Pension funds

gadger999

Is there a figure that you should go from workplace pension providers to independent financial advisors...

I've got 350k in a closed Scottish widows pension.low costs....doing ok....probs 5%…taking the 5% every year so pot isn't shrinking…should I look at ifa,s and take more... really like to here views..

El_Torro

I wouldn’t say there’s a specific figure. If you’re happy managing the pot yourself then it doesn’t really matter how big it gets.

Taking 5% a year is already an ambitious / optimistic figure. Chances are the pot won’t last 30 years if you keep doing that. You do need a long term plan for your money. One that doesn’t involve you guessing what an appropriate withdrawal rate is. Many people come up with this long term plan on their ownc, many others use an IFA.

Have you looked at annuities? Might be worth considering if you want a steady income.

Marcon

https://forums.moneysavingexpert.com/discussion/6674223/pension-funds

If that's the same pension which had £400k in it when you posted in October last year, it's shrinking by considerably more than 5% per annum....

dunstonh

I've got 350k in a closed Scottish widows pension.low costs....doing ok....probs 5%…taking the 5% every year so pot isn't shrinking…should I look at ifa,s and take more... really like to here views..

5% is a high draw rate. Is that just a temporary draw that you plan to lower at some point?

I've got 350k in a closed Scottish widows pension.low costs....doing ok....probs 5%…

Growth of 5% per annum, if over the last three years, is very low. Whilst 2022 was a bad year, the three years that followed have been very good for pretty much anyone with 40 to 50% equities plus.

How are you measuring the 5% gain?

should I look at ifa,s and take more

We don't know how you're modelling, what the time scale is, when you intend to lower it, or what other assets you have. If you haven't modelled it and you don't intend to, then that is when an IFA will be beneficial for you.

Or if you have truly only been getting 5% per annum in recent years then something probably needs looking at.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82051157#Comment_82051157

If the OP goes to an IFA the annual drawdown could easily go to 6% ie 5% income and 1% IFA fees.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82051693#Comment_82051693

On the other hand, if the op is investing badly and isn't doing any decent financial planning, the cost could be far greater. And you'd like to think that he wouldn't be charged 1% on £350,000? Sure, some might, but with that value, you would expect a little less.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82051742#Comment_82051742

There are numerous, "coulds and ifs" in financial planning, but the IFA fee is guaranteed. Whether or not it's worth it will additionally depend on the nature of the client and the nature of the IFA. I was just noting that if the OP wants to maintain their 5% spending they will have to find additional gains to pay the IFA fees.

ali_bear

OP have you considered converting that fund into an annuity? Assuming it is all uncrystallised you would get 25 tax-free lump sum and the remaining 262500 would be used to provide the income for life. Have a look at annuity quotes and see what that income would be (depends a lot on your age). If you're 60 you could get around a 4.6% rate assuming it is RPI-linked (that's £12075 a year in the first year and rising with inflation).

Advantages are simplicity and the income is guaranteed for life.

Ibrahim5

If you use an IFA you are funding two retirements. Always going to be better just funding your own.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82052076#Comment_82052076

Generally I agree, but the OP might benefit from being told to draw less than 5%…of course that advice is free of charge from many sources.