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  • FIRST POST
    • savingholmes
    • By savingholmes 26th Aug 19, 11:40 AM
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    savingholmes
    Combine pensions or sipp or what?
    • #1
    • 26th Aug 19, 11:40 AM
    Combine pensions or sipp or what? 26th Aug 19 at 11:40 AM
    DH has three pension pots plus one through his current work

    1) About 1200 pot - DH needs to find details
    2) 5988 - it grew 535 but had charges of 143
    3) 26115 - it grew 2073.99 and had charges of 252
    4) pension due to be worth 4K pa at 67

    I think as a minimum we need to combine the first 3 pots - but am considering whether we should move it to a SIPP. We are 49 and interested in moving to the country ideally no later than 55 (2025). We would expect to work in some capacity but are less likely to retain such relatively high income and therefore access to those pension funds could really help.

    I have DB pensions that I can access at 67 1) deferred 5K+ and 2) 7.3K (already) and I would continue to contribute to this until we move plus we should both get full state pensions worth approx 17K combined. I could take my pension from the second one of them early but would have a 44% reduction. This is not my current plan - but may consider later.

    We are currently repaying debt but expect to resolve that by Nov 20. It would then take us to the summer of 2021 to save up a 6 month emergency fund. After that if we kept our current jobs we could put 1800-2250 per month (OH's salary) towards either the mortgage or investments. With the 20% uplift due to tax relief of going down the sipp route - is that better than trying to repay mortgage with the money and what are the pros and cons?
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
Page 1
    • Dazed and confused
    • By Dazed and confused 26th Aug 19, 12:02 PM
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    Dazed and confused
    • #2
    • 26th Aug 19, 12:02 PM
    • #2
    • 26th Aug 19, 12:02 PM
    Have you actually checked your State Pension forecasts on gov.uk?

    Given your relatively young age you are highly likely to be able to reach 168.60 providing you are earning enough each year to add additional qualifying years but plenty of posters on here have made assumptions they will get the full 168.60 and been surprised when they check the reality on gov.uk.

    Make sure you read past the headline figure (almost certainly 168.60) to see what you have both accrued to date (should be updated to 05:04:2019 by now).

    And it's a 25% uplift, not 20%. You add say 1,000 into a relief at source scheme and the pension company (courtesy of HMRC) add 250. Gross contribution is 1,250. Of which 20% was the basic rate tax relief.

    How much is your current "relatively high" income? Are either of you paying 40/41% tax?
    Last edited by Dazed and confused; 26-08-2019 at 12:09 PM.
    • savingholmes
    • By savingholmes 26th Aug 19, 12:34 PM
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    savingholmes
    • #3
    • 26th Aug 19, 12:34 PM
    • #3
    • 26th Aug 19, 12:34 PM
    Providing we both make another 6 years worth of NI contributions we will qualify for full state pensions. I have checked both our state pensions.

    I am under the threshold for higher rate tax - but hope to get closer / perhaps exceed in the near future. We take home approx 4.9K pcm between the two of us.
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
    • Linton
    • By Linton 26th Aug 19, 12:57 PM
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    Linton
    • #4
    • 26th Aug 19, 12:57 PM
    • #4
    • 26th Aug 19, 12:57 PM
    At first sight your husbands pensions appear to be pretty small though your DB pensions seem reasonably large.

    Have you calculated
    1) how much income you need to live on?
    2) Where the income is coming from, particularly before you both get your SPs and DB pensions. Do you have other savings?
    3) What happens if one of you dies?
    • savingholmes
    • By savingholmes 26th Aug 19, 1:09 PM
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    savingholmes
    • #5
    • 26th Aug 19, 1:09 PM
    • #5
    • 26th Aug 19, 1:09 PM
    Thanks for the replies

    If we worked to age 67 - we would retire on around 51K plus (including state pension) any additional benefits we create from other investments. If we moved to the country at age 55 we either need jobs that bring in around 2.7-3K net pcm or some passive income streams that reduces that requirement... or B&B income or similar - potentially more if we are planning to repay mortgage...

