Pension fund consolidation advice

[TheMotorcycleBoy]

Why on earth do I pay into a SIPP, given that it actually costs me money before the provider charges me a penny?

Well....

Until recently I use to pay that money into my ISA. Both allow me to indulge my hobby of stock picking and company research. Had I retired at 50 (as I originally wanted to) I could not have touched a pension, but could have used my ISA to live upon. Now over 55, I can take money out of my pension when ever I want to. Sure there are serious downsides to doing so, but it's not prohibited. Since that is the case why should I not divert funds into a wraper free from IHT (SIPP) from one subject to IHT (ISA)?

For me the choice is not SIPP or company pension but SIPP or ISA. But I pay for that choice and it wouldn't be the "best" choice for everyone.

Thank you. This is the kind of thing, I'd been rooting for.

Yes, I can imagine it makes sense for you UD. Alas, being a newbie, I had lookup IHT. So when you are talking about inheritance tax, is that basically so that in the event of your death, your dependents/family etc. don't have to pay inheritance tax on it?

Sorry to be slow, I had initially only posted this thread, to ask what I thought would be a couple of simple provider switching questions!

But, no bother, this is all interesting stuff to us. And it has rapidly accelerated making some necessary decisions which needed to be made.

M&M

[Urbandreamer]

Thank you. This is the kind of thing, I'd been rooting for.

Yes, I can imagine it makes sense for you UD. Alas, being a newbie, I had lookup IHT. So when you are talking about inheritance tax, is that basically so that in the event of your death, your dependents/family etc. don't have to pay inheritance tax on it?

Sorry to be slow, I had initially only posted this thread, to ask what I thought would be a couple of simple provider switching questions!

But, no bother, this is all interesting stuff to us. And it has rapidly accelerated making some necessary decisions which needed to be made.

M&M

Yes you did open a can of worms didn't you. By the way did you spot Melonfool's comment about tax?

Ok IHT and other taxes. You can run your finances to minimise the tax that you will pay legally.

For example pensions are inherited free of tax providing that the deceased was under 75. If they were over 75 then the money is taxed at the recipients marginal tax rate. I believe that if what is inherited is a portfolio of shares or funds then it would be the income from that or any sale which would be taxed, but an accountant should be consulted. Other funds can pass to the spouse tax free, but when passed down wealth above the multiple different allowences is subject to IHT.

Income tax is divided into tax bands depending upon what you recieve. Many people can manipulate the band that they are in by changing the income that they recieve. I do this by ensuring that enough goes into my pension to ensure that I pay "standard" rate income tax. This has effects upon other benefits and taxes. ie child allowence, student loans, tax on interest or dividends etc.

[TheMotorcycleBoy]

By the way did you spot Melonfool's comment about tax?

Did you mean this bit?

But, nearly all my saving is into my employer pension currently as we have sal sac, as you say, so I get the NI saving PLUS my employer rebates 50% of their NI saving too so an immediate 6.8% uplift which is more than I would expect on any return anywhere right now, frankly. So, I put 20% of my salary in, employer puts 5%. I got a bonus last year of £9k and I put it all in (had to get special permission as it went over our sal sac cap of 35% [for that month only though], a cap I personally imposed - doh!).

I think we do have sal sac at my work, though I don't contribute into it. Perhaps I should make some more enquiries, I'm not sure right now. My monthly finances despite having a full-time job aren't always predictable due to having teenage children, e.g. I have been paying for private tuition, and of course all the ad hoc school trips. Previously I would just move any (if at all) surplus into a (at the low IR) saving account. Now we trying to better things, i.e. using a shares ISA, NS&I bonds, best savers account we can find etc.

Currently the main benefits I get regards my works pension is for my 4% my employee contributes 8%.

Regards tax in general, you will probably think bad of me, but for many years, I have tried to be ignorant of it. Back in the late 90s I did work as a computer consultant with own Limited Company, and I dread to recall all the receipts and filling and phone calls to the accountant, VAT, PAYE etc. And then after I dissolved the Co. the tax office continued to send me personal paper tax returns annually for about the next 5 years or so. So I'd rather not get back to it right now.....but perhaps I should return to it at some point, and scoop up some these savings that some here mention.

