Hargreaves Lansdown - are you one of the 3100....

[flyer61]

https://www.hl.co.uk/news/articles/the- ... llionaires

Given HL have 1.6 million customers I was surprised at how low the figure was for people with a 7 figure pot.

The column inches given in the media would imply there are zillions of people in this exalted position. It would seem not.

Must be a few of the 3100 on these boards....

[doug2500]

Bear in mind some people will have 2 pensions, I do but far short of 7 figures. So they will have more than 3100 but they just don't know about it.

[DrFfybes]

Given the LTA and HL's fees, I'm surprised it is as many as 3100. Over £1m doesn't leave much headroom, even for thise with the £1.25M protection.

Paul

[scrumpyjack]

Given the LTA and HL's fees, I'm surprised it is as many as 3100. Over £1m doesn't leave much headroom, even for thise with the £1.25M protection.

Paul

HL's fees are only £200 a year (avoid funds etc). Anyway they aren't 'pension millionaires'. The pension that a fund of £1m would support is probably only about £30k. There must be literally millions of public sector people who are entitled to index linked DB pensions, the capital value of which is a lot more than a million. At 10% inflation those DB pensions look a lot more attractive than a personal pension with no inflation protection!

[Gilgongo]

There must be literally millions of public sector people who are entitled to index linked DB pensions

Interesting point, although given the fact that less than 10% of those DB pensions are still open to public sector employees, and about 50% have now been closed to further accruals, the HL millionaire figure better start bucking up pretty quickly...

https://www.thepensionsregulator.gov.uk ... scape-2021

[scrumpyjack]

I have my SIP with HL and keep getting emails offering 'advice' and pushing their 'investment experts' ideas.

Whenever I get one of these I think - Are these the same 'experts' that carried on promoting Woodford's funds long after most 'advisers' had decided they were very far from being worth investing in

(needless to say I have never taken them up on their offers)

[TahiPanasDua]

https://www.hl.co.uk/news/articles/the-secrets-of-pension-millionaires

Given HL have 1.6 million customers I was surprised at how low the figure was for people with a 7 figure pot.

The column inches given in the media would imply there are zillions of people in this exalted position. It would seem not.

Must be a few of the 3100 on these boards....

I am certainly not one of them. I have zero pensions of any kind. My wife is not much better. She has a civil service pension of only £5,500 per annum. We even have no state pension entitlement. As foolhardy itinerant expats in 7 countries we had to look after ourselves. The good news is: we did alright.

TP2

[Dod101]

https://www.hl.co.uk/news/articles/the-secrets-of-pension-millionaires

Given HL have 1.6 million customers I was surprised at how low the figure was for people with a 7 figure pot.

The column inches given in the media would imply there are zillions of people in this exalted position. It would seem not.

Must be a few of the 3100 on these boards....

I am certainly not one of them. I have zero pensions of any kind. My wife is not much better. She has a civil service pension of only £5,500 per annum. We even have no state pension entitlement. As foolhardy itinerant expats in 7 countries we had to look after ourselves. The good news is: we did alright.

TP2

I paid Class 3 contributions. Did you not even do that? My only pension is the State Pension.

Dod

[TahiPanasDua]

https://www.hl.co.uk/news/articles/the-secrets-of-pension-millionaires

Given HL have 1.6 million customers I was surprised at how low the figure was for people with a 7 figure pot.

The column inches given in the media would imply there are zillions of people in this exalted position. It would seem not.

Must be a few of the 3100 on these boards....

I am certainly not one of them. I have zero pensions of any kind. My wife is not much better. She has a civil service pension of only £5,500 per annum. We even have no state pension entitlement. As foolhardy itinerant expats in 7 countries we had to look after ourselves. The good news is: we did alright.

TP2

I paid Class 3 contributions. Did you not even do that? My only pension is the State Pension.

Dod

By the time I realised what a good deal Class 3 contributions were, it was too late to do so. During my 42 years overseas, I tried my hand at property and equities, making lots of the usual amateurish mistakes in the early years. However, after an expensive investment education, I started to make good and developed an ongoing love of the subject.

By the way, not only do I not have any pensions, I have no bonds, gold, etc only a highly diversified shares, ETF and IT, mostly income, portfolio and we own our house. We live entirely on dividends and have about 7 years expenditure in cash which is too much. In the event of a serious market collapse we should manage OK. I am not the cautious type and reckon we should survive almost anything bar Putin lobbing nuclear devices. No investment strategy will survive Armageddon. (on second thoughts, maybe I haven't learned much over the years after all!)

TP2.

[DrFfybes]

The pension that a fund of £1m would support is probably only about £30k. There must be literally millions of public sector people who are entitled to index linked DB pensions, the capital value of which is a lot more than a million.

I doubt there are that many. LGPS calculates 20X salary (plus lump sum) as the LTA contribution so a £45k pension (plus 2 years' pension as lump sum) would transfer at £1m. Whether that is fair a multiple is open to discussion but there is no residual value, so the comparisson is what index linked Annuity could you get with £1m.

A £45k pension would require a £90k salary and 35+ years service, so certainly in Local Govt that would be a small number at each council. Other schemes might be different, some headteachers would probably be hitting the limit and London based Civil Servants.

At 10% inflation those DB pensions look a lot more attractive than a personal pension with no inflation protection!

This year the rise was 3.1%, same as the State Pension. Last year it was 0.5%, compared to 2.5%. Since April 2011 LGPS pension has increased by 29.3%, compared to SP increase of 45%, and VWRL returning about 300%.

