help - time of stop burying head in sand

monkeymutz

Hi Pension gurus

This is the first time that I have posted to the pension list - I am terrified by the word! My New Resolution however is to try to get some handle on the pensions and most scary start looking at my pension situation.

It seems I will have to work until I am 68 to be entitled to the state pension, so I have another 33 years left to work. I have been contributing to my NHS pension since 1996 (not sure what kind of pension that is but seems that everyone think that the NHS pension is pretty good - ?right).

I also had a look in the old filing cabinet over the holidays and I see that I have what is called a free-standing AVC from Scottish widows - which is putting in £65.79 per month (I wondered what the £50 odd a month going out to scottish widows was but was too frightened to ask incase it involved a pension!) I am not really sure how thing came about and I am sure that it was probably not a good thing to have it free-standing. I havent even update my address with Scottish widows since 2004 (when I moved house so i guess I will have to do that). What should i do with this - my income has increased about 3x from when I started it so I am guessing it is not really going to be contributing that much in retirement. I have been saving in an isa (well for the past two years anyway and plan to use them fully every year if possible).

What is the best way to start being more pension savy - is there an idiots guide to pensions or some such thing. i really dont understand the basics so I am finding even reading these boards with the SIPPS etc really intimidating!!

Many thanks
MM

EdInvestor

monkeymutz wrote: »

It seems I will have to work until I am 68 to be entitled to the state pension, so I have another 33 years left to work.

You can request a forecast of what you will get from the state pension here:

https://www.thepensionservice.gov.uk. You might have to download a form.

I have been contributing to my NHS pension since 1996

Excellent, one of the best pensions around.

I also had a look in the old filing cabinet over the holidays and I see that I have what is called a free-standing AVC from Scottish widows - which is putting in £65.79 per month. I am not really sure how thing came about

Do you have any other pensions left over from past jobs? Is this FSAVC also from the past or did you open it after joining the NHS?

I havent even update my address with Scottish widows since 2004

Suggest you do this and ask for updated details ( current and transfer values, fund choice, annual charges).

. What should i do with this - my income has increased about 3x from when I started it so I am guessing it is not really going to be contributing that much in retirement. I have been saving in an isa (well for the past two years anyway and plan to use them fully every year if possible).

It might be best to switch the contributions to your S&S ISA as you will otherwise possibly end up with too much (taxable) pension income in retirement.You could also ask if the FSAVC can be trasferred into your NHS pension and check whether that would be a good deal.

monkeymutz

Hello

Thank you for your reply EdInvestor. I will certainly have a look and order a forecast.

I went straight into the NHS after graduating (age 21) and have had a couple of breaks - total a couple years lost, including when I had my DS, so I got the scottish widows FSAVC after I joined the NHS.

I have contacted Scottish Widows and asked for the things you suggested and they will post the information onto me - so I will let you know what that says.

They also suggested getting a IFA to look into transferring into the NHS scheme so perhaps that is what I should do - it is a bit scary looking into getting an IFA - how do you know if they are good one etc:eek: I guess more reading on the MSE boards to find out.

I did think about the Stock and Shares ISA (is that what S&S ISA is ) but I got scared off again by the complication of it all - I know i would have to use a company and buying and selling the shares cost everytimes too doesnt it - does anyone know if there is a good thread to read one this for me to start understanding this a little?

Once again thank you very much for taking the time to reply and sharing your knowledge - It is very much appreciated.

MM

dunstonh

Thank you for your reply EdInvestor. I will certainly have a look and order a forecast.

You cant at the moment. They are down for 12-18 months.

it is a bit scary looking into getting an IFA - how do you know if they are good one etc

How do you get a good solicitor for conveyencing?
How do you get a good accountant for doing your books
How do you get a good plumber, builder, blah blah.

Its no different and certainly not scary. Its more awkward probably in that you dont know where to start. However, once you know that you shouldnt see a tied agent and avoid the salesforces you are half way there.

I did think about the Stock and Shares ISA (is that what S&S ISA is ) but I got scared off again by the complication of it all - I know i would have to use a company and buying and selling the shares cost everytimes too doesnt it

Most people dont by shares with a stocks and shares ISA. They buy funds. You can buy shares of course but you can also have stocks and share ISAs with no stocks or shares. There is not necessarily an initial charge depending on where and how you buy.

monkeymutz

Hello Dunstonh

what a shame about the forecast - I will just have to wait for that I guess.

Of course you are right about choice of people to help and advise - this is why I dont use any of these professional services, too frightened of making a mistake and when I bravely tried to getting a builder I ended up fighting in the small claims court! Where would you advise I start trying to find an IFA? I guess this is the whole reason that I have stuck my head in the sand about the pension for so long - really terrified of making a big mistake.

Very interesting about the s&s isa - I didnt realise that it was funds. Again where would you advise that a complete wet behind the ears novice like me should start dipping their toes in the water with this?

Thanks again for your input - much appreciated.

MM

dunstonh

Where would you advise I start trying to find an IFA?

Firstly to make you feel easier, IFAs have between 60-80% of the distribution for advice sales in the UK. Yet they only have between 12-16% of the complaints to the ombudsman (figures differ as the sources used have different dates, periods and slightly different criteria. i.e. the 80% one appears to include execution only and direct offer). So despite the majority of the transactions going through IFAs, they have the lowest complaints of any advice distribution channel.

