Help point me in the right direction - possible pension amalgamation

MK62

 

boots_babe said:

Hi Pat38493,

Happy to post details, I just didn't want to post too much detail that people may not want to wade through! All 3 pensions are/were DC. I have no firm retirement plans, but am 43 and imagine would be nice to have the option to retire earlier, maybe 55 or so.

My current active company pension:

£136,600

Via Scottish Widows

Fund name 'Scottish Widows Pension Portfolio Two Pension'

I cannot seem to find the fees associated

Previous company pension 1:

£35600

Via Legal and General

Fund name 'L&G PMC Standard Life Global Abs Return Strat 3'

Management charges - average around £2.50 per month

Previous company pension 2:

£35300

Via Aviva

Fund name 'Aviva Pension BlackRock (50:50) Global Equity Index Tracker'

States 0.4% fund charge

Thank you for your advice, I didn't know that I may be restricted from further transferring if I do it now, so I will definitely look into that before making a decision. This is the thing, being such a newbie to pensions, I simply don't know what I don't know at the moment!

In terms of other savings etc, we have an offset mortgage which is almost fully offset so for the purposes of this thread, let's disregard both mortgage and cash savings. Other things though are:

- I have £11k I put into a SIPP last year, as I needed to get myself under the £100k earning limit.
- We have £90k in stocks and shares - already very well managed and attended to by my husband. He's done really well and have seen really good growth here. 
- Around £50k in bitcoin (various coin types) - obviously a risky investment but we are comfortable, have had it for several years.
- I helped my parents buy a house so they could move close to us as they got older, our investment was £40k. We'll also get half of the remainder house value in their will, another ~£40k.
- Husband has a healthy company pension pot with his current employer, currently £550k. If I remember rightly he contributes 20% plus gets some % of employer contribution.
- Husband also has £50k in a previous company pension.

I think that's it. 

As you already have a SIPP, an alternative approach could be to transfer the two £35k pension pots there, so you'd have one works pension and one private pension - obviously you'd need to do the research on charges/fees etc - from an admin perspective, it'd certainly be easier...and possibly more flexible in terms of retirement withdrawal timing etc than putting everything into your works pension.

stormCat99

Thanks again for all the help, I really appreciate it. I will certainly now look into whether I am best to move my old pensions into my SIPP, or into my existing company pension, or indeed a new separate SIPP. 

I have checked my government pension forecast and it’s showing that I’ll receive the full amount provided I work for at least a further 3 years. 

Re my poorly performing pension, a couple of you have commented on that, and I guess that explains why it’s been consistently going down! I am kicking myself as had I bothered to get on top of my pensions a few years earlier I could have taken action and reduced the loss. But, at least now I can try stop it reducing further hopefully.

Pat38493 mentioned considering talking to an IFA. I have always thought those were for very rich people, or those with very complicated financial affairs.  I just assumed they cost thousands of pounds, and so not worth it for someone like ourselves. If anyone on here has used an IFA and wouldn’t mind giving me some insight into potential costs, that would be really interesting.

People have mentioned ISAs – I should have said, our stockmarket funds are within an ISA already. And on the cash side of things, we’ve preferred to prioritise putting funds into our mortgage offset account, which means we cannot use an ISA. However in a couple of years we’ll start to have more funds in the offset account than what the outstanding mortgage is, so at that point I will look to open an ISA and start gradually transferring as the mortgage reduces.

Lots of useful comments and suggestions on here, am really glad I posted. I will be continuing to quietly read the forum to hopefully start to build up my understanding of all things pensions. I would like to get to a position where I can be confident in actively managing both of our pensions moving forwards.

Pat38493

Using an IFA will cost you money for sure, but as you mentioned your husband has a large pension fund also, normally you would ask an IFA to look into your joint finances and help you to develop a long term retirement plan for both of you.  Normally it's recommended to look at these things as a couple in order to avoid both saving up too much independently, and also to look at scenarios where one of the partners dies much earlier and how that would be handled.  An IFA can also manage the process for you on an ongoing basis if you want (or they can just give you a one off advice which indeed would cost several thousand pounds).  Sometimes though they might pay for themselves - e.g. if you had hired an IFA years ago they would for sure have told you to move away from that L&G fund.

You can also do this yourself if you are prepared to put in the work and research and save a lot of money.  Even if doing it yourself it could be recommended to see it as a joint retirement plan with your husband rather than two independent ones.

ISA - each of you has a separate ISA allowance so if saving into ISAs, you can make sure you use both of your ISA allowances (40K instead of 20K per year).  Hence this reinforces my point about the benefits of planning as a couple.

