'Medium' DC Pension strategy

bearshare

If someone had a sub-£100k DB pension pot with a provider who does not offer flexible drawdown, what would be the best suggested strategy?

- Person has no knowledge of markets, low appetite for risk
- would like to access pension as needed using flexible drawdown
- IFAs approached so far do not seem to want to deal with pot of this size
- full state pension in about 6 years. No other provision (wife also full state pension)

Thanks

B

Albermarle

If someone had a sub-£100k DB pension pot with a provider who does not offer flexible drawdown, what would be the best suggested strategy?

Presume you mean a DC pension pot ? ( DB being a final salary/guaranteed income type scheme)

If so basic options are probably as follows

1) Spend some time reading about investing, pensions and risk. Read this forum regularly. Then DIY.

2) Find an IFA who will deal with smaller pots

3) Transfer to a modern provider offering flexible drawdown ( you or an IFA will have to do this anyway)

4) A couple of providers offer not very expensive in house financial advice on setting up a suitable portfolio. Normally tied advisors like this are not recommended, but possibly could be a suitable solution in your case.

bearshare

Albermarle, thanks yes. I am sure I typed DC....!

1) Is not going to happen. (Incidentally, I manage my own investments, and am pretty well up to speed on most aspects, but I am reluctant to help them, for obvious reasons)
2) Does there exist such a beast, at reasonable cost?
3) That's what I have (iWeb,  Youinvest etc), but then they still need 2). (Or I suggest something and get any blame..)
4) is what I was thinking of, if a suitable IFA does not appear. Any suggested company names to look at?

B

Steve_666_

For smallish pots, an IFA is an expensive option. There are flexible low cost providers that can access simple life style funds, thinking something like a Vanguard (an example not a recommendation) Lifestrategy fund. Where it is relatively clear  the risk/reward profile with all the diversity that you would desire.

ader42

Just transfer to a SIPP with HL or Vanguard - no need for an IFA

bearshare

Steve_666  and ader42
But both of your suggestions need someone to select which funds, and to, maybe, take the blame if/when markets slide. Which (lacking an IFA) would be me. I am happy enough selecting an HSBC All- World or Vanguard Lifestyle 60 for MY portfolio, but suggesting it, and suitable cash holding for someone else is a different kettle of fish.

dunstonh

But both of your suggestions need someone to select which funds, and to, maybe, take the blame if/when markets slide. Which (lacking an IFA) would be me. 

An IFA wouldnt be responsible either.   Events occur and markets move.  You, an IFA or your provider are not going to change that.

I am happy enough selecting an HSBC All- World or Vanguard Lifestyle 60 for MY portfolio,

I take it that they are just examples as they are not comparable investment options.

Linton

bearshare said:

Steve_666  and ader42
But both of your suggestions need someone to select which funds, and to, maybe, take the blame if/when markets slide. Which (lacking an IFA) would be me. I am happy enough selecting an HSBC All- World or Vanguard Lifestyle 60 for MY portfolio, but suggesting it, and suitable cash holding for someone else is a different kettle of fish.

Yes investing for friends and relations is to be avoided - when the investment suffers in the next crash it will be your fault and relationships could be damaged.

Depending on what they want to do with the money, one appropriate solution could be an annuity now that interest rates are higher.  No risk, no knowledge, and no effort required and I guess no need to transfer.   They may well be able to find an IFA to help them choose something suitable.

bearshare

dunstonh said:

But both of your suggestions need someone to select which funds, and to, maybe, take the blame if/when markets slide. Which (lacking an IFA) would be me. 

An IFA wouldnt be responsible either.   Events occur and markets move.  You, an IFA or your provider are not going to change that.

I am happy enough selecting an HSBC All- World or Vanguard Lifestyle 60 for MY portfolio,

I take it that they are just examples as they are not comparable investment options.

1) Of course. But I would rather they blame the IFA than me. Or, rather, 'the IFA has qualifications, so must know what he is doing', but me.....

2) Examples. 

bearshare

Linton said:

bearshare said:

Steve_666  and ader42
But both of your suggestions need someone to select which funds, and to, maybe, take the blame if/when markets slide. Which (lacking an IFA) would be me. I am happy enough selecting an HSBC All- World or Vanguard Lifestyle 60 for MY portfolio, but suggesting it, and suitable cash holding for someone else is a different kettle of fish.

Yes investing for friends and relations is to be avoided - when the investment suffers in the next crash it will be your fault and relationships could be damaged.

Depending on what they want to do with the money, one appropriate solution could be an annuity now that interest rates are higher.  No risk, no knowledge, and no effort required and I guess no need to transfer.   They may well be able to find an IFA to help them choose something suitable.

Exactly, to first part.
Yes, annuities are looking a bit better values now. But c.4k per year, versus a wodge in the bank for emergency repairs etc...  May take some selling.

Albermarle

bearshare said:

Albermarle, thanks yes. I am sure I typed DC....!

1) Is not going to happen. (Incidentally, I manage my own investments, and am pretty well up to speed on most aspects, but I am reluctant to help them, for obvious reasons)
2) Does there exist such a beast, at reasonable cost?
3) That's what I have (iWeb,  Youinvest etc), but then they still need 2). (Or I suggest something and get any blame..)
4) is what I was thinking of, if a suitable IFA does not appear. Any suggested company names to look at?

B

For 4) One of the companies I thought of has a minimum fund of £100K. This one appears not to but does have a minimum charge.
The problem is that although HL is a platform with a vast array of investment options, they also have their own in house and usually expensive funds. No doubt they will get steered in that direction.....
So in the end might still be better off with an IFA, if you can find one.