Stick or twist? Aegon GPP
Discussion
I turned 40 this year and am getting my finances into order: next step – pension! I’d be grateful for some advice.
I am enrolled into my workplace GPP run by Aegon.
This has a low AMC at 0.62% - currently I get a 3.41% employer contribution which I top up to 8% under salary sacrifice.
The default fund I am invested in is balanced passive lifestyle fund, mainly UK & US equities and bonds. The returns over 1 year have been 1% (June 19-20). Over 6 years the return is 13%.
I’m looking to up my contributions to reach c£1000 per month. I could go higher but likely to move to “forever” house in next 1-5 years so saving for that.
My goal: growth over next 25 years. Speed up momentum into pension quickly over next 10 years or so, get the benefits of compound growth earlier rather than later.
Risk appetite: historically low, now open to risk. Perhaps I can pick one aggressive fund for 50-65% of the money and the remainder in less risky fund.
My questions:
- I plan to stick with the GPP (retain employer contributions) and pick 2 new funds, one aggressive, one globally diversified and lower risk. Does anyone have any knowledge or advice of Aegon funds? Any tips before I trawl through their awful website?
- I think my main alternative is to retain the GPP and use my top up funds in a SIPP. I have a Vanguard S&S ISA so could use them and claim back the 40% tax relief.
Some more circumstances
- c27 y time horizon to retirement
- higher rate tax payer
- married, kid on the way
- some other pensions but limited funds, total pension pots c45k
- wife has her own NHS pension provision (and a BTL)
I am enrolled into my workplace GPP run by Aegon.
This has a low AMC at 0.62% - currently I get a 3.41% employer contribution which I top up to 8% under salary sacrifice.
The default fund I am invested in is balanced passive lifestyle fund, mainly UK & US equities and bonds. The returns over 1 year have been 1% (June 19-20). Over 6 years the return is 13%.
I’m looking to up my contributions to reach c£1000 per month. I could go higher but likely to move to “forever” house in next 1-5 years so saving for that.
My goal: growth over next 25 years. Speed up momentum into pension quickly over next 10 years or so, get the benefits of compound growth earlier rather than later.
Risk appetite: historically low, now open to risk. Perhaps I can pick one aggressive fund for 50-65% of the money and the remainder in less risky fund.
My questions:
- I plan to stick with the GPP (retain employer contributions) and pick 2 new funds, one aggressive, one globally diversified and lower risk. Does anyone have any knowledge or advice of Aegon funds? Any tips before I trawl through their awful website?
- I think my main alternative is to retain the GPP and use my top up funds in a SIPP. I have a Vanguard S&S ISA so could use them and claim back the 40% tax relief.
Some more circumstances
- c27 y time horizon to retirement
- higher rate tax payer
- married, kid on the way
- some other pensions but limited funds, total pension pots c45k
- wife has her own NHS pension provision (and a BTL)
I’ve switched my Aegon pension into 70% Technology and 30% Dynamic Lifestyle funds. My circumstances are actually remarkably similar to yours.
I’ve decided to go for growth. It seems to me there is as much risk to my lifestyle in retirement in sticking with a fund that barely keeps up with inflation as there is going for it with the Technology fund which has had massive growth.
If there being a significant downturn in the tech sector were doomed anyway.
I’ve decided to go for growth. It seems to me there is as much risk to my lifestyle in retirement in sticking with a fund that barely keeps up with inflation as there is going for it with the Technology fund which has had massive growth.
If there being a significant downturn in the tech sector were doomed anyway.
8% isn't enough - you need to be putting in at least 15%
What's your tax position? Max out that 40% tax relief if you can.
Any ISAs in the picture?
The forever home - will the BTL be sold to fund it?
Is SWMBO paying 40% tax on her BTL income?
Depending on the overall position you may find it's worth getting some input from an IFA in order to maximise tax efficiency while investing for retirement and working towards the house move. It's difficult to make appropriate decisions unless the full context is understood.
