Detailed retirement planning 16 March at 4:16PM in Pensions, annuities & retirement planning 3 replies 540 views

CobaltSaver

My husband and I are the same age (48) and only now have I got round to some serious retirement planning. We have no debts and no mortgage (just finished paying it off). We have two kids that will want to go to university starting in 2 years. We have quite a lot of savings in cash (ISA's and premium bonds) as we intend to do some home improvements soon, for the uni costs and our emergency fund. We live quite cheaply aside from spending on the kids (and the home improvements we are planning).

I think we are holding too much in cash and though I'm late to realise this I hope not too late. Since paying off the mortgage I would like to start a SIPP (I cannot add to my workplace pension). We are both 20% lower rate taxpayers so I am aware that the SIPP benefits are more marginal than for some others. We put 6k a year into a S&S ISA each but we only started that last year. We will continue to do this. 

We would like to retire at around 60 and will have full state pensions (at 67/68). We may have to do some part time work in between 60-68. We will have access to 23k DB pension at 60 plus the AVCs and pension and 6K at 65 (this could be 60 but would be worth less). I would like to save into a SIPP to help bridge the gap to state pension age. 

I think that I could put 1k a month into a SIPP for the next 10/12 years. Just an index tracker or is this too risky over this time frame? This should give another 130-70k depending on market performance DC pot at 60. 

Our current pension situation. 

DB

7750k at 60

16k at 60

6k   at 65 

DC
94k pension pot
35k AVC1
20k AVC2

The pension is with Reassure and having looked at the recent statement it seems to charge about 1k a year (this seems a lot). Should we look to move this and would we need to take advice?

Summary!

Does 12 years in an index tracker seem reasonable? 

Should we max out the S&S ISAs and put less into a SIPP?

Should we try to move the pension? 

Many thanks for reading this long post

Steve_666_

1K charges on a 94K pot, you can do better. II would £156 (12x12.99) and Vanguard @0.15% would be £141, there are others. 12 years in a tracker, if the markets don't have good times in the next 12 years, then we will all be stuffed. You will have to time the exit. There are providers and funds that have diverse investments and levels of risk, Vanguard Life Strategy funds are one example, be aware that some products that are retirement orientated tend to exit you to safer investments based on age criterion rather than the state of the market.

Albermarle

(I cannot add to my workplace pension).
Why ?

We are both 20% lower rate taxpayers so I am aware that the SIPP benefits are more marginal than for some others.
Minimum 6.25% tax benefit, can be more if you can take some of the taxable part out when you have some personal allowance available.

The pension is with Reassure and having looked at the recent statement it seems to charge about 1k a year (this seems a lot). Should we look to move this and would we need to take advice?
Older pensions tend to have higher charges, but it can also be affected by what investments you have in the pension.
It is easy to transfer a DC pension and no need for advice. It is possible there will be an exit fee, although they are quite rare nowadays.
The caveat is that there can be issues if the pot has any guarantees associated with it, rather than just being a simple pot of money.

Does 12 years in an index tracker seem reasonable? The rational answer is that in all probability this will give the best result, but there could be some hairy moments, which not everybody likes

CobaltSaver

Thanks for both of the replies.  Really helpful. 

I will look at the life strategy funds, thank you. I am aware of lifestyling features , moving to bonds etc and I think these do make sense but I would probably prefer options rather than an automatic feature.

I cannot add to my workplace pension as I'm in a DB scheme under TUPE rules. The only option open to me is to buy added years which are very expensive and not so flexible if I died earlier so I have decided against. 

I think I'm OK with the risk as we have some basic pension provision and I would just have to work longer if it didn't work out or possibly take a different part time role.