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Any pensions experts or IFAs in?
I've got a bunch of old personal pensions and it's getting to the time when I should be thinking of using them for what they were intended. Now I'm qualified for an old person's railcard. Gulp - where did all those years go?
I spoke to one IFA, who seemed keener on me moving all my funds into his super flexible scheme that was certain to beat the returns of the big funds, and he would only charge a few percent to set it up, and take a teeny weeny annual fee...Hello Mr Ponzi!
What with Osborne talking about stopping the tax-free withdrawals I guess this is the time to set up something that lets me draw down funds, carries on earning interest and is tax-efficient and leaves a bit for if I reach a fine old age. As well as giving me a monthly income.
Anybody care to point me in the right direction?
I am not an expert in any way but I know as you get older our works pension moves the holdings from more volatile things like stocks and shares to bonds and cash options. Lower returns but more stable as you won't be paying in more.
Depending on the tax implications (now and potentially in the future) it may be worth looking at drawing down then re-investing in ISAs/bonds doing something like this if you believe it is more tax efficient. Overall it may not gain you anything if the rate of returns are significantly lower or the overall tax rate of income generated as well as drawing money from the pot is more than the tax saving in the long term.
The rumour that was/is doing the rounds (trailed by former pensions minister Steve Webb, who was unusual as he actually knew what he was talking about) about the tax free lump sum (or 25% of benefits being tax free if no lump sum is taken) is not around its abolition for existing pensions but its effective abolition for new contributions if Osborne moves to an ISA based system.
It is of course possible that Government could abolish it for existing schemes but that would be politically difficult and problematic for those who didn't take the lump sum, but are getting the relief through draw down.
That makes sense.
Does anybody know any reasonable companies to approach who allow a flexible pension fund without charging a fortune?
Despite being 53 pensions are a mystery to me, but I've just opened a SIPP with these fellas: https://www.youinvest.co.uk/pensions/pensions-freedom
They seem pretty cheap compared with other similar providers. I' don't know if this was the sort of thing you had in mind?
I've just got back from a nice night ride. Well, ride-pub-ride and when I'm feeling sober I'll call that nice chap who pm'd me and read the above post. *hic*. Night all.
* as a non ifa/pensions expert - so if any of this is incorrect I'd appreciate knowing
understand (the ever changing world of):
- annuities
- drawdown
- ufplus
- *I think there are now other guaranteed income drawdown products ....
- understand the 25% tax free options (lump or drip)
- irrespective of which understand the related fees and management charges associated (and I belive you can also pay IFAs fixed cash amount)
understand the ever changing world of
- personal tax allowance
- pas
- dividends tax free allowance
- isa
- accept that (and this is imho) without a final salary type pension you have 3 choices (and sorry):
- dying with money left in pension pot
- living with no money left in pension pot
- taking some sort of guaranteed income product (e.g an annuity) but note that I don't think an annuity type thing is sensible(as rates are very low now) till you are much older (as rates go up) and it may help when you cant manage your own affairs
if you wish to leave part of your pension in a will look at options (I have no dependents so don't care about that)
again imho you might wish to plan in a couple of things
- might come a time when you can't manage your own affairs
- might have a two stage retirement(1 - functional, mobile, spending etc), 2 - no so functional,not so mobile - so spending less)
What you do depends very much on your personal circumstances, your wants and (again) imho - your prediction of what future changes will do to your choices.
Those seem all good points, Towzer.
Fortunately a fellow forum dweller saw my cry for help, PM'd me and is now busily in the process of sorting through my stack of pensions to get me on the right lines.
If you spot an off-duty IFA riding round Kirroughtree this weekend, shout a thank you from me.