What's your tax position? Max out that 40% tax relief if you can.
Any ISAs in the picture?
The forever home - will the BTL be sold to fund it?
Is SWMBO paying 40% tax on her BTL income?
Depending on the overall position you may find it's worth getting some input from an IFA in order to maximise tax efficiency while investing for retirement and working towards the house move. It's difficult to make appropriate decisions unless the full context is understood.
Thanks for your help rockin.
From yesterday contributing 21% at £1km pcm.
Have almost 6 figures in ISAs saving for move.
Wife does incur tax on BTL but using accountant for tax returns. Aiming to keep BTL (55% ltv) for kids uni fees once paid off. Also next home will be in my name to avoid additional SD of 3%.
From yesterday contributing 21% at £1km pcm.
Have almost 6 figures in ISAs saving for move.
Wife does incur tax on BTL but using accountant for tax returns. Aiming to keep BTL (55% ltv) for kids uni fees once paid off. Also next home will be in my name to avoid additional SD of 3%.
brightmotiv said:
Thanks for your help here Quinny.
I take it that both these funds were with the Aegon pension?
Will do some searching on them tomorrow.
Think 70/30 seems like a good spread of risk too.
Yes, these are Aegon’s own funds. I have an Aegon GPP too, so presumably you’ll have access to the same as I do. You can chose to move your existing balance into different funds, or just have future contributions invested in new funds. It’s really easy to do on the website.I take it that both these funds were with the Aegon pension?
Will do some searching on them tomorrow.
Think 70/30 seems like a good spread of risk too.
The technology fund grew 18.3% March 19-20 and has averaged 13.2% per year over the past 10 years.
Watch out for any non-Aegon funds as these often have higher management charges over and above the AMC.
Edited by quinny100 on Friday 26th June 23:31
quinny100 said:
Yes, these are Aegon’s own funds. I have an Aegon GPP too, so presumably you’ll have access to the same as I do. You can chose to move your existing balance into different funds, or just have future contributions invested in new funds. It’s really easy to do on the website.
The technology fund grew 18.3% March 19-20 and has averaged 13.2% per year over the past 10 years.
Watch out for any non-Aegon funds as these often have higher management charges over and above the AMC.
Cheers - checking these out nowThe technology fund grew 18.3% March 19-20 and has averaged 13.2% per year over the past 10 years.
Watch out for any non-Aegon funds as these often have higher management charges over and above the AMC.
Edited by quinny100 on Friday 26th June 23:31
bmwmike said:
are you guys using Aegon RetireReady or the native aegon? i am 90% in technology via the retireready site, same funds iirc. website is a bag of s
t though, needs flash etc.
I am on the generic Aegon platform. It is pretty backward, not that easy to use. Everything seems hidden... and they take 14 days to answer an email!t though, needs flash etc.brightmotiv said:
Thanks for your help rockin.
From yesterday contributing 21% at £1km pcm.
Have almost 6 figures in ISAs saving for move.
Wife does incur tax on BTL but using accountant for tax returns. Aiming to keep BTL (55% ltv) for kids uni fees once paid off. Also next home will be in my name to avoid additional SD of 3%.
Looks as though you have a good plan in place.From yesterday contributing 21% at £1km pcm.
Have almost 6 figures in ISAs saving for move.
Wife does incur tax on BTL but using accountant for tax returns. Aiming to keep BTL (55% ltv) for kids uni fees once paid off. Also next home will be in my name to avoid additional SD of 3%.
Someone with more knowledge will come in but as you are married and your wife has a property, is it as easy just to have your name on the second house to remove the stamp duty payment.
I thought if you were married this was not possible, good chance I am wrong here though.
Edited to add.
"For stamp duty purposes a married couple, or civil partners, are classed as one unit by HMRC. So, if one owns a buy-to-let property and the other buys a property the second home stamp duty rate still applies"
Edited by tighnamara on Saturday 27th June 10:10
Edited by tighnamara on Saturday 27th June 10:10
tighnamara said:
Looks as though you have a good plan in place.
