heapsy wrote:I'm thinking of opening a SIPP and transferring two pensions into it.
A few questions spring to mind that you might want to consider:
What type of pensions are they?
Do they have any advantages to staying where they are? Like being a DB scheme or DC with a guaranteed annuity rate, or high exit fees(with profits fund)?
How do the charges and investment choices compare?
What's the ultimate aim for the money? Annuity, drawdowm, etc and at what age? And is having one pot better than two in your scenario?
My question, for those who may have done this, is this: when the funds were transferred, how did you invest the cash? I'm assuming you drip fed a lump sum each month into your chosen funds, along side your regular contributions? Any advice appreciated.
I would assume the funds in these two pensions have already been drip fed if they're DC, so perhaps doing the same again isn't necessarily needed? It would depend on how much money you're taking about and how many different funds you invest in.
You'll be out of the market while you're in cash, which could be a good or bad thing depending on how stocks perform during that time.
Drip feeding with new money is generally the way to go, but again market conditions may dictate otherwise.
05 Dec 2018, 10:09
One huge consideration for me is this, I enjoy the buying and selling element the SIPP provides me with. I'm very proactive, trading on average 10 times a month. You can lump all the cost negativity (fees, risks, etc), into a box quite easily but quantifying seeing you've beaten a Fund Manager over a year in a Sector is priceless.
I spend approximately 20 to 25 hours a week analysing my portfolio, is that for you? Or will you just lump your money every month into a tracker fund producing ,say 5% pa? Nothing wrong with either approach, horses for courses.
06 Dec 2018, 00:25
Thanks to everyone for the replies. I'm already investing in a S&S ISA, so have done quite a bit of research. I quite enjoy it tbh, so I'm prepared for more. It was just the initial transfer and wondering about how to disperse the lump sum that would be sitting there. The pensions I'm thinking of transferring are approx. £34,000 and £20,000. The latter is the remains of a pension I could not transfer to RM due to it not meeting the Minimum Pension Guarantee figure. It's with Royal London who took it over from Scottish Life. It does have a GAR, about £2,500 a year, but no annual increases. The NRA is 65. As I took it out pre RM, obviously things have changed. Joining RM with a pension age of 60 is, as I'm sure you longer serving members agree, quite attractive. They are in the process of offering me a cash injection to forego the GAR, which would offer me more flexibility, and would increase that figure. As I have an unknown, but reasonably sized inheritance coming some time in the future, and possibly a pay off from RM, if the timing is right, I should be comfortable. The other pension of £34,000 has an NRA of 60, but I feel I would have more control, as they are not interested in offering me a draw down option.
I'm looking at taking my RM pensions when they are due, and not taking a hit on them as would be the case if taken early. I reckon I could retire at 60, using my S&S ISA and some shares held in a share account, to bridge the gap and avoid income tax until I hit 65. Possibly 67, my state pension age. If I chose to, I might take a part time job from 60 until 65, if I can find something that wouldn't rule my life the way RM has.
06 Dec 2018, 17:32
Buying a level annuity of £2,500 per year would currently cost in the region of £50,000 at age 65. So your GAR pension as it stands, is quite attractive if you're prepared to wait for it. You'll get its current value back after about 8 years of drawing it, and everything after that is 'profit' for the rest of your life.
The cash injection would therefore have to be fairly sizeable to make it a better option.
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