    I
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
    • Albermarle
    • By Albermarle 26th Aug 19, 2:08 PM
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    Albermarle
    • #6
    • 26th Aug 19, 2:08 PM
    • #6
    • 26th Aug 19, 2:08 PM
    1) About 1200 pot - DH needs to find details
    2) 5988 - it grew 535 but had charges of 143
    3) 26115 - it grew 2073.99 and had charges of 252
    4) pension due to be worth 4K pa at 67
    It would see that no 4) is a DB pension so probably best left alone until it is taken .
    It would be easier administratively to combine the other three . Also as they are probably old pensions they will not support some options for when you want to take the money
    This could be by transferring all to a new pension ( which is what you are considering ) or alternatively transferring into the current employer pension. It will depend on exactly what type of workplace pension it is though. ( presume it is DC and not DB?)
    Often workplace pensions are relatively simple and have a discount negotiated by the employer . Usually they are happy to accept transfers in but it depends on the type of pension you will need to check . Also check that when employment ceases the pension then just becomes a personal pension ( usually this is the case)
    If so you can then compare the charges with opening a new SIPP.
    SIPP's are a bit more complicated to operate than a typical workplace ( or ex workplace ) pension for an inexperienced investor.
    • savingholmes
    • By savingholmes 26th Aug 19, 3:00 PM
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    savingholmes
    • #7
    • 26th Aug 19, 3:00 PM
    • #7
    • 26th Aug 19, 3:00 PM
    Thanks - number 4 is defined contribution. OH pays around 6.7% and gets a 4% match. It doesn't perform particularly well - possibly as he put everything in low risk funds. He's seeing a pension adviser about that in September. HR have also committed to reviewing the pension provider.
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
    • Albermarle
    • By Albermarle 26th Aug 19, 4:09 PM
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    Albermarle
    • #8
    • 26th Aug 19, 4:09 PM
    • #8
    • 26th Aug 19, 4:09 PM
    Thanks - number 4 is defined contribution
    4) pension due to be worth 4K pa at 67
    Then I presume this 4Kpa is the projection of what it will pay at age 67 ?
    In this case this projection might be a little pessimistic - they usually are.
    The low risk funds are much more likely to be causing the poor returns, than the actual pension provider them selves .
    If you move to another provider, including a SIPP, but again with low risk funds , you will probably get pretty much the same result.
    • savingholmes
    • By savingholmes 14th Jan 20, 9:31 PM
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    savingholmes
    • #9
    • 14th Jan 20, 9:31 PM
    • #9
    • 14th Jan 20, 9:31 PM
    I have since got a cetv on my defined benefits pension. I am 49.5. They would offer me a DB pension of 6K per year with 35K cash at age 60 or 7.7K if I wait to 65 (nots sure what cash they would then give me. The CETV has come in at 325K. I think I should move it to a sipp - as a) the DB part of the pension isn't very generous b) the TFLS isn't very generous either and c) if I was to die within 5 years of drawing it my spouse would only get half of the pension.

    We want to potentially retire at 55, take TFLS and live off various pensions. We are planning to add most of DH's salary to a SIPP between now and then.He's roughly the same age. It looks to me like I'm way better of taking the CETV - is there anything I'm missing?

    Also I know I have to see an IFA - do you have any advice on acceptable charges for doing the paperwork and where I should get one from?
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
    • Dazed and confused
    • By Dazed and confused 14th Jan 20, 9:35 PM
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    Dazed and confused
    Only you know what is acceptable.

    Going off other threads on here I suspect you are looking at 5-10k. If it were 10k would that be acceptable?
    • savingholmes
    • By savingholmes 14th Jan 20, 10:44 PM
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    savingholmes
    I've heard some people say 1% of the value? Does that sound right?
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
    • Albermarle
    • By Albermarle 15th Jan 20, 10:15 AM
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    Albermarle
    It looks to me like I'm way better of taking the CETV - is there anything I'm missing?
    Yes - currently there is no risk to the annual payments you will receive as they are guaranteed for life ( your average life expectancy means that from 55 you have a more than 50% chance of living for another 30 years) When/if you transfer you immediately expose your self to investment risk and who knows what might happen in that time .
    It might be the right decision for you but it is a very big financial decision to take .
    Have a look at this link:
    https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/five-good-reasons-good-with-your-money-guide-2018-edition.pdf
    • savingholmes
    • By savingholmes 16th Jan 20, 3:59 PM
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    savingholmes
    I've had one quote for 3% and another for 2% so far. Any good defined benefit transfer specialists out there that would charge less?
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
    • Albermarle
    • By Albermarle 16th Jan 20, 4:51 PM
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    Albermarle
    This thread might be of general interest:

    https://forums.moneysavingexpert.com/showthread.php?t=6091489
    • Dox
    • By Dox 16th Jan 20, 5:16 PM
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    Dox
    It looks to me like I'm way better of taking the CETV - is there anything I'm missing?
    Originally posted by savingholmes
    Quite a lot, I'm afraid - but your IFA will cover all this when you seek advice (no point trying to cover everything here in the absence of full details of the scheme, your attitude to risk, health, other savings etc etc).
    • savingholmes
    • By savingholmes 17th Jan 20, 7:29 PM
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    savingholmes
    I have read the other thread and some others too. I have spoken to or messaged 4 IFAs so far:

