Only to see how low it is
No but seriously, the index eats itself with a near 4% dividend yield. You have to compare with dividends reinvested over the years not just the nominal price really to get a proper picture.
Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
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No but seriously, the index eats itself with a near 4% dividend yield. You have to compare with dividends reinvested over the years not just the nominal price really to get a proper picture.
Soldato
Got a meeting with the pensions guy at work tomorrow, never had one of these before as never really bothered with it, not really sure what stuff I need to prep, if anything!
I have 3 pensions with my current employer via Standard Life, the performance is pretty poor, and I'd like to start steering the ship in the right direction. I can sign in and see them all in one place at least with my SL login.
As I understand it, two of the current pensions are dormant and I could in theory do something with them, whether it's moving them into my own control via Vanguard SIPP, or splitting them out into different funds and then just not touching them.
The total value isn't anything to brag about, so I don't really mind posting the value here, I have more invested personally in my property etc, so the pension has been a secondary concern. Whilst I still want to focus on my own investments etc, I realise I probably also want to make sure I'm starting to put money here more wisely in the next couple of years once the mortgage is well on the way to being paid off.
Pension 1 (dormant)
Date: 2006 - 2020
Value: £18250 (53% of total)
Profit: £4000
Fund: Standard Life Multi Asset Mgd (20-60% Shares) Pn
Fee: 0.744% (discounted from 1.024%)
Risk: 4 of 7
Pension 2 (dormant)
Date 2020 - 2021
Value: £5850 (17% of total)
Profit: £700
Fund: SL Sustainable Multi Asset (PP) Pension Fund
Fee: 0.709% (discounted from 0.989%)
Risk: 5 of 7
Pension 3 (active)
2021 - current
Value: £10000 (29% of total)
Profit: £800
Fund: SL Sustainable Multi Asset (PP) Pension Fund
Fee: 0.709% (discounted from 0.989%)
Risk: 5 of 7
Questions/things I'm mulling on, appreciate any thoughts on the below? I am struggling to shorten my questions here whilst keeping the meaning understood.
1. Should I move the two dormant ones into something like Vanguard with my own SIPP account? this is 70% of the current value. I could in theory then allocate these to cheaper Vanguard global trackers or index funds.
Standard Life does let me allocate to various funds including Blackrock/Vanguard etc, but the fees are always around 1%, and after discount always minimum of around 0.7%. I see that I could in theory get cheaper fees with Vanguard direct.
I don't think I can do anything with the currently active one about moving it or draining it, which makes paying extra in to the existing pension via salary sacrifice less attractive, given I then have to pay the higher fees on it.
2. What is a good split for funds to set and forget? I don't want to have to spend too much time considering the pension funds, as long as the funds are diverse enough to weather storms, I will be unlikely to want to change if the splits are good. I don't mind some higher risk ones, I simply don't have enough funds in place to worry about playing totally safe here. I think my goal would be that most funds would go to one, and then maybe I'd have two smaller ones that target different asset types or regions.
3. If I wanted to pay into my own SIPP, how annoying/difficult is the self declared tax relief thing? I don't mind doing it, but I don't want to cause myself tax issues, or for HMRC to start expecting them each year if I decide to halt paying in.
4. I am considering a self-custody style arrangement where I just invest into 2-3 funds with stocks and shares ISA. Don't get tax reflief, but I can cost average buy it over time, and I can also get access to the funds when I want them. Would anyone recommend this over a SIPP as per Question 3?
I have 3 pensions with my current employer via Standard Life, the performance is pretty poor, and I'd like to start steering the ship in the right direction. I can sign in and see them all in one place at least with my SL login.
As I understand it, two of the current pensions are dormant and I could in theory do something with them, whether it's moving them into my own control via Vanguard SIPP, or splitting them out into different funds and then just not touching them.
The total value isn't anything to brag about, so I don't really mind posting the value here, I have more invested personally in my property etc, so the pension has been a secondary concern. Whilst I still want to focus on my own investments etc, I realise I probably also want to make sure I'm starting to put money here more wisely in the next couple of years once the mortgage is well on the way to being paid off.
