Retirement Planning / ISA Advice

AsifM068

Morning Forum - advice please.

The majority of my life savings (around 200K) are held under an ISA with Royal London, comprised of the following three active funds;

Royal London UK Growth Trust 
Royal London Sustainable Leaders Trust A
Royal London European Growth Trust A

I also have a Vanguard ISA, comprised of the FTSE Global All Cap (A) index fund with about 15K in there. 

Is there any merit in transferring my active RL ISA to my passive Vanguard ISA with a view to de-risk?. I plan to retire in 4 years time, when I reach 60, with my Civil Service Pension of about 20 years, and I also have about 50K with NS&I for emergencies.  

Thoughts / ideas very much appreciated please.

eskbanker

It might be better to post on the Pensions, annuities & retirement planning board, but moving from active funds into passive, but still 100% equities, wouldn't seem to fit most people's definition of de-risking?

El_Torro

When does your civil service pension start paying out? Is there a penalty to take it at 60?

One way to make a quick buck is to transfer some of your wealth from ISAs to a pension. You will at least get the benefit of tax relief and being able to remove 25% of the pension tax free. The benefit is even bigger if you're currently a 40% tax payer and will pay 20% tax in retirement. 

Moving your ISA from Royal London to Vanguard might be a good idea, depending on what funds you want to be invested in. Vanguard are cheap but they only offer Vanguard funds. I don't know how much choice Royal London have, or how expensive they are.

dunstonh

Have you considered transferring some of the ISAs into pension?   The pension wrapper beats ISA wrapper for retirement planning.

Is there any merit in transferring my active RL ISA to my passive Vanguard ISA with a view to de-risk?.

Royal London inherited the CIS ISA range and haven't spent any money on it since.  It's a legacy system with pre-RDR bundled pricing, and it is usually easy to justify moving to modern unbundled pricing on a whole of market platform (which Vanguard is not - they only offer Vanguard funds and not their whole range at that but if you are only using one fund that is available that isn't an issue).

However, what you propose is not de-risking as the equity content remains 100%.

AsifM068

Retirement age is 60 with no penalty. It's a DB inflation link pension with a lump sum.

I have even less clue about pensions than I do about investing. 

I thought moving from three active funds to one index tracker fund may be less risky.

With my life savings held under one (Vanghard) ISA, I could just draw down annually to top up my civil pension.

Also, you have to ring RL for a quotation and withdrawals.

Albermarle

I thought moving from three active funds to one index tracker fund may be less risky.

It will probably be less expensive, but a 100% equity fund is still quite high risk. If you want to derisk you need to move to a multi asset fund where the equity content is less than 100%. As you are on the Vanguard platform then you can look at the 'LifeStrategy ' funds as an example.

AsifM068

Are Vanguard's Targeted Retirement Funds worth a look and how do they differ from their Lifestyle range please?

Linton

AsifM068 said:

Are Vanguard's Targeted Retirement Funds worth a look and how do they differ from their Lifestyle range please?

Vanguard Lifestrategy (not Lifestyle)  funds are simply a range of funds with allocations of x% to equity and 100-x% to bonds.  The targetted retirement funds derisk by decreasing x over time as you approach your specified retirement date. "Lifestyling" is a generic name for this type of derisking.

You would need to check whether the rate and timing of the derisking meets your needs.  If you are going for drawdown you will presumably be invested for perhaps the next 30-40 years and so you may question whether derisking for the date you happen to stop working makes much sense.  On the other hand if you are going to immediately spend all your pension on an annuity it wuld be foolish not to derisk.

I would not recommend using the targetted retirement funds blindly without some research.

Beddie

If you want to reduce risk, have a look at the Vanguard Lifestrategy funds. There's lots of information about the differences here:

https://www.vanguardinvestor.co.uk/what-we-offer/life-strategy-products

TheSpectator

AsifM068 said:

Retirement age is 60 with no penalty. It's a DB inflation link pension with a lump sum.

I have even less clue about pensions than I do about investing. 

I thought moving from three active funds to one index tracker fund may be less risky.

With my life savings held under one (Vanghard) ISA, I could just draw down annually to top up my civil pension.

Also, you have to ring RL for a quotation and withdrawals.

Any Civil Service legacy scheme will be payable at full in 60 but any accrued Alpha will be actuarily reduced. Based on your age your Alpha NPA will be 67. And no automatic lump sum with Alpha.

AsifM068

Thank you all; I'm in the 'Classic' Scheme - retirement age is 60 with no penalty...l think / hope.

When I reach 60, is there any harm in transferring my ISA to an all bonds ISA, to consolidate my gains and limit my exposure to the markets...am I talking cobblers...please be honest as I can't afford any mistakes with my life savings.

Re annuities; with my Civil Service Plan; I don't need an annuity...is that right please or are you talking about using my ISA funds to purchase a separate annuity pension in addition to my Civil Service pension?

That's too many pensions right?