Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • catowner123
    • By catowner123 12th Apr 18, 9:15 AM
    • 8Posts
    • 0Thanks
    catowner123
    Serps - help
    • #1
    • 12th Apr 18, 9:15 AM
    Serps - help 12th Apr 18 at 9:15 AM
    Hi
    My father has recently worked out he has 68k in a SERPS pension fund which he is entitled to - he is 60 now.
    He has been told he can take 25% tax free and then approx 2.5k ish a year.

    However he said to me that people have been suggesting this is not the right time to cash out SERPS but he isnt sure why. Any ideas on what people might be talking about? Are they simply suggesting the market is low (where the cash is invested by Aviva) so to hold out? Or is there something else I'm missing?

    Thanks!
Page 1
    • Brynsam
    • By Brynsam 12th Apr 18, 9:55 AM
    • 1,740 Posts
    • 1,276 Thanks
    Brynsam
    • #2
    • 12th Apr 18, 9:55 AM
    • #2
    • 12th Apr 18, 9:55 AM
    When you say he has 'worked out', what exactly do you mean (or what does he mean)? Who are 'the people' who have been suggesting?

    Sounds as if he opted out of SERPS and took out a private pension - anything on the paperwork to suggest that's the case? if so, his decision has nothing to do with SERPS any more, but is simply a pension which he can take now or in the future; and (depending on the terms of the pension), 25% as a tax free lump sum and the rest as pension (2.5K a year sounds about right); or take the lot as cash, with tax payable on 75% of it.

    Perhaps get an up to date quote from Aviva before going any further.
    • catowner123
    • By catowner123 12th Apr 18, 10:07 AM
    • 8 Posts
    • 0 Thanks
    catowner123
    • #3
    • 12th Apr 18, 10:07 AM
    • #3
    • 12th Apr 18, 10:07 AM
    Yes thats correct he opted out and took a private pension.

    He heard from his friends or other people he used to work with but didnt really understand why they were saying that. I wanted to check if I was missing something but it seems there are really 3 options:

    1. Cashing out now at the 68k current value (25% lump sum and remaining annuallly)
    2. Cashing the lot out now at a high tax rate - defo not!
    3. Leaving this pot in the fund and simply see where the value goes in the future (up and down). I presume down/static for a while given the unknown of brexit etc...
    • zolablue25
    • By zolablue25 12th Apr 18, 10:15 AM
    • 1,601 Posts
    • 469 Thanks
    zolablue25
    • #4
    • 12th Apr 18, 10:15 AM
    • #4
    • 12th Apr 18, 10:15 AM
    3. Leaving this pot in the fund and simply see where the value goes in the future (up and down). I presume down/static for a while given the unknown of brexit etc...
    Originally posted by catowner123
    If Aviva have purely invested in the UK then yes, Brexit may cause a down/static looking chart. However, if the funds are diversified in markets around the world then Brexit won't have too much of a negative effect. On the contrary, when the falls it makes investemets in other currencies worth more in terms.
    • Brynsam
    • By Brynsam 12th Apr 18, 10:34 AM
    • 1,740 Posts
    • 1,276 Thanks
    Brynsam
    • #5
    • 12th Apr 18, 10:34 AM
    • #5
    • 12th Apr 18, 10:34 AM
    Y
    He heard from his friends or other people he used to work with but didnt really understand why they were saying that.
    Originally posted by catowner123
    Probably they don't understand either - and it always comes down to being a personal decision based on your own circumstances.
    • PeacefulWaters
    • By PeacefulWaters 12th Apr 18, 10:47 AM
    • 8,318 Posts
    • 10,672 Thanks
    PeacefulWaters
    • #6
    • 12th Apr 18, 10:47 AM
    • #6
    • 12th Apr 18, 10:47 AM
    The market has dipped slightly in recent weeks.

    "His friends or other people" might be assuming it will return to its recent high point in due course.

    It might do. It might go even higher. It might not recover in good time. It might slide further.

    Does he actually need any part of this money now?. If he's not yet retired, or financially stable, then what's the rush?

    I wouldn't worry about Brexit. The uncertainty was priced into the market two years ago.
    • catowner123
    • By catowner123 12th Apr 18, 11:13 AM
    • 8 Posts
    • 0 Thanks
    catowner123
    • #7
    • 12th Apr 18, 11:13 AM
    • #7
    • 12th Apr 18, 11:13 AM
    He would prefer to have it now as he wants to collate his cash together and buy a property to rent out.

