Yep. You’re right. No mention of the regular investment option on the SIPP charges page. Just as well you mentioned this as it opens up a new option for me
Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
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Yeah that's all I use. Looking for a referral
It looks like 0.15% is the Aviva platform fee, and the fund fee is 0.24% on top. Also looking at it there are transaction fees of 0.32%. Does that all seem a bit high? For info I’m in the default global equity fund (as I’m a long way from retirement) for a large financial institution.
Soldato
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It's good that you've got the figures now so you can review this yearly even if you decide there's no need to move now.
Overall that's not too bad, you can beat it, but whether that's worth the effort is debatable.
The next step would be to work out the cost in pounds and compare to the competition.
1) Only a few NI years left to get.
2) A decent lump of defined benefit currently deffered @ CPI capped ~3.5%, available at 60 (or 57 at earliest)
3) A relatively small pot of defined contributions in a safe and boring fund.
4) Employer scheme with Scotish Widows in default fund, I currently salary sacrifice in 50%, employer 6%.
5) Every time the employer scheme get over £20k I partially transfer to my SIPP, invested 100% VUAG (S&P 500) with Vanguard (already at the fee cap)
So I guess I put more effort into this than most and I am very prepared for retirement. But it has come at the expense of ISAs and moving House. I am very much at risk of hitting the TFC cap by retirement. Although I plan to FIRE at some point, so it is hard to judge if I should reduce pension payment, pay more tax but get more ISA/GIA savings.
TFC will likely be taken for a house upgrade.
2) A decent lump of defined benefit currently deffered @ CPI capped ~3.5%, available at 60 (or 57 at earliest)
3) A relatively small pot of defined contributions in a safe and boring fund.
4) Employer scheme with Scotish Widows in default fund, I currently salary sacrifice in 50%, employer 6%.
5) Every time the employer scheme get over £20k I partially transfer to my SIPP, invested 100% VUAG (S&P 500) with Vanguard (already at the fee cap)
So I guess I put more effort into this than most and I am very prepared for retirement. But it has come at the expense of ISAs and moving House. I am very much at risk of hitting the TFC cap by retirement. Although I plan to FIRE at some point, so it is hard to judge if I should reduce pension payment, pay more tax but get more ISA/GIA savings.
TFC will likely be taken for a house upgrade.
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Thanks. I’ll have to pull some figures together and then decide whether it’s worth moving it.
Soldato
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Think so, assuming you're going to want stuff you can access before 57.
Personally, I have the cut off at the level of the basic tax allowance… take as much salary as possibly without going into the 40% tax bracket.
It’s highly unlikely that the basic tax rate will go down from the 20%.. and you will likely be paying that when you are collecting your pension. The only current advantage is the 12% employees NI and the 12.5% employer’s NI if your employer gives you that rather than pocket it themselves.. lol
Indeed I'm avoiding 40%, just. But it means I'm very pension loaded and lacking ISA/GIA opportunities. I'll also be paying 40% tax in retirement for sure, especially if I take the tfc as a lump.
The wife has almost nothing for retirement, so my pension has to work double as hard.
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Maybe it’s worth looking at taking some more of your salary so that your wifey can put cash into her pension… yeah you may fall into the 40% bracket, but the amount your wife puts in will be tax free and then you can use the tax allowance for both of you during your pensions. I think there’s a special scheme where you can use each others pensions allowance.
Taking that so called tax free lump sum, basically locks you into a tax scheme… ok if you plan to take an annuity.. but if you are doing a draw down, any additional gains will get taxed. Might be worth considering borrowing more on your montage or re-mortgaging… the interest on the additional borrowing vs the tax.
Worth speaking to a pension advisor to run the numbers…
Soldato
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What do you mean additional gains will get taxed.
Lets say in my scenario the stock market goes up 100% in your first year of being a pensioner.
Lets say your pot is 400k.
A)You take 100k, remainder is 300k, next year that 300k is now 600k, you cannot take any more tax free cash.
B) You take only 50k, remainder 350k becomes 700k, you take a further 100k tax free cash (this is essentially equal to having 2 pots at different providers where each pot is 200 and you only touch one)
C) You do nothing, your 400k becomes 800k, you take 200k tax free cash.
I assume all are correct?
I finally got round to consolidating my 3 pensions into 1. Was actually fairly straightforward, L&G have a function on their website. All you needed was the name of the provider, account number and they would do all the leg work. One of my pots is now transferred into my current pot and the other is pending. I was really shocked by how easy it actually was.
Ok… I’ve just seen it explained in a different way… so ignore the above, I was confusing myself in which percentage was getting reduced each time. It’s not the 25% itself but what is considered as your total pot, which is reduced by the percentage of what you took out previously.
Flexible Access drawdown (FAD)
if your pot is 400k and you take 30k of that, 25% of the 30k is take free. You have used 7.5% of your tax free pot.
Year two you have 92.5% of your tax free percentage left.. and your pot grows back to 100k, you take another 30k out.