SIPP and 100K income - one thing I forgot to mention - are you doing a tax return already?  You mentioned putting money into a SIPP to avoid 100K income - if you paid that money directly from your net income, you will have got 20% tax relief added back to the SIPP, but you are very probably entitled to 40% tax relief on it as a higher rate taxpayer.  You have to make sure you include this on your tax return (or fill out the relevant form if you don't do a tax return).  Apologies if you knew this already.

stormCat99

Will definitely be looking at our finances jointly in terms of retirement planning. I guess I came on here with a specific question about my old pensions, but overall we will definitely consider the overall picture across us both. For example we are already aware that husband's pension may in time exceed the lifetime allowance, so I will need to dig into options there. Although, his employer has this odd setup where he can optionally put in the 20% or whatever it is into his company pension (plus company top up %), but if he chooses not to do so, he just loses the money, and won't get paid the 20% through salary, so probably somewhat limited in options there. 

I take on board what you say re an IFA possibly saving more in the long run than the up front cost. I probably need to look into costs and options properly and we can decide if we think it is worthwhile for us.

Re your question on tax returns, yes we both already do these. It was only through this process that I realised about the £100k implications and hence quickly put some money into a SIPP to reduce my liability. It was also through this process that I learned that I was only getting 20% tax relief by default on my pension, so last year I was able to claim back the additional 20% via HMRC. They only let you go back 3 years so yet again, that's another example where I'm absolutely kicking myself, for having neglected my pensions knowledge for so long. You live and learn!

Pat38493

Just to be clear, I am not suggesting you shoul definitely use an IFA - it's just to be aware that it's an option if you don't want, or don't have time, to do all the required research and admin yourselves.  IFAs would definitely work with a couple with joint assets on the levels you mentioned including your husband's.

The lifetime allowance tax has been reduced to zero rate since April this year, and the current policy is that it will be completely abolished.  Having said that, Labour have stated that if they get into power they will reverse that decision (which I doubt they will do but anyway...).  Therefore as of today Lifetime allowance is not an issue (except that it limits the amount of tax free cash you can get still).

Albermarle

There have been plenty of threads on discussions on here about the pros and cons of using an IFA.

Firstly they are not just for very wealthy people, although there is a minimum amount below which they will not be interested ( £50K to £100K) In any case with financial assets of around One Million Pounds ( + a house?) you would be considered a desirable client to have.
They normally charge an initial fee of a few grand and then an ongoing charge of 1% to 0.5%.
The more complicated your affairs, the more you need professional advice. ( such as having a business, children from another marriage, complicated tax issues, not being 100% based in UK etcetc )
If you are clueless about investing, pensions etc, or just disinterested in such matters, then obviously an IFA can be useful. 

However if your situation is mainly around investing, pensions, cash savings and you are happy to spend some time researching ( reading this forum !) then it becomes more debatable/personal choice between paying an IFA and DIY.
For sure if you DIY, you have got to keep up to speed with legislation issues, like the LTA being abolished.

stormCat99

Albermarle said:

There have been plenty of threads on discussions on here about the pros and cons of using an IFA.

Firstly they are not just for very wealthy people, although there is a minimum amount below which they will not be interested ( £50K to £100K) In any case with financial assets of around One Million Pounds ( + a house?) you would be considered a desirable client to have.
They normally charge an initial fee of a few grand and then an ongoing charge of 1% to 0.5%.
The more complicated your affairs, the more you need professional advice. ( such as having a business, children from another marriage, complicated tax issues, not being 100% based in UK etcetc )
If you are clueless about investing, pensions etc, or just disinterested in such matters, then obviously an IFA can be useful. 

However if your situation is mainly around investing, pensions, cash savings and you are happy to spend some time researching ( reading this forum !) then it becomes more debatable/personal choice between paying an IFA and DIY.
For sure if you DIY, you have got to keep up to speed with legislation issues, like the LTA being abolished.

In a lot of ways our situation is straightforward. We are married, no children, no previous marriages. No businesses, no assets abroad, have never lived abroad. It's just the 2 of us, each in a permanent UK job.  We bought our house in 2020 for £700k but mortgage should be fully offset in around 18 months, then the various pensions/shares I outlined before.

I'm very happy to do lots of research, that's my usual modus operandi, as I like to be fully informed and capable of making my own decisions. So whether we engage with an IFA or not, I am definitely going to be a regular on this board and continue to read around the topic of pensions.

sheslookinhot

Just be aware that the pension age for accessing pensions will be 57 or higher by the time you retire.

stormCat99

sheslookinhot - I suspect it may even be higher by the time I get there! :-( 

Mattmints007

What should I be looking out for when trying to amalgamate my current 5 pensions into one? 
Current pensions are with Scottish widows and legal & general, these were the pensions i had when i was employed. 

I'm now self employed and haven't contributed into either of these accounts in years.