Pension 1 (dormant)
Date: 2006 - 2020
Value: £18250 (53% of total)
Profit: £4000
Fund: Standard Life Multi Asset Mgd (20-60% Shares) Pn
Fee: 0.744% (discounted from 1.024%)
Risk: 4 of 7
Pension 2 (dormant)
Date 2020 - 2021
Value: £5850 (17% of total)
Profit: £700
Fund: SL Sustainable Multi Asset (PP) Pension Fund
Fee: 0.709% (discounted from 0.989%)
Risk: 5 of 7
Pension 3 (active)
2021 - current
Value: £10000 (29% of total)
Profit: £800
Fund: SL Sustainable Multi Asset (PP) Pension Fund
Fee: 0.709% (discounted from 0.989%)
Risk: 5 of 7
Questions/things I'm mulling on, appreciate any thoughts on the below? I am struggling to shorten my questions here whilst keeping the meaning understood.
1. Should I move the two dormant ones into something like Vanguard with my own SIPP account? this is 70% of the current value. I could in theory then allocate these to cheaper Vanguard global trackers or index funds.
Standard Life does let me allocate to various funds including Blackrock/Vanguard etc, but the fees are always around 1%, and after discount always minimum of around 0.7%. I see that I could in theory get cheaper fees with Vanguard direct.
I don't think I can do anything with the currently active one about moving it or draining it, which makes paying extra in to the existing pension via salary sacrifice less attractive, given I then have to pay the higher fees on it.
2. What is a good split for funds to set and forget? I don't want to have to spend too much time considering the pension funds, as long as the funds are diverse enough to weather storms, I will be unlikely to want to change if the splits are good. I don't mind some higher risk ones, I simply don't have enough funds in place to worry about playing totally safe here. I think my goal would be that most funds would go to one, and then maybe I'd have two smaller ones that target different asset types or regions.
3. If I wanted to pay into my own SIPP, how annoying/difficult is the self declared tax relief thing? I don't mind doing it, but I don't want to cause myself tax issues, or for HMRC to start expecting them each year if I decide to halt paying in.
4. I am considering a self-custody style arrangement where I just invest into 2-3 funds with stocks and shares ISA. Don't get tax reflief, but I can cost average buy it over time, and I can also get access to the funds when I want them. Would anyone recommend this over a SIPP as per Question 3?
Not financial advice but having gone through this you need to check for a few things.
Pensions opened earlier may have a minimum pension age guarantee, so you may lose that benefit if you move it. Think about whether that matters to you because moving to Vanguard will definitely mean you lose the option to claim your pension at say, 55 if that's something you've acquired.
Your first fund for example is very UK weighted and would have benefitted from being split according to global market cap much earlier. It's hard to suggest what to do with it now so you'll have to consider it given US growth. I am personally bullish on the US.
Set and forget depends entirely on your circumstances and whether you want an annuity. I am 100% equities and have built a cash buffer for bad years. You may prefer to put some money into bonds if that worried but again, this isn't something anyone else can recommend for you.
Tax relief is easy - just ring HMRC and tell them what you're putting into a SIPP every month and they will adjust your tax code. Otherwise you can do this via self-assessment.
Finally, make maximum use of your tax allowances via ISAs, Pensions and Capital Gains (although this is reducing).
Honestly, when I started out I just spoke to a financial planner. The outlay was worth it but since then I have pulled everything away into my own control.
Soldato
Thanks @Narj good advice, I wasn't aware that earlier one may have minimum pension age attached, I'll have to check that, I don't know/haven't seen it online.
I don't want to pile everything into pension as employer doesn't match above the basic 4%, but at the same time, I feel like even throwing £100/month into a SIPP will add up long term, and tax relief is tax relief.
Mortgage balance is £168K and I wanted to reduce it to £100K by the time my current fix expires (2.5 years away). My current goal is essentially this, so that I have more free cash each month to distribute into investments. I have savings in a cash ISA towards this goal (didn't want stocks/shares for such a short duration in case of a crash) and I think it's doable with another 30 months of savings and current savings.
After that I was considering a split approach, some into SIPP, some into ISA, some into normal savings (below the taxable income here). Mainly wanted to configure current pension better to facilitate longer term potential.
I don't want to pile everything into pension as employer doesn't match above the basic 4%, but at the same time, I feel like even throwing £100/month into a SIPP will add up long term, and tax relief is tax relief.
Mortgage balance is £168K and I wanted to reduce it to £100K by the time my current fix expires (2.5 years away). My current goal is essentially this, so that I have more free cash each month to distribute into investments. I have savings in a cash ISA towards this goal (didn't want stocks/shares for such a short duration in case of a crash) and I think it's doable with another 30 months of savings and current savings.
After that I was considering a split approach, some into SIPP, some into ISA, some into normal savings (below the taxable income here). Mainly wanted to configure current pension better to facilitate longer term potential.
