Retirement Funds - advice and ideas welcome

PyggyMalony66

DRS1 - thank you. I have asked SW about the drawdown and will check I can continue to drawdown for as long as there is money and not have anything happen when I'm 75.

Albermarle - thank you. Not sure if this is what you are asking for but it says

Aviva My Future Focus Growth S6 8.71%

Aviva My Future Focus Consolidation (pre-2024) S6 91.29%

DRS1

I think @Albemarle was suggesting you look at something like this

Aviva Pen My Future Focus Growth Pn S6 Fund factsheet | Trustnet

Aviva Pension My Future Focus Consolidation (Pre-2024) Pn S6 Fund factsheet | Trustnet

The Growth one has plenty of equities and the Consolidation one has a lot of bonds. Some people might say that if you were aiming for drawdown over the next 20 years you could put a bit more in the Growth one and a bit less in the Consolidation one. The trouble is if you do that you might hit the time when equities start to decline. 20 years sounds a long time and should allow time for a recovery but you will be dipping into the pension during that 20 years so you may prefer something which doesn't go up and down like a yo yo.

Albermarle

In simple terms with these types of funds. The higher equity % they have the more they will likely grow in the long term, but the more volatile they will be . Equity = company shares ( usually not a few individual ones but large numbers of different ones) .

The Aviva growth fund, has a relatively high % of equities at 75%, and has grown 50% in 5 years.

The consolidation fund has only 25% equities and has only grown 16% in the last 5 years.

Your money is largely in the slower growth one. However we have to be careful here, as if global stock market was to have a big slump, then the lower equity fund would suffer a lot less.

So you have :

cash savings - safe but little no real growth above inflation

A with profits pension fund - relatively low risk, but returns low

An Aviva pension that is mainly invested in a low equity, lower growth, low/medium risk fund.

So it is probably safe to say you are not taking enough risk, but of course the more risk the more chance of losses . One issue is that stock markets have done VERY well in recent times so maybe some kind of correction will come sooner rather than later. At some point it would seem to make sense to change the balance between the two Aviva funds and if you were a bit unlucky with your timing, then just leave them alone until things recover again.

Something to think about anyway.

PyggyMalony66

DRS1 and Albermarle, thank you both for explaining that all to me. I know more about my pensions now than I did this morning that's for sure, and I certainly need to think about adjusting the level of risk.

One more question for now if you don't mind. Should I move some of my savings into either SW or Aviva?

DRS1

Contributing to your pension is tax efficient so it can be a good idea. Obviously we don't know what your earnings are or what you currently contribute but your limit for tax relieved contributions while employed is your taxable earnings while after you stop working it will be gross contributions of £3600.

You need to check how you contribute. Some people do salary sacrifice and if that is you then there is a restriction that you cannot salary sacrifice down below the national minimum wage. Salary sacrifice can be good because it saves on NICs as well as tax. Others contribute what are called relief at source contributions and if that is you then you need to allow for the tax relief claimed by the pension plan - so you contribute 80% of your earnings and the pension plan claims the other 20%.

I imagine you would want to contribute to the Aviva plan rather than the SW one not least because that is where your current contributions are going.

DRS1

BTW Whatever you have in an ISA I'd be inclined to leave there.

PyggyMalony66

Thanks again DRS1 - current salary £37,796 (Band 5 agenda for change) now working 3 days per week with a plan to hand my notice in mid may, and finish completely by end of June, so just a few more months of employer/employee contributions.

I will look into the rest of your message in more detail tomorrow - can I tell from my payslip if it's salary sacrifice/relief at source or will I need to ask someone in payroll?

DRS1

I am being a bit thick here but Band 5 agenda for change sounds like the NHS so why aren't you in the NHS pension scheme?

Salary sacrifice would mean that no employee contributions would show on your payslip - instead your pay would have been reduced by the amount sacrificed. I have a feeling the NHS doesn't do salary sacrifice but then maybe that is a red herring.

A way to tell if the contributions are relief at source is to check the pension scheme and see if it shows the tax relief coming in as an extra amount on top of your contributions. With some providers there is a time gap between your contributions hitting the pension scheme and the tax relief doing so but I am not sure with Aviva. I have seen on here mention of prefunding which means they credit the tax relief to your pension before they actually get it from HMRC but if the amount shown as your contribution in the pension is higher than the amount shown as deducted from your pay on the payslip then it should be relief at source.

Just to confuse things there is a thing called net pay which is a bit like salary sacrifice but without the NIC benefits. In that case an amount for your contributions will be shown on the payslip and is deducted from your pay before the entry saying taxable pay. In that case there is no tax relief in the pension because you got it all through the net pay calculation - ie the contributions are taken off before you pay any tax.

That may not have helped to clarify anything. Asking payroll may be simpler.

PyggyMalony66

I am an administrator in a clinical team at a charity where clinical teams are paid according to agenda for change. I get all the benefits of AFC but not in the NHS pension scheme.

Under 'This Period' my January payslip says

Taxable payments this 2041.50

Pensionable Pay this 2041.50

Employers NI this 243.67

Employers Pension Paid 142.91

Under 'Deductions' it says

Tax 198.60

NI - A 79.48

Aviva (%) 49.00

Does this mean tax relief at source? I never thought it was salary sacrifice but what do I know, I'm beginning to think not much : )

If this doesn't help I will speak to payroll tomorrow.

Thank you

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81866008#Comment_81866008

It looks like a relief at source pension payment, but there is an easy way to check . If you log on to your Aviva pensions, you should see three separate payments going into it each month.

Your contribution + tax relief payment + employer contribution.

Can you clarify your contribution. On your payslip it says

Aviva (%) 49.00

Does that mean £49 ( if so seems very low) or 49% ( which is high ) .

Regarding making more contributions, I would suspect the SW one would not accept new contributions, so probably best to do that with the current Aviva one .