Pensions - best thing to do with them
Discussion
Hi all, I hope that you're managing to restrain the frustration of being impounded.
I am looking for some independent but qualified guidance. Having already been raped on my endowment policy a few years ago, I really would prefer to act now on my pension pot but really not sure what to do
Advice from my IFA is to keep regularly investing as my money will buy more shares at a lower face value and when the markets pick up, this will will help to bridge the gap of any loss in my overall pension fund. I sort of get that and it makes sense ......BUT is this the best action to take.
My very simple, unqualified view is that IF I COULD, draw it all out, park it somewhere, keep putting aside the regular contributions but not making the payment to my pension and then when it turns, at least I'm back to a similar place to where I started before this fiasco
I am 58, so I can draw some down I guess but was wondering whether there are any others out there with any more qualified advice to offer?
Thank you in advance
Mike
I am looking for some independent but qualified guidance. Having already been raped on my endowment policy a few years ago, I really would prefer to act now on my pension pot but really not sure what to do
Advice from my IFA is to keep regularly investing as my money will buy more shares at a lower face value and when the markets pick up, this will will help to bridge the gap of any loss in my overall pension fund. I sort of get that and it makes sense ......BUT is this the best action to take.
My very simple, unqualified view is that IF I COULD, draw it all out, park it somewhere, keep putting aside the regular contributions but not making the payment to my pension and then when it turns, at least I'm back to a similar place to where I started before this fiasco
I am 58, so I can draw some down I guess but was wondering whether there are any others out there with any more qualified advice to offer?
Thank you in advance
Mike
I have no qualified advice, but it seems to me there are two things here. The first is what to do with your pension fund, the second is where to invest the future monthly instalments currently going that way.
If it's a private pension, then as you're 55+ you can (probably) take 25% of the fund tax free right now. You can have 100% of the fund if you want but the other 75% is liable to income tax so that's probably a bad idea.
Your IFA is right - at present you are buying at what I believe to be a discount. But you don't have to send more money into the pension (caveat - there may be a penalty if you stop contributions before a certain time) - you can open, say, an S&S ISA and invest in that. Same opportunities, no tax issues.
ETA Oh and welcome to PH!
If it's a private pension, then as you're 55+ you can (probably) take 25% of the fund tax free right now. You can have 100% of the fund if you want but the other 75% is liable to income tax so that's probably a bad idea.
Your IFA is right - at present you are buying at what I believe to be a discount. But you don't have to send more money into the pension (caveat - there may be a penalty if you stop contributions before a certain time) - you can open, say, an S&S ISA and invest in that. Same opportunities, no tax issues.
ETA Oh and welcome to PH!
Edited by Simpo Two on Wednesday 15th April 14:43
It sounds to me like you want to bolt the stable door after the horse is running free 
A bit glib - apologies!
Okay, the markets ABSOLUTELY could drop further, and some commentators predict a lengthy recession. They could be right. If you believe that, take your 25% TFLS, park it as safely as you can, and then make the call when to put back.
If, on the other hand, you felt okay investing 3-6 months ago: heck, today is a bargain, buy two!! Or to be less glib - why wouldn't you be comfortable with this?
Did your IFA give you any indication or heads up about what to do, or have you approached them?
edit to add - maybe you could ask them for a discount on their services, as the value of the funds they manage has perhaps dropped? Again, kind of kidding....but their fees continue regardless, right?
My *personal* view is that I am simply not clever enough to know when the bottom is without the benefit of hindsight (& frankly, if your IFA suggests they are....run away!!)
.....& I (again, personally, no special skills!) feel that in time (18 months to 5 years), this 'blip' will be just that - a blip - and actually anything I invest from March until it starts to pick up again will be a bargain.
OF COURSE, it depends a bit when you need to access the funds.
If you need it in the next couple of years, well, maybe take some out now. Tougher call.
A bit glib - apologies!
Okay, the markets ABSOLUTELY could drop further, and some commentators predict a lengthy recession. They could be right. If you believe that, take your 25% TFLS, park it as safely as you can, and then make the call when to put back.
If, on the other hand, you felt okay investing 3-6 months ago: heck, today is a bargain, buy two!! Or to be less glib - why wouldn't you be comfortable with this?
Did your IFA give you any indication or heads up about what to do, or have you approached them?
edit to add - maybe you could ask them for a discount on their services, as the value of the funds they manage has perhaps dropped? Again, kind of kidding....but their fees continue regardless, right?
My *personal* view is that I am simply not clever enough to know when the bottom is without the benefit of hindsight (& frankly, if your IFA suggests they are....run away!!)
.....& I (again, personally, no special skills!) feel that in time (18 months to 5 years), this 'blip' will be just that - a blip - and actually anything I invest from March until it starts to pick up again will be a bargain.
OF COURSE, it depends a bit when you need to access the funds.
