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Multiple smallish pensions - best strategy to max return

daducky
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Multiple smallish pensions - best strategy to max return

#396953

Postby daducky » March 19th, 2021, 12:42 am

Hi there


I think i have about 6 or 7 co pensions equating to about

15 yrs of work in jobs ranging from.£13k -56k pa.. I'll be 49 this yr and have a prt time job.

For my pensions from my prior employers, i was wondering if it perceived as a generally good strategy to:

Review sipps or other investment vehicles for a favoured combo of risk and reward and charges,

Compare the annual fees and performance of existing prior pensions so far

Make a judgement on which to leave where is eg low fees, high growth/ eg high fees, lo growth so transfer elsewhere

I think i've missed the big money boat now for jobs, but my aggregate pension from.prior employers will.come to ~£10k pa.
I've missed about 4 yrs of state pension contributions, so far which i probably need to check if theres a cut off date to replace them/ is it the best place to.put the money.

The other question is what are the good options to transfer a pension to within or outside of a sipp eg which investments or combination. I 'd say i have a medium appetite for risk as i hope to benefit from.compound growth for the yrs b4 i retire.

mc2fool
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Re: Multiple smallish pensions - best strategy to max return

#396959

Postby mc2fool » March 19th, 2021, 2:05 am

daducky wrote:For my pensions from my prior employers, i was wondering if it perceived as a generally good strategy to:

Review sipps or other investment vehicles for a favoured combo of risk and reward and charges,

Compare the annual fees and performance of existing prior pensions so far

It's always a good idea to start by gathering all the relevant information. ;)

You don't say if these are all defined contribution schemes or if there's some defined benefit (final salary) ones. In either case you also want to find out if and what benefits there are. E.g. guaranteed annuity rates, index linking, spouse pension, etc. Also find out if there are any restrictions on getting valuations, e.g. most DB schemes will give you one transfer value a year for free but charge you for any subsequent ones.

I've missed about 4 yrs of state pension contributions, so far which i probably need to check if theres a cut off date to replace them/ is it the best place to.put the money.

Yes, there are cut offs. The very first thing to do is to get a state pension forecast, start here: https://www.gov.uk/check-state-pension.

If you sign up for the online service it'll show you your NI record as well. The calculation as to whether it's worth filling past gaps can, in some cases, be unclear due to you having contributed under both the old (pre-2016) and new systems, and if it's not clear to you come back here for help. :D

mc2fool
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Re: Multiple smallish pensions - best strategy to max return

#396961

Postby mc2fool » March 19th, 2021, 2:16 am

daducky wrote:The other question is what are the good options to transfer a pension to within or outside of a sipp eg which investments or combination.

Forgot this one .... You cannot transfer a pension to outside of a SIPP, at least not until you are 55 (57 after 6 April 2028).

This board is for practical matters with pensions themselves, of the sorts I've replied to. For investment discussions you'd be better of on the Investment Strategies board.

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Re: Multiple smallish pensions - best strategy to max return

#396966

Postby JohnB » March 19th, 2021, 5:33 am

Company pensions normally have higher charges than a SIPP, especially old ones. So for cost and simplicity I'd transfer any DC ones that dont have reserved benefits.

Well worth getting a NI statement and cherrypicking the years top up. There is a rolling time window for this, its long now because of the pension reforms, but will narrow, so don't procrastinate. You will find it very confusing, everyone does.

daducky
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Re: Multiple smallish pensions - best strategy to max return

#398521

Postby daducky » March 24th, 2021, 6:38 am

JohnB wrote:Company pensions normally have higher charges than a SIPP, especially old ones. So for cost and simplicity I'd transfer any DC ones that dont have reserved benefits.

>> Thankyou John. Is there a correct form.of lingo to ask pensions providers for a summary of charges e.g. TER and benefits for each scheme?

Well worth getting a NI statement and cherrypicking the years top up. There is a rolling time window for this, its long now because of the pension reforms, but will narrow, so don't procrastinate. You will find it very confusing, everyone does.


