What do you do when there is not enough money?

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  • Thrugelmir
    Thrugelmir Posts: 89,546
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    jamesd wrote: »
    It's not speculation like yours about something you've never used but what someone who's been using P2P for ten years knows from doing it is easy enough.

    I bow to your superior knowledge. Can I ask what your background in finance is? SME, Venture Capital, PLC or from working in the Accountancy profession.
  • I don’t appreciate the adviser bashing, maybe not everyone could see the value in whatever your profession is either but that doesn’t mean it isn’t valuable to plenty of people. for example good luck correctly working out how to extract money from a bond - via segment surrender or via withdrawal across all segments, might appear the same to you but have seen it cost thousands in tax to someone who doesn’t know what they are doing

    How old is the ill person as their age at death affects the tax treatment of the inherited pension, if it has not been accessed and they die pre age 75 it is fully tax free to the recipient but the rules re death post 75 are different
  • Joey_Soap wrote: »
    Thank you very much. This is indeed a concern. And not only for this pot of money. my current thoughts are to suggest the majority of the pot that is invested for 11 years goes into a low cost, very broadly based tracker along the lines of the Vanguard LS 80 fund.
    And maybe a diversifier into a well run REIT for some property exposure. It's quite possible such a portfolio can run itself. However, this in itself is likely to be a serious and in depth discussion.



    If you don’t factor in some sort of inflation measure the person will lose out in real terms knocking all of your calcs out so it is essential to do so
  • Hopefuljoy
    Hopefuljoy Posts: 442
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    edited 14 February 2018 at 9:29AM
    Hello, I have read through these postings and I have a number of concerns for your relatives and for you. First I am not an IFA or connected to the financial industry. I have only met with an IFA once and that was for a different and less complex matter. My personal experience was excellent.

    I have researched the qualifications needed to give pensions advice and discovered that there are a series of intensive exams to go through before an independent IFA is able to advise on pensions. Clearly this is a complex area and in.spite of my money saving credentials I would hesitate to give advice on a pot of money which has to potentially last another 40 years. My father was a trustee of a huge company pension scheme for over 20 years, is a Chartered Accountant and even he refuses point blank to give pensions advice to anyone. I am not sure how or why you feel you are better qualified other than by having confidence and some personal experience with your family funds. This simply cannot compare to training and professional qualifications in such a difficult area.

    An IFA can give advice for a one off fee and it is up to the individual whether they proceed with the IFA. This seems to me to be a prudent way forward. You and your relative could gain knowledge without risk and then your relative could.decide which way to go.

    Your relatives are undoubtedly going through a stressful time and while I commend the fact you will sit down with them and help with finances and can see that you want to help them I urge you to reconsider taking this responsibility on your shoulders without professional help. It is simply too important. Clearly they have worked hard and one of them faces the imminent prospect of bereavement, job seeking and making their way on their own. This must be about optimising their financial future and sometimes there has to be an upfront payment to get the best.

    Finally, they have not 'sailed along blissfully for years'. You said yourself that they have managed on low incomes and only have a small personal loan outstanding. One of them has prudently saved a proportion of their low income into a defined benefits scheme and the survivor can easily and inexpensively increase their National Insurance contributions to make sure they get the maximum amount of state pension. The pension will pay a survivors pension so the partner has ensured they have done their very best to look after their partner. Thecsurvivor can work and I suggest that they will not necessarily need to draw any pension at all until they reach retirement age and can then draw their own pension which they will have built up in employment, plus state, plus survivors.

    These relatives have done their best with little. I respect them for it and I think you should too.
    With family, friends and pets (or any combination of them) life will be fine!


    Emergency fund £2474 post cat wee catastrophe!

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  • jamesd
    jamesd Posts: 26,103
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    laurenzo wrote: »
    If you don’t factor in some sort of inflation measure the person will lose out in real terms knocking all of your calcs out so it is essential to do so
    All it does is produce a drop in the real inflation-adjusted value of the remaining pot and any income not increased by inflation. In this case it's desirable to draw on capital in the years before state pension age. So useful to consider inflation in planning but it doesn't mean they are losing out, it's just an extra bit of capital real value reduction to allow for. Of course an IFA suitability report would need to cover the issue.
    laurenzo wrote: »
    for example good luck correctly working out how to extract money from a bond - via segment surrender or via withdrawal across all segments, might appear the same to you but have seen it cost thousands in tax to someone who doesn’t know what they are doing
    I've seen reports of providers letting people do partial encashment of all segments of their investment bonds without questioning. A horrendously expensive mistake compared to full encashment of some segments or taking just 5% or some efficient permutation. It also proved expensive for Prism Financial Advice to advise full encashment when the FOS ordered them to pay a customer £4,389 for having done that with insufficient analysis.

    Fortunately most IFAs unfamiliar with P2P are unlikely to try giving unregulated which platform or regulated if for remuneration individual loan contract advice.
  • jamesd
    jamesd Posts: 26,103
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    Hopefuljoy wrote: »
    One of them has prudently saved a proportion of their low income into a defined benefits scheme
    "defined contribution pension pot. The value of the pot is about £180k"
    Hopefuljoy wrote: »
    The pension will pay a survivors pension
    If it was defined benefit it might not provide a survivor's pension, the default annuity offered by the DC provider would but it's likely to be a standard annuity not making any allowance for the short life expectancy of the primary individual and hence paying far less than a sole policy in the name of the survivor. Likely considerably less than half as much.
    Hopefuljoy wrote: »
    These relatives have done their best with little. I respect them for it and I think you should too.
    The one with the pot seems to have done really well on a low income. Far more than a typical pot.
  • wurley
    wurley Posts: 95
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    edited 19 February 2018 at 12:00PM
    The first port of call should be the CAB... I've been through their training and this is something they are able to help with. Make the appointment and bring all their financials - There are likely routes that you don't know about to get more help. They will know of these. Find a reputable office.

    Pensions is an area that has many pitfalls for even the most experienced Googlers to get wrong. :eek:

    Just for the record CAB are not financial advisers.
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