Someone with more knowledge will come in but as you are married and your wife has a property, is it as easy just to have your name on the second house to remove the stamp duty payment.
I thought if you were married this was not possible, good chance I am wrong here though.
Edited to add.
"For stamp duty purposes a married couple, or civil partners, are classed as one unit by HMRC. So, if one owns a buy-to-let property and the other buys a property the second home stamp duty rate still applies"
Very useful to know this, appreciated. Will do some thinking! Have time to plot the move so will consider our options. Very reluctant to give a 3% tithe to the government for nothing.Someone with more knowledge will come in but as you are married and your wife has a property, is it as easy just to have your name on the second house to remove the stamp duty payment.
I thought if you were married this was not possible, good chance I am wrong here though.
Edited to add.
"For stamp duty purposes a married couple, or civil partners, are classed as one unit by HMRC. So, if one owns a buy-to-let property and the other buys a property the second home stamp duty rate still applies"
brightmotiv said:
Very useful to know this, appreciated. Will do some thinking! Have time to plot the move so will consider our options. Very reluctant to give a 3% tithe to the government for nothing.
Can understand your reluctance.Someone like Sarnie may pop on with what is correct, just remembered having this discussion with someone.
tighnamara said:
brightmotiv said:
Thanks for your help rockin.
From yesterday contributing 21% at £1km pcm.
Have almost 6 figures in ISAs saving for move.
Wife does incur tax on BTL but using accountant for tax returns. Aiming to keep BTL (55% ltv) for kids uni fees once paid off. Also next home will be in my name to avoid additional SD of 3%.
Looks as though you have a good plan in place.From yesterday contributing 21% at £1km pcm.
Have almost 6 figures in ISAs saving for move.
Wife does incur tax on BTL but using accountant for tax returns. Aiming to keep BTL (55% ltv) for kids uni fees once paid off. Also next home will be in my name to avoid additional SD of 3%.
Someone with more knowledge will come in but as you are married and your wife has a property, is it as easy just to have your name on the second house to remove the stamp duty payment.
I thought if you were married this was not possible, good chance I am wrong here though.
"For stamp duty purposes a married couple, or civil partners, are classed as one unit by HMRC. So, if one owns a buy-to-let property and the other buys a property the second home stamp duty rate still applies"
21% pension sounds good, smack in the 15-25% range. I'd only used the 15% figure, which is lowest end, to avoid scaring you! Some people get a nasty shock if they've 8% going in and you suddenly mention >20%
BTL, school fees - in all seriousness, I suggest having a chat with a decent IFA. Not just someone from the Yellow Pages - someone known to be sensible. There are one or two who post regularly on here and might be worth a look.
I've learned more in the past 24 hours than I have in the past 24 months. Thanks all.
tighnamara said:
Can understand your reluctance.
Someone like Sarnie may pop on with what is correct, just remembered having this discussion with someone.
Appreciated, cheers maraSomeone like Sarnie may pop on with what is correct, just remembered having this discussion with someone.
rockin said:
Check it all out carefully. I agree that you seem to have an incorrect understanding of Stamp Duty.
21% pension sounds good, smack in the 15-25% range. I'd only used the 15% figure, which is lowest end, to avoid scaring you! Some people get a nasty shock if they've 8% going in and you suddenly mention >20%
BTL, school fees - in all seriousness, I suggest having a chat with a decent IFA. Not just someone from the Yellow Pages - someone known to be sensible. There are one or two who post regularly on here and might be worth a look.
Appreciated, cheers rockin. I think getting advice is a sensible next step.21% pension sounds good, smack in the 15-25% range. I'd only used the 15% figure, which is lowest end, to avoid scaring you! Some people get a nasty shock if they've 8% going in and you suddenly mention >20%
BTL, school fees - in all seriousness, I suggest having a chat with a decent IFA. Not just someone from the Yellow Pages - someone known to be sensible. There are one or two who post regularly on here and might be worth a look.
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