>> This is news to me so thanks for the alert John
So is it that the Gov calc your pension on a fraction of 40 years or something and if one has completed a part year, the NI is cheaper to top up for that than.a fully unpaid year e.g. if one was unemployed for example?

daducky
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Re: Multiple smallish pensions - best strategy to max return

#398522

Postby daducky » March 24th, 2021, 6:41 am

Thankyou everyone for your advice.

I'll.try a definition of costs and benefits.
I've found some of the cos more readily open than others :-o in terms of supplying info. Its a little discombobulating.

pochisoldi
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Re: Multiple smallish pensions - best strategy to max return

#398532

Postby pochisoldi » March 24th, 2021, 7:23 am

Don't forget that you can consolidate pensions into one or more defined contribution funds, or put another way, you aren't restricted to consolidating into a SIPP.

From personal experience:
I have two DB pensions (never been looked at for transfer)

Pension A (1990 era personal pension) (CO + PP parts) (9yrs)
Pension B (Group personal pension) (2yrs)
Pension C (Stakeholder pension) (2yrs EE+ER, 8yr EE*)
Pension D (Group personal pension) (10yrs EE+ER)
(EE=my/employees contribs, ER=Employers contribs, * contribs made whilst member of DB scheme)

Pot A ( both parts) invested in a managed fund
Pots B C and D all invested in tracker funds

B, C and the personal pension part of A were transferred to D.
(on the basis of charges)
Some time later I transferred the contracted out part of A into D. (on the combined basis of fund performance, and charges).

I now have another job, with a pension E.

Any further "new" money over that required to secure the employers contribution to pot E goes into pot D, on the basis that E has a higher AMC, I can't see how many units my contributions buy each month, and it seems impossible to find out what the fund prices are (lack of fund codes).

I may consider transferring to a SIPP, but my gut feeling is that the advantages of a SIPP are counterbalanced by the charges.
(You've probably all guessed that my pension saving preference is for funds rather than picking shares.)

Edit: Note that my decision was made easier as none of the transferred pensions had any kind of guaranteed annuity rate or other benefit over the cash value of the pot.
If you have a guaranteed annuity or GMP from a company DC pension, you may want to do the job in two passes: consolidate the straightforward stuff first, then consider each of the remaining pots on their own merits.

Pochisoldi

mc2fool
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Re: Multiple smallish pensions - best strategy to max return

#398678

Postby mc2fool » March 24th, 2021, 4:29 pm

daducky wrote:So is it that the Gov calc your pension on a fraction of 40 years or something and if one has completed a part year, the NI is cheaper to top up for that than.a fully unpaid year e.g. if one was unemployed for example?

As already stated, it's complicated. Go to https://www.gov.uk/check-state-pension and get yourself an account, and once you've done so come back and post here:

The amount it says you'll get from your record up to now.
The Contracted Out Pension Equivalent (COPE) amount (you'll only have this if you were ever contracted out of SERPS/S2P).
The number of full qualifying NI years you have up to and including 2015-16
The number of full qualifying NI years you have from 2016-17 onward, inclusive.
The years that you don't have a full qualifying NI year for from 2006-7 onward (it's too late for any gaps before that),
and if any of those are part filled, the cost to fill them (click on View Details against years which aren't marked as full).
Your age.

daducky
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Re: Multiple smallish pensions - best strategy to max return

#399232

Postby daducky » March 26th, 2021, 2:30 pm

mc2fool wrote:
daducky wrote:So is it that the Gov calc your pension on a fraction of 40 years or something and if one has completed a part year, the NI is cheaper to top up for that than.a fully unpaid year e.g. if one was unemployed for example?