    No 1 - wants to meet me and would charge 3% - and seems to think there's a reasonable chance it would go ahead
    No 2 - wants to charge 3% on the first #250K and then 2% on the rest - rang me today - very rarely say no
    No 3 - said wait until 55 or close to it so take less risk. What's irritating to me is that they ignore any growth I am potentially missing out on and that my cetv could also fall significantly. They were willing to let me speak to one of their people in more detail though before they made a final decision. They appeared to charge a flat fee - #1K for initial advice - another #3K if proceeding and then I think 0.7% on-going advice fee for them to manage my sipp for me... Would be reluctant to do it without the 'on-going relationship'. Suggested getting annual cetv number and reviewing
    No 4 - said wait until 55 or close to it so take less risk but we will help you with your other sipp plans for a fee - can't remember if it was 0.7% or higher. Again want 'on-going relationship'

    A relative is going to ask whether any of his contacts in the industry would do the transfer - but said lots running scared because of insurance / claims risk.

    I still want to do it at the moment... Frustrated that I am being charged an arm and a leg to get to manage my own money!
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
    • savingholmes
    • By savingholmes 22nd Jan 20, 8:15 PM
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    savingholmes
    I spoke to another 2-3 IFAs. The final tally. Most said their insurance wouldn't cover me below age 55. I could then have picked a transfer company that would have been below 2%. One IFA claimed there were only about 70 transfer specialists in the country - hence the rate. Two 'introducers'/IFAs did use the same company. One IFA told me that they share the money with the pension transfer specialist - 40% of the fee goes to the IFA and 60% to the pension transfer specialist.

    2 said they could speak to me from age 50 ie when within 5 years of planned retirement. I got 1 of those from Unbiased and 1 from a personal recommendation. Vouched 4 gave me someone that charged 3% to speak to - TBF to their Customer Services they checked someone had been in touch by email, asked me if I wanted anyone else and rang me up to find out why I hadn't proceeded.

    I managed to get someone down to 2% but only because he too read the rates wrong on the pension transfer specialists page. I do think their rates are misleading - it was a page that said 3% for 250K , 2% for above but below another figure etc... Either way they agreed to honour the 2% I had been quoted by the IFA.

    I do think the FCA have created a 'racket' or monopoly in their desire to protect those with DB pensions. If I pay 2% - that is equivalent to a year's pension at 60. The FCA say the fee should be around 4K - I haven't found any provider yet that is willing to do it for that. By prosecuting companies where they didn't like the advice given - even where it was an insistent client - they have driven up insurance premiums and created a bigger monopoly. Someone I work with - who is the kind of person the FCA are trying to protect - got his DB transfer through. He was aware of paying 1% a year for advice - but unaware that he had also paid a transfer fee - he told me 'I think I got it for free'. I worked out based on the figures he gave me - he had paid 5K!!! plus an on-going 1%. Fortunately for him - he too needed a second CETV and it went up 30K.

    I still want to transfer my but now have to wait until my 50th birthday. I am potentially losing out on 4 months stock market earning potential as a minimum. Yes I am also protected from the stock market but I have no control over what my cetv will be then. (I am told the 'gilt' 10 year market yields are likely to have the biggest impact on my CETV - that or a change of the view of risk by individual actuaries). I will have to pay for another CETV - costing me 120+ (I've heard of others paying far more). I have to hope and pray that next time they offer me a cetv that it is no worse than this one or I could end up very disappointed.

    Hope that helps some of those looking into DB transfers. I will let you know how I get on after I am 50!! Interestingly the FCA also takes a dim view of triage services - I would say they have all triaged me to some degree - I spent 40 minutes on the phone with the first IFA I spoke to.... It's been an interesting 10 days.... and I've learned a lot. I do now have a copy of all the main paperwork I would need to fill in - at least I can review that at my leisure.
    During 2020: Target 1) 25,121 to be repaid in 2020 (0%) Now down to 24,703 Target 2) repay 1450 off (OP 102.51) mortgage now 144872 @1.7% Target 3) Set up SIPPs Target 4) Declutter 52 bags - now done 4/52
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