Hello!/Grey Parrot/Midlands IFA

JayRitchie

Uncertaininvestor said:

Thanks for your input so far, all. 

I’ve been pondering this change for a while, and have run the numbers to figure out my outgoings. In broad brush terms, I’m looking at £30k gross / £24k net to maintain my current lifestyle. Once my state & DB pensions kick in at 66/67 they will contribute the vast proportion of that, around £26.5k gross. I’m happy with that aspect of it, it’s more the actual mechanics of bringing the pensions together in an appropriate account that will allow flexible drawdown, while growing in a useful, fairly non-volatile way in the meantime. Whilst not completely financially inept, the subject has never really interested me so I feel I have a lot of learning to do, and wouldn’t be confident to go DIY without a fair amount of learning / hand-holding. 

How much will your DB pension(s) be and are these fully index linked or is there a cap on the inflation rate applied?

Uncertaininvestor

JayRitchie said:

Uncertaininvestor said:

Thanks for your input so far, all. 

I’ve been pondering this change for a while, and have run the numbers to figure out my outgoings. In broad brush terms, I’m looking at £30k gross / £24k net to maintain my current lifestyle. Once my state & DB pensions kick in at 66/67 they will contribute the vast proportion of that, around £26.5k gross. I’m happy with that aspect of it, it’s more the actual mechanics of bringing the pensions together in an appropriate account that will allow flexible drawdown, while growing in a useful, fairly non-volatile way in the meantime. Whilst not completely financially inept, the subject has never really interested me so I feel I have a lot of learning to do, and wouldn’t be confident to go DIY without a fair amount of learning / hand-holding. 

How much will your DB pension(s) be and are these fully index linked or is there a cap on the inflation rate applied?

Estimate for the DB is £14.4k pa in today’s terms. I’ve just been in touch with the administrator for an up to date valuation. As far as I know, it’s index linked, not sure if there are strings attached. Why, what do you have in mind?

JayRitchie

Uncertaininvestor said:

JayRitchie said:

Uncertaininvestor said:

Thanks for your input so far, all. 

I’ve been pondering this change for a while, and have run the numbers to figure out my outgoings. In broad brush terms, I’m looking at £30k gross / £24k net to maintain my current lifestyle. Once my state & DB pensions kick in at 66/67 they will contribute the vast proportion of that, around £26.5k gross. I’m happy with that aspect of it, it’s more the actual mechanics of bringing the pensions together in an appropriate account that will allow flexible drawdown, while growing in a useful, fairly non-volatile way in the meantime. Whilst not completely financially inept, the subject has never really interested me so I feel I have a lot of learning to do, and wouldn’t be confident to go DIY without a fair amount of learning / hand-holding. 

How much will your DB pension(s) be and are these fully index linked or is there a cap on the inflation rate applied?

Estimate for the DB is £14.4k pa in today’s terms. I’ve just been in touch with the administrator for an up to date valuation. As far as I know, it’s index linked, not sure if there are strings attached. Why, what do you have in mind?

Thanks. I was wondering a couple of things. Firstly I don't think your calculation of needing gross income of £30k a year a year to receive £24k net in retirement once you have the state pension is correct. 

I think you may be overlooking the personal allowance and tax free allowance on private pensions? Or do you expect to have some other form of income such as ongoing earnings or rental income in retirement? 

I was also contemplating that a lot of DB pensions have caps on inflation uplifts. Very well worth checking this as people seem to want to overlook this risk. 

Both these possibilities (capped inflation adjustments on the DB scheme and other sources of income in retirement) would make me much more inclined to seek individual professional advice. 

cfw1994

That is a good point 👍
A calculation of needing gross income of £30k a year a year to receive £24k net….you need to remember you pay no NI, & you have a personal tax allowance of £12,570 before paying any tax.

https://www.thesalarycalculator.co.uk/lifestyle.php suggests £26,857.32 will give £2000pcm after tax at the standard rates.
It shows £30k pa would give a net of £26,514pa.