The big win for public sector employees is the employer contributions, which wuns at about 16-25% depending upon the scheme.

Paul

[scrumpyjack]

According to Scottish Widows annuity figures, £1m would buy an index linked annuity of £27,800 at age 66, so I wasn't far out. I underestimated the value. I would be surprised if there were not a very large number of public sector people receiving or entitled to a pension of at least that.

The index linking is based on historic inflation so of course the 10% will hit the fan in a year's time.

[Kantwebefriends]

LGPS calculates 20X salary (plus lump sum) as the LTA contribution

Tat figure of 20x was selected by Treasury officials presumably with the intent of disguising what an absurdly good deal their DB pensions are (for the pensioner, I mean, not for the taxpayer who funds them).

At current annuity rates I'd think that 30x - 40x would be a more rational figure. That guess is for the case of an index-linked pension that carries a 50% widow's pension.

[Lootman]

LGPS calculates 20X salary (plus lump sum) as the LTA contribution

Tat figure of 20x was selected by Treasury officials presumably with the intent of disguising what an absurdly good deal their DB pensions are (for the pensioner, I mean, not for the taxpayer who funds them).

At current annuity rates I'd think that 30x - 40x would be a more rational figure. That guess is for the case of an index-linked pension that carries a 50% widow's pension.

My rule of thumb is that a pension is worth 25 times the annual income it produces. This is analogous to the 4% safe withdrawal rate rule.

My three pensions, when I start collecting them all and including the state pension, will yield about 50K a year, so I value the total of those at 1.25 million. Of course that needs to be adjusted depending on how the payout is uprated annually.

[xxd09]

Good way of looking at it -what I used to use in the old days
£3000 pa from £100000 more realistic now
Your pot is nearer £1.65 million
xxd09

[DrFfybes]

LGPS calculates 20X salary (plus lump sum) as the LTA contribution

Tat figure of 20x was selected by Treasury officials presumably with the intent of disguising what an absurdly good deal their DB pensions are (for the pensioner, I mean, not for the taxpayer who funds them).

At current annuity rates I'd think that 30x - 40x would be a more rational figure. That guess is for the case of an index-linked pension that carries a 50% widow's pension.

LGPS is fully funded, although it is the only one that is. Widow's pension is 1/3, not 50%, but I do think that 25-30x would be more appropriate. I don't know what multiples the other schemeds use. Police and armed forces pensions are better, as they kick in from age 60 rather than SP age, and so 35-40x is probably more like it.

They are all very good schemes, just not quite as good as a lot of people think

According to Scottish Widows annuity figures, £1m would buy an index linked annuity of £27,800 at age 66, so I wasn't far out. I underestimated the value. I would be surprised if there were not a very large number of public sector people receiving or entitled to a pension of at least that.

The index linking is based on historic inflation so of course the 10% will hit the fan in a year's time.

Moneyhelper suggests £31k index linked from SW with no dependant payout. Even at £27,800 that puts the recipients at 35+ years' service and senior levels (£55k+). Average Local Gov salary is £37k which would give a £19k pension with full service, apparently average NHS pay is £28k.
https://www.devon.gov.uk/factsandfigure ... 2019-2020/ suggests Devon Council has about 90 people earning over £55k, and there is churn in senior staff so well under half of them have been there long enough to qualify for full pension. My neighbour is retired met and on mid £20ks aged 68.

Don't get me wrong, there will be a lot of Public Servants (and London based Civil servants in particular) who will have £30k+ index linked pensions with spousal benefits which would cost well over the LTA to buy standalone, tens or hundreds of throusands maybe, but I don't think it is the "literally millions" made in the initial claim.

Paul

[Alaric]

The term “fully funded” is only meaningful

In the context of public sector pension schemes, the term means that the accrued liabilities are backed by invested assets. They are therefore on the same footing as private sector defined benefit schemes, That's disinct from other public sector schemes, the Civil Service for example, where the payments to retired recipients are financed by current employee and employer contributions and the taxpayer, No contributions from rents, dividends, interest or asset sales as would be the case in a funded scheme.

[scrumpyjack]

There are about 6.6 million people currently paying into defined benefit public sector schemes. If you add to that those who have retired and so whose pensions are in payment that must be approaching or exceeding 10 million. So it seems quite likely that the number who have or are building up a pension entitlement that would cost a million or more to buy probably is in 7 digits! Anyway it is a very large number but not worth continuing to debate. It makes the 3,100 at HL seem rather trivial!

[hiriskpaul]

My wife and I will be included in the 3100. This came about through a series of fortunate events all happening over a few years:

1) The previous Labour government brought in pension simplification rules which resulted in the launch of low cost SIPPs, an LTA peaking at £1.8m in 2011 and high annual allowances peaking at £255,000 (also in 2011).
2) 2008-2012 was a fantastic time to invest. Equities, bombed out bank prefs/subordinated debt, anything really.
3) We both had high earnings during this period which enabled us to make very good use of salary sacrifice and the high allowances.
4) We took Fixed Protection 2012, fixing our LTAs at £1.8m and fully crystallised once reaching 55. Both of us managed to do that without exceeding the £1.8m LTA.

Our "secret" was mostly about being in the right place at the right time. Something that is hard to engineer.

[gnawsome]

I have my SIP with HL and keep getting emails offering 'advice' and pushing their 'investment experts' ideas.

Whenever I get one of these I think - Are these the same 'experts' that carried on promoting Woodford's funds long after most 'advisers' had decided they were very far from being worth investing in

(needless to say I have never taken them up on their offers)

Are they reusing left-over EQUITAQBLE LIFE material?