Transferring old work place pensions into SIPP

Deano37

Hi everyone new member here, i am 34 years old and looking closely at my finances. i currently am saving towards a new home as looking at moving next year, also starting to put a little money £100 a month or so towards ETFs in a stocks and shares isa. I am also looking into my pensions, i have a old workplace pension with People pension that has 11k in however i am thinking of opening a SIPP (just found out i can transfer my old work pensions into a sipp) that would then allow me to buy certain funds and most likely get a better return also give me option to pay into this if i want to. In my current job i get a certain salary then get a separate amount depending on overtime etc so if i am possibly going to be over the 40% tax bracket i will be able to pay a lump sum into this if i am not mistaken ?

Firstly i am thinking of opening this with vanguard as i have previously used vanguard and my children's ISAs are with vanguard however i am struggling to decide what is the best option to put the money into for highest returns over the long term global etf or lifestratergy or target retirement etc any help or recommendations ?

Secondly am i correct in thinking if i am going to be slightly over the tax bracket and hit the 40% tax bracket, before the new tax year could i take money from my emergency fund that was payed into by my bank account and pay it into the sipp to not hit that 40 % tax mark ?

hope that makes sense and any help or recommendations welcome
Thanks Dean

Linton

Deano37 said:

Hi everyone new member here, i am 34 years old and looking closely at my finances. i currently am saving towards a new home as looking at moving next year, also starting to put a little money £100 a month or so towards ETFs in a stocks and shares isa. I am also looking into my pensions, i have a old workplace pension with People pension that has 11k in however i am thinking of opening a SIPP (just found out i can transfer my old work pensions into a sipp) that would then allow me to buy certain funds and most likely get a better return also give me option to pay into this if i want to. In my current job i get a certain salary then get a separate amount depending on overtime etc so if i am possibly going to be over the 40% tax bracket i will be able to pay a lump sum into this if i am not mistaken ?

1) Firstly i am thinking of opening this with vanguard as i have previously used vanguard and my children's ISAs are with vanguard however i am struggling to decide what is the best option to put the money into for highest returns over the long term global etf or lifestratergy or target retirement etc any help or recommendations ?

2) Secondly am i correct in thinking if i am going to be slightly over the tax bracket and hit the 40% tax bracket, before the new tax year could i take money from my emergency fund that was payed into by my bank account and pay it into the sipp to not hit that 40 % tax mark ?

hope that makes sense and any help or recommendations welcome
Thanks Dean

1) Vanguard is just one provider among many.  The problem with chasing the highest returns over the long term is that generally the higher the return the higher the risk.  So for example a global 100% equity fund could crash by 40% perhaps once every 10 years recovering over a possibly few years.  Would that upset you?  The time scale is important as if it is too short there may not be enough time to recover.

If you are buying a global equity index fund which one you choose would only make a marginal diffence, so no need to get too worried about it.  Again whether it's an ETF or a traditional fund is marginal. The key issue is whether you go for 100% equity or some lower value.   There are a number of multi-asset fund ranges with varying % equity available.  Major players are HSBC, Vanguard, and Blackrock. You can choose one appropriate to your needs. Again the difference would probably be marginal.

2)  In the situation you describe if you make the SIPP contribution near the end of the tax year you could well continue to be charged the higher rate tax which would be refunded by HMRC after the year end. But the overall effect would be to avoid higher rate tax.

How old are the children?  Young enough to be investing for the "long term"?

penners324

What pension do your employer have? Assuming you dint work for yourself.

Make sure you're in it. Contribute through that.

For a pot of £11k it's probably not worth moving. Just check what People's Pension have it invested in and change it if you feel it's appropriate. Or even transfer it into your current works pension 

Deano37

Thanks so much for your comments,  firstly  I don't mind a bit risk as only 33 and this is my pension so plenty time to ride out the bumps, maybe reduce the risk when closer to retirement is a possibility.

What funds would you recommend and what is the past average return ?

Also children are under 10, and I also do on call so can't guarantee what my income will be, maybe just over tax bracket.

Current provider is aviva and I do contribute and so does my employer.

Lastly I would rather move the 11k to a fund I think is best and hopefully get a decent return as predicted return where it is , is only 18k at retirement. Plus means I can also contribute extra if I want.

Thanks again
Dean

QrizB

Deano37 said:

What funds would you recommend and what is the past average return ?
Also children are under 10, and I also do on call so can't guarantee what my income will be, maybe just over tax bracket.

At 33 you've got at least 24 years to invest for ) potentially 55 or more). You're also closer to my kids in age than to me!

Not a recommendation (I know nothing about you or your risk tolerance), but my kids ISAs are with Vanguard and invested in VWRL.

Past performance info here:

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/overview?intcmpgn=equityglobal_ftseallworlducitsetf_fund_link

Albermarle

Deano37 said:

Thanks so much for your comments,  firstly  I don't mind a bit risk as only 33 and this is my pension so plenty time to ride out the bumps, maybe reduce the risk when closer to retirement is a possibility.