I mentally work on the State Pension using that allowance up, so other pension income starting at a 20% rate 🤷‍♂️

Uncertaininvestor

Oh splendid, thanks! Happy to be wrong this way round. I take your points about seeking the advice of an IFA - we do actually have a couple of rental places that provide a bit of additional money. 

We actually have an IFA at the moment, who have been through a change in personnel following retirement. The new guy suggested bringing all my pensions together, for which they’d charge £8k setup followed by an annual charge of £2k. That didn’t feel like an offer worth biting their arm off… I sat on it since last Aug, and I’m seriously thinking about finding a new IFA, which brought me here!

Dazed_and_C0nfused

Uncertaininvestor said:

Oh splendid, thanks! Happy to be wrong this way round. I take your points about seeking the advice of an IFA - we do actually have a couple of rental places that provide a bit of additional money. 

We actually have an IFA at the moment, who have been through a change in personnel following retirement. The new guy suggested bringing all my pensions together, for which they’d charge £8k setup followed by an annual charge of £2k. That didn’t feel like an offer worth biting their arm off… I sat on it since last Aug, and I’m seriously thinking about finding a new IFA, which brought me here!

Is that something you could do yourself for roughly £8k less 🤔

dunstonh

We actually have an IFA at the moment, who have been through a change in personnel following retirement. The new guy suggested bringing all my pensions together, for which they’d charge £8k setup followed by an annual charge of £2k. That didn’t feel like an offer worth biting their arm off… I sat on it since last Aug, and I’m seriously thinking about finding a new IFA, which brought me here!

Are you already paying for ongoing servicing with that IFA?  Most IFAs, where ongoing servicing is in place, will do consolidations, replatforming etc at no initial cost.     So, £8k would be very greedy if that is the case.

However, if there is no ongoing servicing and you are on a transactional arrangement, then you would expect an initial charge (although not as high as that as 8k sounds greedy).   The annual charge needs context with the amount invested.

Uncertaininvestor

 dunstonh said:

We actually have an IFA at the moment, who have been through a change in personnel following retirement. The new guy suggested bringing all my pensions together, for which they’d charge £8k setup followed by an annual charge of £2k. That didn’t feel like an offer worth biting their arm off… I sat on it since last Aug, and I’m seriously thinking about finding a new IFA, which brought me here!

Are you already paying for ongoing servicing with that IFA?  Most IFAs, where ongoing servicing is in place, will do consolidations, replatforming etc at no initial cost.     So, £8k would be very greedy if that is the case.

However, if there is no ongoing servicing and you are on a transactional arrangement, then you would expect an initial charge (although not as high as that as 8k sounds greedy).   The annual charge needs context with the amount invested.

The IFA (actually a guy who’s just retired) helped my partner sort out a pension issue. We have some money that they advise on, an ISA in my case, an ISA and a CRA for my partner, that they charge 0.5% ongoing service charge for which gives us an annual review. The money is with Quilter, who also have charges.

The proposal to combine my pensions into a new plan with a flexible drawdown facility would have had a 2% initial implementation charge, followed by an annual change of 0.5%. There was no mention of which plan they would use - in fact I don’t think they particularly had one in mind. 

dunstonh

The IFA (actually a guy who’s just retired) helped my partner sort out a pension issue. We have some money that they advise on, an ISA in my case, an ISA and a CRA for my partner, that they charge 0.5% ongoing service charge for which gives us an annual review. The money is with Quilter, who also have charges.

0.50% ongoing is the dominant figure charged by advisers.
Quilter will have charges as they are the investment platform.    Quilter is not that good value any more although they do discount it for their in house agents.  Quilter also do niche stuff. So, can be useful on things like disqualifying pension credit (which most don't do).

The proposal to combine my pensions into a new plan with a flexible drawdown facility would have had a 2% initial implementation charge, followed by an annual change of 0.5%. There was no mention of which plan they would use - in fact I don’t think they particularly had one in mind. 

If its an IFA, you would probably expect them to move it off Quilter as you can get almost half the cost elsewhere.  If its a Quilter FA then they only use Quilter.

Whatever it is, £8k is ridiculous. 

Ibrahim5

According to the FCA the average ongoing fee is 0.8%. Scandalous, but people agree to pay these ridiculous fees.