[Closed] Pensions - School me!

Well the earliest you can access your pensions is probably 55 (or might be 57 if it rises with the pension age which will be 67 ish for you).

I would say your first step is to find out where all your pensions are and how much money you have in them.

Any current pension schemes you pay into should give you an annual statement saying how much you have in it and predicting how much you'd get as a pension at 67 assuming you keep working up until then etc.

As a general rule you can't pay too much into pensions (there is a lifetime allowance of £1.07m, but you're unlikely to be near that). The only real question is is your SCAVC scheme a good choice for sticking extra money in - which without reading all the details is a bit hard to answer.

As for planning to retire asap. You need to map out when your major debts (eg mortgage) end and how much money you think you really need to live on (factoring in that at 67 you'll starting getting state pension, amount dependant on getting 35 years NICs). Then once you know what you need each year to retire and how much you currently have (in pensions / savings etc), you can work out the shortfall and that will tell you how many years you need to keep working.

I've got a about 5 years of pension with Coca-Cola, the rest is all LGPS. So from an admin point of view that is quite easy. I've never bothered moving the Coca-Cola pension as its small so I just check I get the annual statement each year.

there is a lifetime allowance of £1.07m, but you’re unlikely to be near that

My wife is a medic and is hitting this issue. Its nuts, she is happy to work more hours but is forced to work less as she would actually take home less money by working more hours due to the maxing out issue and penalties. Its a mess.

I’ve never bothered moving the Coca-Cola pension as its small so I just check I get the annual statement each year.

Still worth looking at
a) how much they charge you in fees per year
b) how well it has done each year

If the fees are over 0.75% and the annual gains are less than say 10% (last 10 years have been very good for stocks and shares), you should probably think about moving it.

you should probably think about moving it.

To where? Do I just shop around like buying car insurance or am I well into the IFA type territory here.

To where? Do I just shop around like buying car insurance or am I well into the IFA type territory here.

A low cost SIPP eg Interactive Investor or Vanguard (either would be a good choice).

With II you'd have to pick some low cost tracker funds (just ask on here for a sensible selection of basic trackers). Or just stick it in one of Vanguards life strategy funds.

NB I'm assuming it's not a final salary style pension, in which case just leave it alone.

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

https://www.ii.co.uk/ii-accounts/sipp

Following this as I'm trying to sort mine out at the moment.

or am I well into the IFA type territory here.

The problem with IFAs is they have large costs to cover (eg insurance for giving bad advice), so you rarely get anything for less than a few £k. OK if you have several £100k to move but for small sums it's simply not cost effective for them to offer advice.

If you're over 50, there is a free government advice service: https://www.pensionwise.gov.uk/en

I wish I knew more about them, the more I learn, the less I know...

The only conclusion I've come it is that, I can't retire early. I *should* enjoy a relatively comfortable retirement at 67 with an income of about £1500 a month (inc state pension), whether that will rise with inflation I don't know, if not and inflation tracks in the same way it has over the last 25 years, that'll be worth about £750 a month, which doesn't seem great.

I'll be reverse-mortgaging the bejesus out of my house to pay for Holidays and other distractions, sorry kids.

If your wife is hitting the LTA then retiring at 55 should be well doable.

First, find out what type of pension you have, is it defined benefit, or defined contribution. Makes a big difference to what you can and cannot do.

Then hit money saving experts pension pages. There is loads on there. Just be wary of the IFA's spreading their doom and gloom.

you should probably think about moving it.

Sometimes it's better to not just focus on absolute return, in cash terms.

I've a fair few pensions from the many companies I've worked for, they're all separate and while they may not be the best 'return', hopefully if any 'disappear' (I did work previously with some ex-Maxwell companies/employees...) it'll not impact me heavily as I'll have just lost a few years.

So I can afford to put away £250 a month extra (over and above my LISA). What is the formula to use to work out if I am better off paying down the mortgage or paying into Shared Cost AVC?

I should add that my previous pension planning has been based on assumption (I'm in LGPS, that is fine), optimism (someone else has worried about the detail, it will be fine) and hope (a unknown rich relative will die and leave me a fortune, preferably by the time I am 50)

I should add that my previous pension planning has been based on assumption (I’m in LGPS, that is fine), optimism (someone else has worried about the detail, it will be fine) and hope (a unknown rich relative will die and leave me a fortune, preferably by the time I am 50)

More than is once I've found myself, to get past a bit of panic about old age, remembered my parents are loaded and even with 3 siblings it might just save my arse.

