advisor putting my kids along with my wife as nominated beneficiaries and he suggested also putting the pension into a trust to help shield it from future inheritance tax when I die. 

Pensions are outside of the estate and not subject to IHT (unless you make an absolute nomination).  Indeed, putting money into pensions is an effective way to get money out of your estate to pass to the next generation.

There are scenarios where a trust could be viable but you are talking about being in a tiny minority of people where it would be best.  Typically, those with very complex situations.     

Is your pension adviser an IFA or sales rep?   What justification did they give for it?    (i.e. what is complicated about your scenario that makes a niche option like this suitable for you)

WSB

The pension advisor is my SJP pension advisor. He recommended the trust. 
My friend who recommended only doing the nominations is an IFA. 
I don't believe my scenario is complex. 
Just want my pension to go to my wife in event of my death, then to my kids equally in the event of both our deaths. 

Albermarle

The pension advisor is my SJP pension advisor. He recommended the trust

This would appear to be bad (or very badly informed) advice from the SJP sales rep.

A DC pension is held in trust anyway by the trustees of the pension scheme. That is why any left when you die is not included in your estate. The pension will be passed on to your nominated beneficiaries in a tax efficient manner.

MX5huggy

It time to extract yourself from the constant drag of being a SJP customer. If you want an advisor to hold your hand go with your friend or if you’re not happy to use your friend get a recommendation from them. 

WSB

Many thanks all.
So my friend was giving the best advice then.
Will be in touch with my SJP advisor to only put my wife and kids as nominations, not put the pension in trust. 

JoeCrystal

And consider an alternative maybe? SJP is extraordinary expensive!

dunstonh

The pension advisor is my SJP pension advisor. He recommended the trust. 
My friend who recommended only doing the nominations is an IFA. 

What a surprise.  I held back from asking if it was SJP but it was my first instinct.  Sales reps love doing trusts as it makes it harder to unwind them in the future.   It can severely restrict the ability of someone else to take over.    Nearly every trust I have come across has been completely useless and unnecessary.

Just want my pension to go to my wife in event of my death, then to my kids equally in the event of both our deaths. 

In this case, the IFA is correct.  (which is the case for 99% of the population).

Will be in touch with my SJP advisor to only put my wife and kids as nominations, not put the pension in trust. 

Or better still, dump the sales rep and get yourself a real adviser.

WSB

Knew that mentioning SJP would bring such comments.
My IFA friend is not keen on them either. 
I have no loyalty. Just want what's going to give me the best overall returns. 
Have asked the SJP advisor to give me an exact breakdown of my charges as my plan was setup in 1998, so possibly different from the standard set of charges.
Then I'll be comparing and possibly moving. 
My only issue is that the fund I've been with all this time has apparently performed quite well over the long term as well as during the recent turmoil. 
That's something the SJP and IFA friend do agree on. So I'm a bit reluctant to leave the Global Equity fund.
Question is, moving forward, is it better to pay SJP higher charges and stay with that fund or move to pay less charges and go for a different fund?

Albermarle

Nearly every trust I have come across has been completely useless and unnecessary.
Also from some posts on the forum, it seems they cause extra complications for anyone trying to sort out the estate.
So even if you could save a bit of tax, then I would avoid them for this reason alone.

Question is, moving forward, is it better to pay SJP higher charges and stay with that fund or move to pay less charges and go for a different fund?
I am guessing that although it has performed well, you could probably easily find an equivalent fund that was not an SJP one. If you post a factsheet you might get some good feedback.

I have no loyalty. Just want what's going to give me the best overall returns.

Regardless of who you work with, the above statement is not usually a good objective to have.
To get the best returns, means taking the most risk.
It is better to say something like' I want a return that in the long run will at least match inflation, and hopefully with some growth on top that will match my objectives, but within my risk tolerance' ( and low fees !)

dunstonh

My only issue is that the fund I've been with all this time has apparently performed quite well over the long term as well as during the recent turmoil. 

Well relative to what?  Most SJP funds are not well regarded.

That's something the SJP and IFA friend do agree on. So I'm a bit reluctant to leave the Global Equity fund.

https://www.ftadviser.com/investments/2022/02/14/jp-morgan-3-9bn-fund-largest-to-top-dog-list/

Question is, moving forward, is it better to pay SJP higher charges and stay with that fund or move to pay less charges and go for a different fund?

SJP charges annual charges are pretty much double what you can get from an IFA.  So, any performance gain has to cover the charges before you see profit.  

Below is the SJP global equity fund (09QX) in blue and a global equity tracker in red.  SJP OCF is 1.55%.  The tracker is 0.12%. 




SJP options tend to be bundled in price.  i.e. they are the bottom line.   Whole of market options allow you to pick each area.  i.e. you choose your adviser, the platform and the fund(s) and you put them together.  So, a platform costing 0.25%, adviser costing 0.50% and fund portfolio costing 0.12% = 0.87%

Are you seeing what you consider good performance because you haven't compared it to alternatives?