My approach was a balanced one where I overpaid mortgage every month and also did SIPP and ISA. As soon as my mortgage was gone I pumped more into investments. I was told by an IFA that I was losing out on opportunity cost by overpaying but in my time frame I was vindicated
Check if your employer lets you do salary sacrifice for pension as this is the best way to get money into a pension. If they don’t do it then hassle HR into investigating. Definitely do not let your money sit in a default fund - make an informed choice.
Good luck
A couple of things to consider asking about is sequencing and maximising tax free cash in retirement. I've watched a few videos on that which made me realise I needed to start building up a S&S ISA so I can use my 25% tax free pension amount, my tax allowance and my S&S ISA to minimise my tax in retirement. Sequencing just means having enough short term money to ride out any dips in the market so you aren't withdrawing as much from your pension when the value is down.
Timing is important which is why a lot of pensions reduce the exposure to S&S the closer you get to retirement but if you've got enough short term cash type holdings you can give your S&S holdings time to recover maximising the time before you run out. I'm about 90% investing into my pension (tax relief reasons) and 10% into a S&S Isa which should mean I've got a couple of years worth of ISA money come retirement.
The ISA pot will increase a lot though once the mortgage is paid off in a few years. I'll balance my risk closer to retirement. My current estimate is a pension pot of £1m at 62 but I think I can survive comfortably with £715k at 58 as a lot will still be 100% Equities during retirement with a lesser amount in lower risk and a lesser amount in cash type holdings.
ETA - a lot of this is just down to starting paying into a pension at 22 and making additional contributions as pay rises came along, compounding is truly a wonderful thing.
Timing is important which is why a lot of pensions reduce the exposure to S&S the closer you get to retirement but if you've got enough short term cash type holdings you can give your S&S holdings time to recover maximising the time before you run out. I'm about 90% investing into my pension (tax relief reasons) and 10% into a S&S Isa which should mean I've got a couple of years worth of ISA money come retirement.
The ISA pot will increase a lot though once the mortgage is paid off in a few years. I'll balance my risk closer to retirement. My current estimate is a pension pot of £1m at 62 but I think I can survive comfortably with £715k at 58 as a lot will still be 100% Equities during retirement with a lesser amount in lower risk and a lesser amount in cash type holdings.
ETA - a lot of this is just down to starting paying into a pension at 22 and making additional contributions as pay rises came along, compounding is truly a wonderful thing.
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have consolidated a few pots into a Vanguard SIPP - left my other big fund as is as it's gets a decent discount so whilst not as cheap as vanguard I can access it at 55 if I needed/wanted to.
Don't have a DB scheme but assume it would be best left alone. NFA.
Soldato
Yes I will find out although it then winds up in Standard Life hell with the higher fees, and they won't match at a higher % than current, so not sure this is really better than me just paying into a SIPP routinely and changing the tax code, at least the money is then in my account.
I think this what I was sort of thinking when it comes to splitting out where money goes, if I pay into a few things, then I have options. If I throw it all into a SIPP then I can't get ready access to the money.
I'd love to retire early, but I doubt I'll have a great pension, still I think I could retire with house paid off, and with enough in investments to cover things, still got a good 20 odd years I can be paying into a pension realistically, if not more.
Man of Honour
Just checked my end of year report one is 9.3% the other 11.7%. I changed my investments to be a little more aggressive, with the hope to be able to retire by 60. That said I'll try and ramp down before then and do some NED work to keep the pennies rolling in but with a lot less hourly commitment.
2 - Generally yes. To move them you NEED to take regulated financial advice, you can not move them yourself. Even then in most instances, you should leave them alone.
Soldato
Open a SIPP with vanguard and transfer the two dormant pensions there and invest into one ETF called VEVE.
Continue with your salary sacrifice
Open a ISA with vanguard (account fee shared), and buy VEVE again.
Change your fund over at standard life to vanguard ftse developed world, ex-uk or not doesnt matter.
Its that simple.
VHVG would be better, the accumulation version of VEVE.
Are you an IFA?
Soldato
This is not financial advice.. just my own view that may differ from others.
Unless you’re planning to downsize or you’re referring to a second property, I don’t see property as an investment, I see it as a tool. I’m not really house proud and can live anywhere in a reasonable condition. Houses themselves are limited in price due to raise of salary and how much banks are prepared to lend people. While your house value is raising, so is the price of the “replacement” house that you will need to buy if/when you cash in on your current place. You have to make sure that your place raises at a higher percentage than the replacement.