    Thanks for all the help
    • AnotherJoe
    • By AnotherJoe 12th Apr 18, 11:29 AM
    • 11,833 Posts
    • 13,780 Thanks
    AnotherJoe
    • #8
    • 12th Apr 18, 11:29 AM
    • #8
    • 12th Apr 18, 11:29 AM
    Yet another amateur landlord who hasn't done the sums but thinks letting out property is the road to riches.
    • catowner123
    • By catowner123 12th Apr 18, 11:35 AM
    • 8 Posts
    • 0 Thanks
    catowner123
    • #9
    • 12th Apr 18, 11:35 AM
    • #9
    • 12th Apr 18, 11:35 AM
    hahahahahaha you're so funny Joe. Wish I was more like you.....idiot.
    • Brynsam
    • By Brynsam 12th Apr 18, 12:11 PM
    • 1,740 Posts
    • 1,276 Thanks
    Brynsam
    Yet another amateur landlord who hasn't done the sums but thinks letting out property is the road to riches.
    Originally posted by AnotherJoe
    How do you know he hasn't?
    • AnotherJoe
    • By AnotherJoe 12th Apr 18, 12:46 PM
    • 11,833 Posts
    • 13,780 Thanks
    AnotherJoe
    How do you know he hasn't?
    Originally posted by Brynsam
    Because he calls it a "SERPS pension", because he's asked some mates down the pub who've said "dont cash it in" but neither he nor they seem to be clear as to why or indeed have any clue what it consists of, what the investments are, what the might do, whether they are well invested (and indeed if the growth on it might outmatch what he's planning to get a return on with a rental property !)

    So, I've made the logical deduction his research into being a landlord is as sloppy as his attitude towards sixty eight thousand pounds he's only just worked out he has but knows nothing else about.

    So, C123, can you post a brief summary of the sums your dad has done to show how much profit he'll make. Just the basics;

    Agent fees.
    Legal costs
    Stamp duty (extra 3%?)
    Mortgage payments
    Mortgage interest.
    Maintenance allowance.
    Void period allowance.
    Insurance
    Gas & electric certificates
    Cleaning & redecoration fees
    Deposit protection scheme
    ERC certificate
    Utlities if applicable
    Tax on profits
    CGT when selling

    Rental income

    Thats just as they occur to me, no doubt there are others.

    Then contrast that with the returns on his "SERPS pension"

    Surely he wouldn't launch into beinag landlord without understanding that? The person who did that would be,well, an idiot.
    • MEM62
    • By MEM62 12th Apr 18, 12:51 PM
    • 1,888 Posts
    • 1,515 Thanks
    MEM62
    Yet another amateur landlord who hasn't done the sums but thinks letting out property is the road to riches.
    Originally posted by AnotherJoe
    Road to riches?.....Nahhhhh!!

    But keeping my flat when I purchased a house with my other half was the best thing I ever did. A reasonable earner now (even as a 40% tax payer) and a tidy addition to my retirement income when the time comes sometime in the next 5-10 years.

    No, it's not the holy grail of money making but it's a useful investment alongside a pension.
    Last edited by MEM62; 12-04-2018 at 12:58 PM.
    • catowner123
    • By catowner123 12th Apr 18, 2:00 PM
    • 8 Posts
    • 0 Thanks
    catowner123
    So many assumptions made for no reason. Hope you enjoy getting off on joining threads, adding no value and talking general crap.

    If you knew what you were talking about maybe you would make some money in property. You probably cant afford any kind of deposit though but oh well.

    Anyway thanks everyone - except you Joe.
    • dunstonh
    • By dunstonh 12th Apr 18, 11:25 PM
    • 96,058 Posts
    • 63,876 Thanks
    dunstonh
    Anotherjoe is correct.

    Cashing in a pension, paying large amounts of tax to then put it into a taxable asset that generally returns lower returns than equities unless you use gearing is not normally a good idea.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • mgdavid
    • By mgdavid 13th Apr 18, 12:34 AM
    • 5,834 Posts
    • 5,179 Thanks
    mgdavid
    So many assumptions made for no reason. Hope you enjoy getting off on joining threads, adding no value and talking general crap.

    If you knew what you were talking about maybe you would make some money in property. You probably cant afford any kind of deposit though but oh well.

    Anyway thanks everyone - except you Joe.
    Originally posted by catowner123
    In the absence of you offering any kind of answers to valid questions, or useful information, we will all have to draw our own conclusions....
    The questions that get the best answers are the questions that give most detail....
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

180Posts Today

1,327Users online

Martin's Twitter
  • Many saying sexism or ego. My suspicion as someone who works in TV is that this is a format point. I'd think whe? https://t.co/AXfrv5YqKA

  • I do always ponder when watching apprentice why Lord Sugar is "Lord Sugar" but Baroness Bradey is Karen. #bbctheapprentice

  • Lord Sugar just said "she's talking like she's a 50 year old, she knows it inside out?" Genuine question if ther? https://t.co/6cZJ9d2Cni

  • Follow Martin