I'm a terrible person.

Apologies if already mentioned but it might be worth investigating purchasing Added Pension if available rather than AVCs. I'm not an expert but it's available to me and my advisor recommended that.

More than is once I’ve found myself, to get past a bit of panic about old age, remembered my parents are loaded and even with 3 siblings it might just save my arse.

You are not alone with that thought. I looked up my parents house on Zoopla....Just hope they don't end up in care homes for years!

My wife is a medic and is hitting this issue. Its nuts, she is happy to work more hours but is forced to work less as she would actually take home less money by working more hours due to the maxing out issue and penalties. Its a mess.

If your wife is hitting the LTA then retiring at 55 should be well doable.

I suspect there’s some confusion here - assuming @franksinatra's wife is a similar age, and reading his description of the issue, it’s more likely it’s the Annual Allowance that’s the issue for her. As you suggest, managing LTA is often simply a case of taking early retirement, but the government hasn’t found a solution to the problem that medics (and others) have to be either in the NHS pension paying a single contribution rate (which might take them over the AA) or out of it and getting no pension - the only way they can 'manage' contributions is by managing hours worked. A sensible scheme would find a way to cap accrual (and contributions), which was mooted years ago, but never implemented. Interestingly, the current version of Local Govt scheme allows members to pay 50% for 50% accrual, and they have far fewer people in the medics' situation.

You are not alone with that thought. I looked up my parents house on Zoopla….Just hope they don’t end up in care homes for years!

MrsMC's parents have sold their bungalow and gone into care. £330k goes down quite quickly at £2k a week.

You are not alone with that thought. I looked up my parents house on Zoopla….Just hope they don’t end up in care homes for years!

Yeah, sadly the old Man is a chunky fella, (pot, kettle, black etc) and already has had heart surgery, he jokes about never getting to fully retire...

Mum though, I'm sure she'll end up being at my funeral, just my sodding luck.

(sorry if dark humour isn't your thing, I do actually love my Mum, sometimes).

I suspect there’s some confusion here – assuming @franksinatra’s wife is a similar age, and reading his description of the issue, it’s more likely it’s the Annual Allowance that’s the issue for her.

Based on my sister in law's lifetime earnings so far (she's a GP and will be turning 40 next year I think), it could probably be both :-0

Care home costs 48k per annum.... my MIL bungalow went in 5 years.

Based on my sister in law’s lifetime earnings so far (she’s a GP and will be turning 40 next year I think), it could probably be both :-0

Seems ok to me!

Some of best paid folk in society. They should save for their pensions, and taking advantage of tax breaks to do this is a good way to incentivise the behaviour.

And when they’ve had a million tax free pounds then it’s ok with me if that’s enough and the tax incentive goes to someone else.

As for the anomaly where they get paid less for working more shifts, the only issue really was where some doctors were vilified for sensibly choosing not to. I wish they hadn’t been and really didn’t deserve it.

It was made a fuss of in the press, but only because it made headline, not because it was a widespread failure of the system or of doctors.

Well, I'm not a financial advisor but in your position id be looking to blow the lot on coke hookers and then ponce off your wife until you die.

More than is once I’ve found myself, to get past a bit of panic about old age, remembered my parents are loaded and even with 3 siblings it might just save my arse.

Take nothing for granted. My grandpa died quite suddenly, but it left my grandma in the dementia home for 11 years. It cost just about everything that was in the bank, the rest divided between 7 grandchildren and 3 children.

I think LGSP has a penalty if you want to withdraw/drawdown or whatever before your state pension age, so if you want to retire before that you need to figure out having money between when you want to retire & when you reach your state pension age.

So I thought I was getting on quite well, decided to invest £200 per month. Registered for the scheme and now I have to choice how much I invest in each fund
Managed, Manager of Managed, Passive Core, Risk Based, Active PLus, Myfolio Managed, Passive PLus, With profits blah blah blah. There are literally hundreds. I don't even know where to start.