As already stated, it's complicated. Go to https://www.gov.uk/check-state-pension and get yourself an account, and once you've done so come back and post here:

The amount it says you'll get from your record up to now.
The Contracted Out Pension Equivalent (COPE) amount (you'll only have this if you were ever contracted out of SERPS/S2P).
The number of full qualifying NI years you have up to and including 2015-16
The number of full qualifying NI years you have from 2016-17 onward, inclusive.
The years that you don't have a full qualifying NI year for from 2006-7 onward (it's too late for any gaps before that),
and if any of those are part filled, the cost to fill them (click on View Details against years which aren't marked as full).
Your age.

-------------------
Thankyou.

Interesting I have an old State Pension Statement based on my NI record upto 2014/15
which tells I 'd receive a state pension of £94.30/ week based on contribution upto 2014/15 from 19 qualifying yrs of of NI contributions.
It also provides for information purposed an estimate of the return from a SERP arrangement would come to £18.13/week (presumably within an employer's scheme, so one has to be careful not to count it twice when one is calculating their total pension to be across providers)

The Statement provided no indication of which years were and were not fully contributed.
So I will ask (as you suggest) again and hopefully get a full record of full and part contributions by year.
Thanks very much for the clear and succinct information. Much appreciated.

mc2fool
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Re: Multiple smallish pensions - best strategy to max return

#399235

Postby mc2fool » March 26th, 2021, 2:49 pm

daducky wrote:So I will ask (as you suggest) again and hopefully get a full record of full and part contributions by year.

Don't ask them, just get yourself a Government Gateway account and you'll be able to find all the information needed online. https://www.gov.uk/check-state-pension

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Re: Multiple smallish pensions - best strategy to max return

#399258

Postby daducky » March 26th, 2021, 3:35 pm

Sure, I've got an id somewhere ...

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Re: Multiple smallish pensions - best strategy to max return

#401792

Postby daducky » April 5th, 2021, 9:49 am

So I've checked things out NI contribs.

retirement year 2039
my state pension NI contribs lists 19 qualifying years up to tax yr 2014/15
plus 2 full years since then = 21 full years contribution made
equating to a £6042 pa pension on contribs so far, where the max is £9110pa
11 years deficient contribution
6 years are excluded from topping up
4 years require £2876 between them to top them up, 3 of those years by May 21
1 yrs missing, presumably the tax year we're in. I expected this year and the following 2 years to be a full NI contrib years.
12 years reqd contribution to make full pension

Re the top up of 4 missing years, I don't know how realistic it is to expect an income of ~£750 pa index linked from £2876 invested for 19 years.
Suggestions as to where to invest vs performance welcome :-). Or maybe I'd be better off just sticking the value of the missing 4 years in the gov pension with my additional expected 3 years full contribution from my current contract, reducing my required 12 years to reach full pension to 5 years.

I should state I have about £30k invested in etfs. So adding £2876 to that would be simple enough. Last year I generated 13% return as progressive entrant to investing with Vanguard. The rebound in 2020 was good. I understand 2021 and 2022 will probably growth years as well. 2023 stasis of recession? I don't know and with bond yields being so poor, one wonders what else can one invest in when stocks go down. I don't have any any experience yet of precious metals or synthetic currencies. One of problems with the Vanguard UK is they have a large array of geographic etfs etc, but 0 in regarding to economic sectors. Hence I'm thinking shifting half my holding to another brokers to allow me access to such sectoral investments. Handy hints welcome.

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Re: Multiple smallish pensions - best strategy to max return

#401806

Postby yorkshirelad1 » April 5th, 2021, 10:30 am

daducky wrote:Hi there

I think i have about 6 or 7 co pensions equating to about

(snip)



Plenty of other good advice on this thread. My thoughts (having looked into this and done/doing it) are that it's worth combining small pension pots (and there are sometimes exceptions to the rules for very small pension pots) if only to have admin hassle and paperwork. If some of the pensions are old, they may be running on old charges and you may find that moving them into a move up to date SIPP may save you some charges. However, if you have any DB (defined benefit) pensions, it could be very tricky moving them (sometimes you have to get advice from an IFA to move from a DB scheme, and this can be costly and quite hard to find, as other recent postings on TLF indicate).