If you need it in the next couple of years, well, maybe take some out now. Tougher call.
Edited by mikeiow on Wednesday 15th April 16:32
mikeiow said:
OF COURSE, it depends a bit when you need to access the funds.
If you need it in the next couple of years, well, maybe take some out now. Tougher call.
Just to add to that if the plan was to access the funds to purchase an annuity in a couple of years one would've expected the glidepath to be well underway already and nothing need changing. Conversely, if the plan was to move into drawdown then why make a change now?If you need it in the next couple of years, well, maybe take some out now. Tougher call.
Edited by mikeiow on Wednesday 15th April 16:32
)Another way to look at it is - if you were happy to invest in your pension when markets were very high (expensive) last year, why are you are concerned about investing in them now they are cheaper?
The glide path is a valid point, but if there's unexpected turbulence you can always blip the throttle and take an opportunity if you feel there is one and you're comfortable with it.
The glide path is a valid point, but if there's unexpected turbulence you can always blip the throttle and take an opportunity if you feel there is one and you're comfortable with it.
Keep on paying in, shares and funds will recover in time and the government contributes to your payments! It is important that you are investing in the right funds, I consulted an IFA a few years ago, he recommended staying with my existing provider, rather than transferring to a SIPP. 18 months later that had cost me a lot of money compared with the funds I would have purchased with the SIPP. The SIPP has done pretty well over the last 30 months despite a significant drop since February. If you take cash out there can also be tax issues that can take time to sort out with HMRC I've heard.
Truly Skint said:
Hi all, thank you for your diverse but useful comments. General opinion stick with it, so that’s just what I will do,’...........thanks all and happy blatting??
From Skinter (1 post, 25 months) to Truly Skint (1 post, 67 months)....how peculiar!Two serious lurkers, or the same person with multiple lurking personalities?
Well, before I was considering my first toy, as I only had a single garage which was full of the usual s
te I had to extend the drive round across the entire width of the house, build a 2nd garage on the other side of the house, replace the entire fence the complete length of the garden to also encase the new garage, then bought my first toy which back then was a Westfield. I then joined the Westfield forum and needed a user name............the rest is history.
Sorry guys, but you did ask!!!!!!
te I had to extend the drive round across the entire width of the house, build a 2nd garage on the other side of the house, replace the entire fence the complete length of the garden to also encase the new garage, then bought my first toy which back then was a Westfield. I then joined the Westfield forum and needed a user name............the rest is history. Sorry guys, but you did ask!!!!!!
Skinter said:
Hi all, I hope that you're managing to restrain the frustration of being impounded.
I am looking for some independent but qualified guidance. Having already been raped on my endowment policy a few years ago, I really would prefer to act now on my pension pot but really not sure what to do
Advice from my IFA is to keep regularly investing as my money will buy more shares at a lower face value and when the markets pick up, this will will help to bridge the gap of any loss in my overall pension fund. I sort of get that and it makes sense ......BUT is this the best action to take.
My very simple, unqualified view is that IF I COULD, draw it all out, park it somewhere, keep putting aside the regular contributions but not making the payment to my pension and then when it turns, at least I'm back to a similar place to where I started before this fiasco
I am 58, so I can draw some down I guess but was wondering whether there are any others out there with any more qualified advice to offer?
Thank you in advance
Mike
Hi MikeI am looking for some independent but qualified guidance. Having already been raped on my endowment policy a few years ago, I really would prefer to act now on my pension pot but really not sure what to do
Advice from my IFA is to keep regularly investing as my money will buy more shares at a lower face value and when the markets pick up, this will will help to bridge the gap of any loss in my overall pension fund. I sort of get that and it makes sense ......BUT is this the best action to take.
My very simple, unqualified view is that IF I COULD, draw it all out, park it somewhere, keep putting aside the regular contributions but not making the payment to my pension and then when it turns, at least I'm back to a similar place to where I started before this fiasco
I am 58, so I can draw some down I guess but was wondering whether there are any others out there with any more qualified advice to offer?
Thank you in advance
Mike
It sounds like you are confusing pensions as being an investment, rather than a tax wrapper, which many people do.
You say about drawing it all out and parking it somewhere else, but you can actually to all of this within the pension wrapper without incurring punitive tax charges.
These days pensions/SIPPs are highly flexible and this is something your IFA should be discussing with you on a regular basis, in return for the fees you (or your pension fund) are paying them each and every year.
Equally, your IFA should be regularly reviewing the investment within your pension to ensure they remain in line with your attitude to risk and given you are approaching retirement age they likely should have advised you already to be de-risking your portfolio to a suitable level having found out what your future plans and objectives are.
These are just the basics (tax planning is another) and if you are not getting this from them you really need to question why you are paying them what is usually very expensive fees out of your pension each year (which you may not fully realise you are paying).
Just ask if I can provide anything further.
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