Considering a Vanguard SIPP for wife

Nevergonnaretire

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Albermarle

Nevergonnaretire said:

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Not sure why a target retirement fund is not recommended. Maybe because she is starting a bit late. To begin with her contributions will have more effect than what it is actually invested in, so I would say OK to start with that.
I think though you need a good think around your own much bigger pension, and consider pulling out of the lifestyle strategy. Probably a low cost multi asset fund, similar to a Lifestrategy fund will be available, and maybe be more suitable. 
Other posters may have a different opinion.

Linton

Nevergonnaretire said:

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Would Mrs N (or yourself) panic if her pension pot dropped by say 30-40% in a crash and did not recover for a year or two?  Such crashes occur typically once or twice a decade. 

If either of you are not able to accept this or do not expect to stay invested for less than 5-10 years maybe you should consider a lower % equity fund and accept the likely lower long term returns.

Nevergonnaretire

Linton said:

Nevergonnaretire said:

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Would Mrs N (or yourself) panic if her pension pot dropped by say 30-40% in a crash and did not recover for a year or two?  Such crashes occur typically once or twice a decade. 

If either of you are not able to accept this or do not expect to stay invested for less than 5-10 years maybe you should consider a lower % equity fund and accept the likely lower long term returns.

The wife is 6 years younger than myself so it would be around 13-14 years before we could take it anyway (assuming the change to 57). So more than happy to ignore some bad returns along the way

Linton

Nevergonnaretire said:

Linton said:

Nevergonnaretire said:

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Would Mrs N (or yourself) panic if her pension pot dropped by say 30-40% in a crash and did not recover for a year or two?  Such crashes occur typically once or twice a decade. 

If either of you are not able to accept this or do not expect to stay invested for less than 5-10 years maybe you should consider a lower % equity fund and accept the likely lower long term returns.

The wife is 6 years younger than myself so it would be around 13-14 years before we could take it anyway (assuming the change to 57). So more than happy to ignore some bad returns along the way

Then why not go 100% equity.  I would suggest Vanguard FTSE Global All Cap rather than VLS100 if it must be Vanbguard as it is more broadly invested with a moderate amount of Small Companies and Emerging Markets/SE Asia.

Nevergonnaretire

Linton said:

Nevergonnaretire said:

Linton said:

Nevergonnaretire said:

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Would Mrs N (or yourself) panic if her pension pot dropped by say 30-40% in a crash and did not recover for a year or two?  Such crashes occur typically once or twice a decade. 

If either of you are not able to accept this or do not expect to stay invested for less than 5-10 years maybe you should consider a lower % equity fund and accept the likely lower long term returns.

The wife is 6 years younger than myself so it would be around 13-14 years before we could take it anyway (assuming the change to 57). So more than happy to ignore some bad returns along the way

Then why not go 100% equity.  I would suggest Vanguard FTSE Global All Cap rather than VLS100 if it must be Vanbguard as it is more broadly invested with a moderate amount of Small Companies and Emerging Markets/SE Asia.

I did consider 100% equity, thanks for the suggestion I’ll take a look at that FTSE fund as well.

Scot_39

Nevergonnaretire said:

Cheers for the responses.


Yes my pension is a Salary sacrifice, as I'm a higher rate earner now that should be saving a nice bit of tax! I'll struggling to find the fees on the Fidelity plan viewer, but found this on the last yearly statement (from 2021, 2022's doesn't seem to be available yet):

If salary sacrifice - you are limited to the NMW re any thoughts of increasing the 30% - from next week thats rising to £10.50 per hour - I believe.  Not 100% of salary

And whilst salary sacrifice is often seen as great above the 40% tax threshold for tax, it's still not bad below for the NI relief.

As generally you benefit from 40% tax+2% NI in upper band, but 20% tax + 12.8% NI in lower band iirc.

Your pension sees the gross contribution - you save on the NI deduction.

So bear that in mind - if want to squirrel away more than wife's limit

MK62

Nevergonnaretire said:

Linton said:

Nevergonnaretire said:

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Would Mrs N (or yourself) panic if her pension pot dropped by say 30-40% in a crash and did not recover for a year or two?  Such crashes occur typically once or twice a decade. 

If either of you are not able to accept this or do not expect to stay invested for less than 5-10 years maybe you should consider a lower % equity fund and accept the likely lower long term returns.

The wife is 6 years younger than myself so it would be around 13-14 years before we could take it anyway (assuming the change to 57). So more than happy to ignore some bad returns along the way

Whilst I wouldn't disagree that over a 14 year period, a high equity allocation is likely to give higher returns, don't forget that one of these crashes could occur in 14 years time....so coinciding with any retirement plans you might have......are you also OK with this (might mean having to postpone retirement for a couple of years for instance, or accepting lower retirement income (esp the PCLS)).

Nevergonnaretire

MK62 said:

Nevergonnaretire said:

Linton said:

Nevergonnaretire said:

Regarding the funds for the SIPP, it says that it doesn't recommend the retirement target funds. Do we think think something like a lifestrategy 80% equity fund would be more appropriate?

Would Mrs N (or yourself) panic if her pension pot dropped by say 30-40% in a crash and did not recover for a year or two?  Such crashes occur typically once or twice a decade. 

If either of you are not able to accept this or do not expect to stay invested for less than 5-10 years maybe you should consider a lower % equity fund and accept the likely lower long term returns.

The wife is 6 years younger than myself so it would be around 13-14 years before we could take it anyway (assuming the change to 57). So more than happy to ignore some bad returns along the way

Whilst I wouldn't disagree that over a 14 year period, a high equity allocation is likely to give higher returns, don't forget that one of these crashes could occur in 14 years time....so coinciding with any retirement plans you might have......are you also OK with this (might mean having to postpone retirement for a couple of years for instance, or accepting lower retirement income (esp the PCLS)).

Yeah I think you have to accept there may need to be some flexibility and we are happy to deal with that if needed..