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Re: Multiple smallish pensions - best strategy to max return

#401874

Postby mc2fool » April 5th, 2021, 2:21 pm

daducky wrote:So I've checked things out NI contribs.

retirement year 2039
my state pension NI contribs lists 19 qualifying years up to tax yr 2014/15
plus 2 full years since then = 21 full years contribution made
equating to a £6042 pa pension on contribs so far, where the max is £9110pa
11 years deficient contribution
6 years are excluded from topping up
4 years require £2876 between them to top them up, 3 of those years by May 21
1 yrs missing, presumably the tax year we're in. I expected this year and the following 2 years to be a full NI contrib years.
12 years reqd contribution to make full pension

Re the top up of 4 missing years, I don't know how realistic it is to expect an income of ~£750 pa index linked from £2876 invested for 19 years.
Suggestions as to where to invest vs performance welcome :-). Or maybe I'd be better off just sticking the value of the missing 4 years in the gov pension with my additional expected 3 years full contribution from my current contract, reducing my required 12 years to reach full pension to 5 years.

Ok, well I can't do a full analysis unless you post the information stated in viewtopic.php?f=17&t=28520#p398678.

What can be said is that as you have 17 potential contributing years before reaching state pension age, then if you expect to be paying involuntary contributions going forward for 12 of those years (i.e. from working), then there's no point in filling any past ones. However, while you haven't said so explicitly, your last sentence above seems to indicate that you don't want to be, or at least, don't want to depend on it.

I'm not quite sure where you get some of your numbers, e.g. the ~£750 pa and £2876, and not clear where you get "3 of those years by May 21" from. The deadlines are always the end of a tax year, i.e. 5-Apr ... unless the govt is giving extra time 'cos of covid, but I don't see that on the .gov voluntary NICs pages.

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Re: Multiple smallish pensions - best strategy to max return

#404067

Postby daducky » April 13th, 2021, 11:40 pm

Thankyou PS. i missed your post when it was first published. It seems to contain a both a lot of information + acronmyns + terms i have a feeling rather than a certainty. Perhaps the best coa (course of action) is to enquire where you aquired your information/ knowledge of the field - albeit experience may be the largest part e.g. your forms of pensions through your multiple employeers obviously would introduce one to this or that decision....Thankyou.


pochisoldi wrote:Don't forget that you can consolidate pensions into one or more defined contribution funds, or put another way, you aren't restricted to consolidating into a SIPP.

From personal experience:
I have two DB pensions (never been looked at for transfer)

Pension A (1990 era personal pension) (CO + PP parts) (9yrs)
Pension B (Group personal pension) (2yrs)
Pension C (Stakeholder pension) (2yrs EE+ER, 8yr EE*)
Pension D (Group personal pension) (10yrs EE+ER)
(EE=my/employees contribs, ER=Employers contribs, * contribs made whilst member of DB scheme)

Pot A ( both parts) invested in a managed fund
Pots B C and D all invested in tracker funds

B, C and the personal pension part of A were transferred to D.
(on the basis of charges)
Some time later I transferred the contracted out part of A into D. (on the combined basis of fund performance, and charges).

I now have another job, with a pension E.

Any further "new" money over that required to secure the employers contribution to pot E goes into pot D, on the basis that E has a higher AMC, I can't see how many units my contributions buy each month, and it seems impossible to find out what the fund prices are (lack of fund codes).

I may consider transferring to a SIPP, but my gut feeling is that the advantages of a SIPP are counterbalanced by the charges.
(You've probably all guessed that my pension saving preference is for funds rather than picking shares.)

Edit: Note that my decision was made easier as none of the transferred pensions had any kind of guaranteed annuity rate or other benefit over the cash value of the pot.
If you have a guaranteed annuity or GMP from a company DC pension, you may want to do the job in two passes: consolidate the straightforward stuff first, then consider each of the remaining pots on their own merits.

Pochisoldi


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