Matt

[Urbandreamer]

Regards tax in general, you will probably think bad of me, but for many years, I have tried to be ignorant of it. Back in the late 90s I did work as a computer consultant with own Limited Company, and I dread to recall all the receipts and filling and phone calls to the accountant, VAT, PAYE etc. And then after I dissolved the Co. the tax office continued to send me personal paper tax returns annually for about the next 5 years or so.
Matt

I quite understand. An easy life can be worth the money. Put as much effort or as little into tax planning as you want. It neededn't be a bad as you remember. Besides there is a bit of a difference between deciding to put money in a pension instead of an ISA, and wondering where to find the money to pay for driving lessons and insurance for your teanage daughter. Yes, I too have teanage children.

Can I suggest just one thing though that will make a huge difference.

Make a note in your diary to spend 3hr once a year to look into your finances on the same date. Ok when you start you will find that it's impossible to do in 3hr and stop. However doing it every year will cause you to find ways to make the task easier and in time it will actually take more like 30min.

Download your bank transactions to a spreadsheet. Sorting by who gets paid or where the money goes then removing those that are transfers to savings or mortgage payments will take minuits. The result is you know how much you spend to live and hence are likely to need from a pension. It should/could take you the same amount of time to establish how big your pension pot and other savings are. I know that you could look at the value of your Aviva pension online, because I check mine. Put it in a spreadsheet.

A few extra cells and you have a prediction of what it will be when you want to retire and if you are likely to exceed the pension lifetime allowance.

Take the result's and feed it into a pension calculator like this one, or another of your choice.
https://www.firecalc.com/
You will soon know if you are saving too little or to much. If you can give up work early or ought to be gifting money to your children.

The "difficult" part is making the first step and you have already done that.

[TheMotorcycleBoy]

Sorry,

I've not really looked at this thread for a little while. By way of an update, I'm now completely free of my Aviva pension and the advisor. I've consolidated my Aviva into my employer's Fidelity scheme (no platform charge), and very low fee (0.3% annual pro-rated on daily value) on the default fund.

So I've now got these schemes to address now. The current plan (I'll kick it off this week, have the week off work), is to consolidate the little pots into the Standard Life.

Standard Life 41.1k "my current employer's earlier provider"
Scottish Widows 1.1k "my previous employer's final provider"
Halifax Financial Services 5.7k "my previous employer's initial provider"

Then I'll just have the Fid and SL, 2 schemes being easier to deal with than 5.

The next plan (within the next 6 months), will be more research on SIPPs, culminating with the SL scheme, being moved into the SIPP.

For example, my SIPP costs me £100pa. You would probably pay the same with A J Bell for a 10k pot, AND having more than one provider will mean extra expenses.

Who would that be with, UD? AJ Bell perchance?

Can I suggest just one thing though that will make a huge difference.

Make a note in your diary to spend 3hr once a year to look into your finances on the same date. Ok when you start you will find that it's impossible to do in 3hr and stop. However doing it every year will cause you to find ways to make the task easier and in time it will actually take more like 30min.

Download your bank transactions to a spreadsheet. Sorting by who gets paid or where the money goes then removing those that are transfers to savings or mortgage payments will take minuits. The result is you know how much you spend to live and hence are likely to need from a pension. It should/could take you the same amount of time to establish how big your pension pot and other savings are. I know that you could look at the value of your Aviva pension online, because I check mine. Put it in a spreadsheet.

A few extra cells and you have a prediction of what it will be when you want to retire and if you are likely to exceed the pension lifetime allowance.

Take the result's and feed it into a pension calculator like this one, or another of your choice.
https://www.firecalc.com/
You will soon know if you are saving too little or to much. If you can give up work early or ought to be gifting money to your children

Sorry again, UD, for my tardiness. The spreadsheet is an excellent idea. We are already tracking our investments, etc. on them.

Matt

[YeeWo]

I eventually discovered all tax relief -40% in those days -being taken by the Pension provider!

That's one of the most outrageous P-takes I've ever read. If you have access to the documentation proving this a retroactive legal claim would be justified, no?(!)..