What funds would you recommend and what is the past average return ?

Also children are under 10, and I also do on call so can't guarantee what my income will be, maybe just over tax bracket.

Current provider is aviva and I do contribute and so does my employer.

Lastly I would rather move the 11k to a fund I think is best and hopefully get a decent return as predicted return where it is , is only 18k at retirement. Plus means I can also contribute extra if I want.

Thanks again
Dean

It is a common misconception that workplace type pensions are all bad and SIPP's are all good. Often ( not always) it is better and easier just to increase contributions to your current workplace pension.

Do you know for sure the charges for the workplace pension? Often they are heavily discounted.

Also how do you make your contributions to your current workplace pension?
Before tax, After tax or by salary sacrifice. Each employer does it differently.

Deano37

My current pension is new (1year old)and payments go in before tax and my employer pay in the minimum they have to so if I up my payment my work place won't.

My kids currently have isas in vanguard lifestratergy 100, is the returns of the VWRL past performance etf better ?

Also I would just like to out my old work pension into a sipp as returns at retirement look so low, if I can manage to get 9% and compounds over years it could possible 5 times in 25 years. Just wanting Hest funds possible in there, will I be able to transfer then pick what funds the money is split between?

As for my aviva current workplace pension is there any funds within that you recommend ? 

Thanks dean 

Albermarle

Also I would just like to out my old work pension into a sipp as returns at retirement look so low,

The returns are just a projection and they are done pessimistically deliberately. Also it depends on what investment funds within the PP your money is in.

My current pension is new (1year old)and payments go in before tax

So you will get all the tax relief you are due automatically. If you instead add to a SIPP, you will have to claim back any higher rate tax due.

As for my aviva current workplace pension is there any funds within that you recommend ? 

There is more than one version of Aviva workplace pension. Normally best not to get investments recommendations from random people on the internet. Best to do your own research or pay a financial advisor.

My kids currently have isas in vanguard lifestratergy 100, is the returns of the VWRL past performance etf better ?

You can check easily yourself on a site like Trustnet .

dunstonh

My kids currently have isas in vanguard lifestratergy 100, is the returns of the VWRL past performance etf better ?

VLS100 is the odd one out in the VLS range.  it is a global managed fund whereas the rest are multi-asset funds.   It is there for completeness but in reality, a global tracker is likely to be better and cheaper unless you like the management decisions Vanguard are making.

Also I would just like to out my old work pension into a sipp as returns at retirement look so low,

What do you mean by that?   If it's a projection/statement then that is not a way to measure returns as those are completely synthetic and not linked to real world returns.     If you are looking just at recent returns, then they will be low because of short term events.   Different assets perform in different ways at different times.     You haven't acutally said what PP funds you are in.  PP have 100% equity funds as well as those with much less equity.   The performances may be down to asset allocations rather than the provider.

Linton

Deano37 said:

My current pension is new (1year old)and payments go in before tax and my employer pay in the minimum they have to so if I up my payment my work place won't.

My kids currently have isas in vanguard lifestratergy 100, is the returns of the VWRL past performance etf better ?

Also I would just like to out my old work pension into a sipp as returns at retirement look so low, if I can manage to get 9% and compounds over years it could possible 5 times in 25 years. Just wanting Hest funds possible in there, will I be able to transfer then pick what funds the money is split between?

As for my aviva current workplace pension is there any funds within that you recommend ? 

Thanks dean 

The projected values at retirement are at current prices, ie they are reduced by expected inflation. Also they are historically pessimistic.  The assumptions made are specified by the regulator. Probably best to just ignore them.

On the other hand your projection of a long term return of 9% is, I believe, rather ambitious.  I based my retirement plans deliberately pessimistically on  4% with inflation at 3%. ie a real return of 1%.

On your question on SIPPs.  Yes, in a SIPP you have the choice of thousands of funds and a range of other investments such as bonds or individual companies, in which you can invest in whatever proportions you want. 

Deano37

The fund that my old workplace pension is with is the peoples pension and invested into a fund that is classed as balanced woth a 15 year glide path, invests in 85% equities and its called B&CE GI .

As fir my aviva pension,  I looked and there is many different funds you can invest in so I will look more into that in future and only a year old and not much money in it at all just looking for some recommendations and advice not expecting a simple quick answer.

I will also check the VLS100 against the likes of the VWRP and decide whats best.

By returns look low on my peoples  pension it gives a prediction and says by retirement I should have 18k wasn't aware how Inaccurate these could be. 

My hope really is to put this into a SIPP so I can have control over the money and decide where best to allocate the money for my future. I am no expert as you can tell and new to investing so wanting a diversified portfolio. I was just wanting advice and recommendations on what us the best funds to put in and earn a decent return more than what I will be currently getting.

Thanks Dean