Salesforces are notorious for bad advice as sales targets, incentives and pressure from sales managers doesnt sit well with quality advice. So avoid sales forces (these can range from national firms, firms linked to unions and regional firms with multiple offices).

Owners, partners and directors of a firm are likely to be your best bet. Owners and partners are personally financially liable for the advice they give. If its wrong, it comes out of their pocket. Directors dont have personal liability but as they have a much closer relation to the assets and liabilities of the company than an employee you should be fine. Also, owners, partners and directors tend to be there for the long term. Its their business. Employees or those attached to a firm on self employed basis tend to have a higher turnover.

Dont be afraid to ask the IFA questions about their experience and background and what they most give advice in.

For example, you dont want to see an adviser that spends 90% of their time doing mortgages if you want investment advice (and vice versa). The good advisers tend to specialise or carry more knowledge in their area of speciality than a GP IFA.

Very interesting about the s&s isa - I didnt realise that it was funds. Again where would you advise that a complete wet behind the ears novice like me should start dipping their toes in the water with this?

Investing is a lot about understanding how things work and why and that the best places to invest are often not those at the top currently but those at the bottom. Also that if you see a league table of performance that a fund in 30th place could be better than the fund at the top. Its knowing how to read the data and making a decision based on that.

There is a good thread at: http://forums.moneysavingexpert.com/showthread.html?t=416337

Its a long read so have a cuppa handy.

EdInvestor

When you get the info from Widows, ask the NHS pension office if you can transfer it in, and how many "years" it will buy. It might cover the gaps when you were off work. .

Try this discount broker site for more info on s&s ISAs and the funds to put into them:

https://www.h-l.co.uk

Re the state pension, those retiring after 2010 will only need 30 years conts to get the full basic, so looks like you're almost half way there already - the career breaks will be covered by Home responsibilities credits.

Not much sorting to do there, then :)

monkeymutz

Thanks so much for the advice Dunstonh and EdInvestor.

That has really given me a great start - time for me to start to do some serious studying with the sites and links that you have given me. I guess with the IFA (and all other professionals too I guess) when completely in the dark, people who have the knowledge can seems to hold quite a lot of power over you. I think probably that is an issue with me - I resent (maybe too strong a word) being vulnerable and relying on somebody else but ignoring it hasnt got me too far and has stressed me out for years so that is not a good plan either! I will start looking into getting an IFA in my area.

It is a great tip to try and get a more senior person in the firm and I didnt know that the FSAVC might be able to be taken up by the NHS as sort of an additional years thing for what I have missed. I will certainly look into it.

I know however that a little bit of knowledge can also be a dangerous things (for my finances!) so I hope you guys wont mind if I pick your brains a little if things get complicated for me and keep you posted on what I am doing incase I go off at a tangent and start getting it all wrong!

You have both been incredibly generous with your time and knowledge - this site is FAB!!

MM

monkeymutz

Hi Guys

i looked into addition the FSAVC to the NHS pension but that is not allowed. Apparently I can apply for "additional years" - i am not really sure what this is but apparently it is being stopped in April which makes me think perhaps it is not such a bad thing to find out about. Can anybody give me a quick synopsis on the difference between additional years and AVC?

What are the views on the Pension Gurus on whether this is worth getting into or not?

Many thanks
MM

meanscot

I have a FSAVC with PRU (formerly a Scottish Amicable member) which matured last year and I had the fund transferred to a PRU Cash fund. The fund last year was worth £13001.86 and this year it is worth £13519.46. So much for PRU fund managers. (As an afterthought, would the PRU be better sacking their fund managers and putting their Cash funds into a Building Society high interest account.)

I took out this FSAVC in 1988 to supplement my Teacher’s pension. I still have 3 years to go until I am 65 and will probably work for another year or so.


I understand from a PRU notice to Members (PENS6552 11/2007) that I can now take a 25% tax-free cash sum and take the retirement benefits even if I continue to work full or part time as there is no longer a link between my main pension and the FSAVC.


Can I now take my lump sum and use the balance to buy a probably worthless annuity giving me a monthly taxed income worth peanuts ?


Can anyone advise if this is the best option otherwise the only persons making any money from this fund is the PRU and their fund managers ?


Have I a case for mis-selling of a financial product against either the Financial Adviser (now long gone) who sold me the FSAVC or the PRU ?


meanscot

EdInvestor

meanscot wrote: »

I understand from a PRU notice to Members (PENS6552 11/2007) that I can now take a 25% tax-free cash sum and take the retirement benefits even if I continue to work full or part time as there is no longer a link between my main pension and the FSAVC.

You can.

Can I now take my lump sum and use the balance to buy a probably worthless annuity giving me a monthly taxed income worth peanuts ?

Yes - or you could put it into "income drawdown" which would enable you to keep it invested and (hopefully) growing while paying you a (higher) income than annuity.You would need to transfer it elsewhere to do this, most likely to a Sipp such as

https://www.h-l.co.uk
https://www.sippdeal.co.uk
https://www.alliancetrust.co.uk

Have I a case for mis-selling of a financial product against either the Financial Adviser (now long gone) who sold me the FSAVC or the PRU ?

What would be the grounds?