Taking money from pension questions

dealyboy

I tell you BestInvest's website is as clear as mud. They do reference UFPLS in a rather vague way ...



Monevator's broker comparison table shows that BestInvest do do UFPLS ...

https://monevator.com/compare-uk-cheapest-online-brokers/

SIPP

As above. Min £120 charge

£0 drawdown/UFPLS

£0

£4.95

n/a

0.95%

£0

Edit: I think a professional or IFA should be able to clarify this ... there are a few about here.

artyboy

OP - I don't know how much is in your SIPP, but Bestinvest isn't the cheapest platform by a margin. If you have a particular liking for them then that's fine, but the 4.35% you're getting on cash could be down to 3.95% after fees.

I also have to ask - why all in cash? If it's a risk tolerance thing, you might at least want to consider a short term sterling money market fund, which will at least give you a return close to base rate (currently 5.25%) less fees.

Point being, your choice of platform and holding mean that you're losing more value in real terms - due to inflation - than you need to if you chose an alternative approach.

dealyboy

Hi again Prunetheroses123 ...

If you haven't done so already you can make an appointment to speak to an impartial advisor from Pension Wise or obtain other money advice from 'money helper' ... https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension funded by the Government. Contact details ... https://www.moneyhelper.org.uk/en/contact-us#.

They may be able to help in discussing a SIPP versus savings.

"... As I am scared to invest it seems the best to get as much out using my personal tax allowance." The thinking to maximise your tax allowance is definitely a good one but it doesn't have to be all or nothing. After 24/25 the scope to drawdown tax free will be limited, so maybe give yourself some time to explore investment options, there are an extremely wide range of possibilities.

I am a couple of years older than you and have chosen a simple route of a 'buy and forget' multi-asset fund. There are several companies in the business with higher and low risk options, typical timelines will be for 10-15 years. You may well have heard of Vanguard Life Strategy, but HSBC Global Strategy, Fidelity and Legal & General have offerings, have a look at this Monevator article ... https://monevator.com/passive-fund-of-funds-the-rivals/.

Investing for a specific medium/long term purpose can be done with a high degree of safety built in with low risk funds.

Keep_pedalling

Prunetheroses123 said:

I only take £8225.00 plus 25% tax free portion of £2741.66 = £10966.66 the rest is left uncrystallized and can be passed to children IHT free and I keep earning interest on cash that is left in SIPP as long as interest rates are OK.  I will then stick this sum in a fixed rate ISA to earn a slightly higher rate.

The IHT thing is only an advantage if your joint net worth takes you into IHT territory. A married couple can leave up to £1M IHT free, so if you are a long way from that it’s probably not something you really need to take into consideration. 

Prunetheroses123

artyboy said:

OP - I don't know how much is in your SIPP, but Bestinvest isn't the cheapest platform by a margin. If you have a particular liking for them then that's fine, but the 4.35% you're getting on cash could be down to 3.95% after fees.

I also have to ask - why all in cash? If it's a risk tolerance thing, you might at least want to consider a short term sterling money market fund, which will at least give you a return close to base rate (currently 5.25%) less fees.

Point being, your choice of platform and holding mean that you're losing more value in real terms - due to inflation - than you need to if you chose an alternative approach.

Which platforms are cheaper and also offer the money market funds and how easy is it to move your SIPP

artyboy

Prunetheroses123 said:

artyboy said:

OP - I don't know how much is in your SIPP, but Bestinvest isn't the cheapest platform by a margin. If you have a particular liking for them then that's fine, but the 4.35% you're getting on cash could be down to 3.95% after fees.

I also have to ask - why all in cash? If it's a risk tolerance thing, you might at least want to consider a short term sterling money market fund, which will at least give you a return close to base rate (currently 5.25%) less fees.

Point being, your choice of platform and holding mean that you're losing more value in real terms - due to inflation - than you need to if you chose an alternative approach.

Which platforms are cheaper and also offer the money market funds and how easy is it to move your SIPP

Well Vanguard and Interactive Investor (II) are a couple of providers that get discussed a fair bit here. Vanguard is a very very simple option, but only does their own funds (including a money market fund). Whereas II has several money market funds, including one by Royal London that some on here think is better than Vanguard's one.

It's hard to assess just how much you'd save without knowing the cash balance in your SIPP, but, using £250,000 as an example here's a comparison with II:

1) Platform fee:
- Bestinvest - you're paying them £1000/year (0.4% of your cash with them)
- II - you'd pay £155.88/year (flat fee of £12.99/month)

2) Cash/Investment return
- Bestinvest in cash @ 4.35% - £10,875 interest
- II in a money market fund @ ~5% - £12,500 yield

The fund return is an approximation as they tend to return just under base rate and have a small management charge - 5% is reasonably conservative.

So all in, you could be almost £2,500/year better off in this scenario. Plus if you are quick, II have a cashback offer if you transfer in a SIPP to them - you would have to start the transfer before 30 September, but that could be worth a £750 extra bonus on a £250k transfer.

As for simplicity - it is a bit more complex than switching bank accounts, and there will likely be forms to fill in. But I specifically highlight II here because I've found them very helpful and supportive with transfers, and good at giving you updates through the process.

I would still strongly suggest you investigate further/take advice on investments that should give you a much better long term return, but good luck with whatever you do...