The amount that is tax free is 30k x 92.5% x 25%.. you now have used 15% of your 25% tax free lump sump
Year three, pot grows back to 100k you take another 30k.. the tax free amount is 30k x 85% x25%
Un-crystallised funds pension lump sum (UFPLS)
Again your pot is 400k
The second method where you take 120k, so that 25% of that will be 30k tax free.. leaving 90k in a crystallised pot, that can be invested… any withdrawals and any future growth taken from the crystallised pot will be taxed at (I believe) at income tax rates, during the year that you take it out. But you can spread it out across serval years so that you don’t fall in to the 40% bracket.
It is debatable if you should take all of additional 90k or at least the 40% tax threshold amount per tax and place it into an ISA, premium bonds, savings.. as those have their own tax levels and allowance.
The un-crystallised pot 280k is still invested and say it grows back to 400k.. you want another 30k tax free.
You have already taken 30% of your lump sum percentage; the original 120k that you crystallised a few years back.
To get 30k tax free, you will have to crystallise £171,450 (42%) this time,
171,450 x 70% = 120,015
120,015 x 25% = 30,003.75
30,003.75 will be tax free and 141,446.25 will be in a crystallised pot.
The next time you take cash from the un-crystallised pot, whatever amount x 28% x25% = tax free amount
There are serval caveats to both methods..
Any crystallised amounts fall under your general inheritance estate and not your pension inheritance estate, which has different rules and allowances.
There is a maximum tax free pension amount of £268,275..
And I believe when we are talking about pots, it’s the total sum of all your pensions, so it may be best to use up poorly managed funds with little room for growth first, thou you may have to claim the addition tax back, if your withdrawal from a smaller pot.
Flexible Access drawdown (FAD)
if your pot is 400k and you take 30k of that, 25% of the 30k is take free. You have used 7.5% of your tax free pot.
Year two you have 92.5% of your tax free percentage left.. and your pot grows back to 100k, you take another 30k out.
The amount that is tax free is 30k x 92.5% x 25%.. you now have used 15% of your 25% tax free lump sump
Year three, pot grows back to 100k you take another 30k.. the tax free amount is 30k x 85% x25%
Un-crystallised funds pension lump sum (UFPLS)
Again your pot is 400k
The second method where you take 120k, so that 25% of that will be 30k tax free.. leaving 90k in a crystallised pot, that can be invested… any withdrawals and any future growth taken from the crystallised pot will be taxed at (I believe) at income tax rates, during the year that you take it out. But you can spread it out across serval years so that you don’t fall in to the 40% bracket.
It is debatable if you should take all of additional 90k or at least the 40% tax threshold amount per tax and place it into an ISA, premium bonds, savings.. as those have their own tax levels and allowance.
The un-crystallised pot 280k is still invested and say it grows back to 400k.. you want another 30k tax free.
You have already taken 30% of your lump sum percentage; the original 120k that you crystallised a few years back.
To get 30k tax free, you will have to crystallise £171,450 (42%) this time,
171,450 x 70% = 120,015
120,015 x 25% = 30,003.75
30,003.75 will be tax free and 141,446.25 will be in a crystallised pot.
The next time you take cash from the un-crystallised pot, whatever amount x 28% x25% = tax free amount
There are serval caveats to both methods..
Any crystallised amounts fall under your general inheritance estate and not your pension inheritance estate, which has different rules and allowances.
There is a maximum tax free pension amount of £268,275..
And I believe when we are talking about pots, it’s the total sum of all your pensions, so it may be best to use up poorly managed funds with little room for growth first, thou you may have to claim the addition tax back, if your withdrawal from a smaller pot.
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Soldato
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I’m just flagging this up for others. If you’re moving your pension from Vanguard then you’re golden. It’s not possible to transfer your pension from other providers. Bit of a spanner in the works for me personally discovering this
Soldato
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I'm in the process of doing a long overdue review of my pension pots. The first review, to be honest.
I've tracked down a pot from years ago and can now access it online after sending in ID.
I have a People's pension, and had a chat with a lady from there who was helpful.
My current workplace pension is with Aviva and my employers pay in 15%. If I transfer away I think I lose that, so I'll keep this going if that's to case.
I've nearly worked out what the charges are for each pension, and once I've worked out how they've been performing I'll decide if it's worth transferring either of the first two pots.
It's a steep learning curve but I'm beginning to understand it.
Better late than never!
I've tracked down a pot from years ago and can now access it online after sending in ID.
I have a People's pension, and had a chat with a lady from there who was helpful.
My current workplace pension is with Aviva and my employers pay in 15%. If I transfer away I think I lose that, so I'll keep this going if that's to case.
I've nearly worked out what the charges are for each pension, and once I've worked out how they've been performing I'll decide if it's worth transferring either of the first two pots.
It's a steep learning curve but I'm beginning to understand it.
Better late than never!
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My workplace pension is with Aviva and they allow partial transfers out.