I’m current overpaying my mortgage at a ratio 1(mortgage):2(pension). Due to tax reasons and I don’t foresee myself working at the same company till I retire, I want to pay off my mortgage and get the 4.01 interest monkey off my back.
Check if any are DB pensions, they are a PITA to move as the paper value doesn’t cover their true value. Most places won’t allow you to transfer in a DB to a DC without a signed letter from yourself or/and from an independent financial adviser.
Older pensions may have better sickness/life payouts as well as a earlier retirement age as previously mentioned.
SIPPs are great way of managing your own pensions but they don’t come with the additional extra benefits that some work place pensions do.
Some work place pensions do allow transfers out. People can pay into their work place pension get the employer’s contribution then transfer it to a SIPP in lumps. You won’t get the additional tax relief bonus of the SIPP but you would have already got that already.
This is the question that everyone wants to know the answer to..
I have two DB pensions, that I’m leaving alone. Chances are that I will merge them at point of retirement and buy an annuity with them for a fixed regular income.
My work place DC pension is currently split at:
50% diverse fund, to help weather any storms, this is roughly the amount that my employer is paying into it. It’s managed and has assets that I can’t buy into.
45% developed world
5% emerging markets.
Only time will tell if I’m right.. in the worst case scenario, I will have the same pension as myself whom never paid into their pension.
Depends on how complex your income streams are.
If you have a single income, like most people working a single job. It’s not complex at all.
If you’re in the 20% tax bracket, you don’t have to do anything. The SIPP company will claim it for you. For 40% and 60% you will have to fill out the form to reclaim the extra 20/40%.
What I do to make my life simple is to pay enough into my work pension to drop me down to the 20% bracket. It comes with additional benefits like higher tax brackets for interest income and lower dividends tax rates.
There are benefits to a stocks and shares ISA as you have already paid the income tax on the amount and won’t have to pay it when taking the money out. Who knows what the tax rate will be in the future and if the 25% tax free lump sum will still be at that amount.
The aim is to be taxed the least before you put the money in and when you take it out.
If you’re currently getting taxed at 20% and put in so much money into pensions where to spend it all you have to withdraw amounts that will be taxed more than 20%. I would rather pay the 20% upfront.
I put the slightly more into my S&S isa than to my mortgage overpayment.
My investment portfolio is quite simple.
Anything over 50k pre-tax and bonuses -> work pension.
11% of take home and capital gains -> S&S ISA (I’ve already paid tax on it or it’s tax exempt)
9% of take home -> savings
8% of take home -> mortgage overpayment.
Any additional “spare” cash goes into an normal trading account for riskier investments.. it allows me to mess about, learn from swing trading.. who knows it maybe what I do when I semi-retire. Importantly it stops me from messing about with my other investments.
I do have work share schemes that come out pre and post tax, and taxable benefits that complexes the sums that I have to do each year to ensure I fall under the 50k.
AFAIK, there’s nothing stopping someone from using a S&S ISA then selling the shares and moving it into a SIPP later to get the tax relief.
There’s also a platform fee with SIPPs while it’s possible to get a fee free S&S ISA.
Soldato
IIRC, the gain occurred after two successive years of dips. If I didn’t suffer that badly as others in the two previous years, I would be more than happy with a 12% return.
High growth = high volatility..
Companies and markets can only grow to a certain size. As the saying goes, you can time the market, which works for putting money in and taking the money out.
How long before or after retirement should people start to switch from high growth to low volatility funds? What happens if you retire around a 10+ year recession?
Personally I would prefer to run a marathon at a steady pace, rather than to sprint some parts and walk others..
Fee free ISA?? Where?
Also to be able to pay funds into a pension, contributions made by an individual or the self-employed, must be supported by relevant UK earnings.... So you need to have relevant earnings to be able to pay into a pension and get tax relief.
You can't just cash in ISA and chuck that into a pension without having earnings to match that contribution. Annual allowance etc all become part of the conversation.
Thing is volatility doesn't matter while you are accumulating, only when you retire. 'Slow n steady' is another way of saying lower returns. Anyone with 20+ years to retirement doesn't need to worry about volatility. Also when you do approach retirement age the situation at that time matters a lot. If you retire with a portfolio of bond funds when interest rates are at 0% then this is not 'low risk, low volatility' its the exact opposite and many people have just been burnt badly by it.
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Soldato
T212 has a fee free S&S ISA along with others.
Cash in the ISA use that to live of that and put your salary into your pension. My work place allows me to put in 90% of my pay as long as it’s below the annual pension allowance.