Off to Martin Lewis I go..

a lot of those will be investment patterns. Ie : they will invest into high-risk funds until 10 years before retirement then move progressively to 100% low-risk (good if an annuity is your thing) vs invested into high risk until 5 years before then move to 50% medium risk (better if you're going to drawdown). the actual funds underneath will be the same - and if you're happy to take another look at/tweak things in the run-up to retirement, which of the patterns you choose is less important than the actual funds

Care home costs 48k per annum…. my MIL bungalow went in 5 years.

Half as much again in Buckinghamshire...

Half as much again in Buckinghamshire…

My parents live in Chalfont St Giles.....

Registered for the scheme and now I have to choice how much I invest in each fund

Which scheme? Happy to take a look and offer some pointers.

My parents live in Chalfont St Giles…..

You can get cream for that.

Which scheme? Happy to take a look and offer some pointers.

AVC Wise, all the funds seem to be accesses via Standard Life.

To get myself set up I'm probably going to just opt for Baillie Gifford Managed Pension Fund and I'll look to change it once I start learning.

To get myself set up I’m probably going to just opt for Baillie Gifford Managed Pension Fund and I’ll look to change it once I start learning.

OK, not a bad initial choice.

If it's this one: https://www.bailliegifford.com/en/uk/individual-investors/funds/managed-fund/

The fee of 0.42% per annum isn't that bad. Keeping fees low is important as if your fund averages say 5% growth per annum, paying 1% per annum is fees (fund + platform) is eating up 20% of your overall growth.

You could easily get much lower by just creating your own blend of say 5 or 6 trackers.

Eg something like:

20% UK FTSE 100 tracker
20% UK small companies eg FTSE 250 tracker
20% North America tracker
20% European tracker
10% low cost UK bonds fund
5% Japan tracker
5% NASDAQ tracker

Just to get diversity by geography, company size etc. You should be able to find all those with fees at or below 0.1%.

Your AVC / SIPP platform will also probably have an annual % fee.

My parents live in Chalfont St Giles…..

£1500 per week for dementia/chair-bound nursing care - my MIL.

20% UK FTSE 100 tracker
20% UK small companies eg FTSE 250 tracker
20% North America tracker
20% European tracker
10% low cost UK bonds fund
5% Japan tracker
5% NASDAQ tracker

Just to get diversity by geography, company size etc. You should be able to find all those with fees at or below 0.1%.

Isn't it easier just to invest in a proper world equity tracker?

Isn’t it easier just to invest in a proper world equity tracker?

Easier? Yes. Safer, possibly not.

First rule of pensions is diversity, never put all your eggs in one basket. Eg many pensioners put everything they had in Woodfords Equity funds and look where that ended up....

So personally, I use a mix of platforms and a mix of funds. So if one platform or fund goes tits up (unlikely but possible) I don't have everything at risk.

Then you need to think about exchange rates. If the £ appreciates vs, say the $, the the £ value of your $ funds will go down (even though they are worth the same in $ terms). On the other hand US equities seem to do much better than UK equities, so there is a balance at play. For a moderate risk portfolio you probably want a heavy UK equity weighting (less growth but zero exchange rate risk). With an off the shelf global equity fund, you'd find quite a low UK weighting.

NB There is no 'right' answer, just endless trade offs of risk vs reward weighted by the individual's appetite for risk and personal circumstances etc.

The two major rules I'd always apply are:

1) Diversity of risk
2) Minimise fees / costs

I've just realised that i'm rather quite old as this is the best thread i've read for weeks on STW 🙂

Disappointed to see only one post about coke & hookers....:)

OP, you mention that most of your pension provision is in the LGPS, so you are going to get hit if your aim is simply to retire as early as possible. Their member site is useful for playing around with potential benefits to give you an idea. There’s a section on the acturial reductions for taking benefits ahead of the scheme retirement date: https://www.lgpsmember.org/more/reductions.php

See how this impacts you. Consider when you want to retire and on how much eg will kids have moved out (if you have them), mortgage situation etc. You can then work out what is realistic.

Bear in mind the LISA can be sold down to fund “income” later on, but not until age 60 without penalty, so if retiring at 50 or 55 where will you get the money to live?

Worth having a look at the older pensions, if bigger companies like coco cola charges are going to be relatively low (qualifying company schemes need to be less than 0.75%), but the funds invested in might be worth looking at. At least making sure they have your current address and you know what is there (even if little) is a useful first step.

May also want to consider LISA vs pension and whether you would be better off putting that £4K a year into a pension rather than the LISA, depending on a number of factors.