Scottish Widows Workplace SIPP

huw01

Hi, 

Through work I have Scottish Widows Workplace SIPP, I will be finishing my contract with work in August and the pension will have circa 60k in it.

If I didn't make any further contributions to it , what is an average expected annual growth rate ?
Currently the funds are split on a ratio of 75% in Portfolio Four CS8 and 25% in Portfolio Three CS8.

I'm 51 at present and trying to work out what it may be worth when I am 65.

DE_612183

There should be performance data on their website - such as this: https://documents.feprecisionplus.com/factsheet/SWCPZ/FS/R74J_en-GB_Wrap_ABI_SWSingleBranded.pdf

It doesn't guarantee a future amount - but it gives you an idea.

As you can see the performance goes up and down - but for 5 years you are looking at about 20% so you should be able to do the math from there.

Don't forget that you have to also look at inflation as well - so your 20% gain is only a gain in real terms if inflation is 0%!

huw01

Thank you for this

I had sort of done some fag packets maths that in 14/15 years it may be worth circa 100k
Using the 20 rule over 5 years, then my calculations make it 103k

So I am happy with that. I am contemplating in August not renewing my contract and looking to retire and not really work again if I can. 
Currently 51, single, in good health, mortgage free. So many friends have been inflicted with health conditions in the last 5 years that it has changed my outook on life.

225k in cash savings
330k in General Investment Account
82k in S&S ISA

LGPS deferred pension which will pay 12k per annum if taken early at age 55 along with a 20k automatic lump sum
LGPS AVC worth about 10k
Scottish Widows Workplace SIPP 62k present

My plan is for the first three and a half years is to live off savings, drawing down 1900 per month should be more than enough for me to live and also travel which I want to do
At age 55 is to start taking the LGPS and alongside the automatic tax free lump sum and AVC as a tax tree lump sum - these would top up the savings. I have asked the LGPS scheme as I will be 55 before April 2028 and the answer seemed to be that as long as I had started to take the LGPS then the rule changes to 57 wouldn't affect me.

Then age 55 for a decade take the LGPS monthly and top up with savings per month,

Age 65 is to take 25% of the SIPP as a tax free lump sum and then at some point in the future the remaining 75% as either UFPLS, drawdown or annuity. Then age 68 all topped up by the state pension. My state pension forecast is now nearly at the full state pension.

Each year move 20k from the GIA to the S&S ISA, then take chunks out of the ISA as and when I fancy a splurge on something.

That is my thinking at the moment, life seems to short and unpredictable to be sat down wasting my time on someone else's priorities. Health and time is the only commodities that now seem important

JohnWinder

Your holdings look to be about 42% growth assets (stocks and property) and the rest bond-like.

Vanguard's projection for returns over the next decade are ~4.5%/year for US stocks (which you have more of), and ~7.5%/year non-US stocks. Call that 5.5%/year overall for you.

Their projection for bonds is ~4.5%/year. As your mix is 42% growth, overall the prediction would be about 4.9%/year considering both your funds.

Firstly, there's quite a range with those projections (predictions!) so don't get fixated on that figure.

Secondly, as you're projecting 14 years away you really ought to consider the effects of inflation since £100 now becomes £161 in 10 years with 4.9%/year growth. But that £161 may not buy nearly as much as £100 now. So it can be useful to use 'real' (inflation adjusted) growth figures rather than the nominal figures Vanguard uses. Vanguard thinks US inflation will be 2.3%/year for USA, making your growth (if UK inflation were the same) only ~2.2%/year (gives £129 of value in today's money).

Thirdly, 40% growth assets is a cautious asset mix, but a big drop in stock values can still have a big effect on your portfolio value with 40% growth assets. If that happens just before you're 65 years old it might be relevant if you wanted to buy an annuity for example. To get a feeling for wild swings in the value of your assets have a look at the performance charts for your funds like this one https://documents.feprecisionplus.com/factsheet/SWCPZ/FS/R74J_en-GB_Wrap_ABI_SWSingleBranded.pdf

Fourthly, your fund managers might change the mix of assets (more global stocks, less US stocks etc). Another source of uncertainty.

gravel_2

Note the target growth for those funds is CPI+1% and CPI+2.5% so they are not exactly pretending they'll rip your face off. And over the last five years they have failed to consistently match or exceed their indices.

dunstonh

gravel_2 said:

Note the target growth for those funds is CPI+1% and CPI+2.5% so they are not exactly pretending they'll rip your face off. And over the last five years they have failed to consistently match or exceed their indices.

Whilst the OP refers to the pension as a SIPP, it is not a SIPP.    So, you would expect the in-house offerings to be tamer.   And its worth remembering that bonds have had a torrid period and are down over 7 years.   So, anything with bonds in, has had a negative drag on it.