Reply to: Pensions - managed vs unmanaged

[Fred Bloggs]

See those words there..... Tracker, unit ,oeic etc

I don't know what any of them mean!
Time to get reading methinks

Look for the free SIPP and ISA downloads available at any fund supermarket website. Hargreaves Lansdown's guides are probably the best starting point. You will quickly be up to speed with the basics.

[youngguy]

Seriously, you don't need to know much about funds. Stick the money in World Index tracker and sit back to wait for pot to grow and very low cost. Or, stick the money in a long time respected unit/investment trust, then sit back and wait for the pot to grow. Simples. IFA's want you to think it is dead complicated, don't they?

See those words there..... Tracker, unit ,oeic etc

I don't know what any of them mean!
Time to get reading methinks

[Fred Bloggs]

I pay my IFA 1% to service my investments. I am also thinking about changing over to a tracker fund and not using him anymore, but the investments he uses perform better than trackers, so make sense to stay with him (I think).

Here is something to think about - you pay your IFA 1% a year. The funds he invests in will charge anything up to another 1.5%, call it 1%. And the SIPP or ISA platform may well charge anything up to maybe another 0.5%. So, I make the total annual charges to your pot maybe 2.5 to 3%.

When you retire, it is commonly thought that the maximum "safe" draw down % each year is 4% or maybe less. And you pay income tax on your SIPP derived income. The tax and the charges aren't leaving an awful lot left out of that 4% draw down are they?

[kaiser78]

As a complete non-expert, I think there's two separate things you can potentially pay for with this kind of stuff:

1) your typical IFA - they'll discuss your current and future plans, what your attitude to risk is, when you want to retire etc. They should also be reasonably savvy on the tax side of investments. They can help advise how much to put into the pension pot.

2) your fund manager - you won't get any advice from this. They will invest the money in your pot in a way that hopefully beats the market, using their knowledge and experience of picking shares.

Up to you whether you have either/both.

Many on here will say that the latter kind will very rarely be able to beat the market, especially when their fees are taken into account, and would therefore just recommend passive trackers. I'd tend to agree with them. The former it really comes down to how savvy you are with this kind of thing, and if you're putting in sizeable sums and do it wrong (eg breaching annual cap or something like that) then you could be heavily stung.

I read that rule of thumb should if value of investments is greater than £100k then take the advice of an IFA. If less than £100k then tracker funds would be sufficient.

[kaiser78]

Hmmm, I have a pension which I put 40k into pa. Charges are 1.5 but I always took the view that I'd be willing to pay someone to do the thinking and it's a tax efficient way of ensuring the ltd doesn't store too much cash. I know JACK about funds etc and always figured I'd probably lose more than someone else charges. Now I am not so sure...

I pay my IFA 1% to service my investments. I am also thinking about changing over to a tracker fund and not using him anymore, but the investments he uses perform better than trackers, so make sense to stay with him (I think).

[Maslins]

As a complete non-expert, I think there's two separate things you can potentially pay for with this kind of stuff:

1) your typical IFA - they'll discuss your current and future plans, what your attitude to risk is, when you want to retire etc. They should also be reasonably savvy on the tax side of investments. They can help advise how much to put into the pension pot.

2) your fund manager - you won't get any advice from this. They will invest the money in your pot in a way that hopefully beats the market, using their knowledge and experience of picking shares.

Up to you whether you have either/both.

Many on here will say that the latter kind will very rarely be able to beat the market, especially when their fees are taken into account, and would therefore just recommend passive trackers. I'd tend to agree with them. The former it really comes down to how savvy you are with this kind of thing, and if you're putting in sizeable sums and do it wrong (eg breaching annual cap or something like that) then you could be heavily stung.

[Fred Bloggs]

Hmmm, I have a pension which I put 40k into pa. Charges are 1.5 but I always took the view that I'd be willing to pay someone to do the thinking and it's a tax efficient way of ensuring the ltd doesn't store too much cash. I know JACK about funds etc and always figured I'd probably lose more than someone else charges. Now I am not so sure...

Seriously, you don't need to know much about funds. Stick the money in World Index tracker and sit back to wait for pot to grow and very low cost. Or, stick the money in a long time respected unit/investment trust, then sit back and wait for the pot to grow. Simples. IFA's want you to think it is dead complicated, don't they?

[Lockhouse]

I've decided recently to go with managed. I'm 55 this year, didn't have a proper pension, had a fair amount of money in the company and needed assistance with an unwinding strategy. The tax advice and assistance in getting the timing correct were worth the charges.

[youngguy]

Hmmm, I have a pension which I put 40k into pa. Charges are 1.5 but I always took the view that I'd be willing to pay someone to do the thinking and it's a tax efficient way of ensuring the ltd doesn't store too much cash. I know JACK about funds etc and always figured I'd probably lose more than someone else charges. Now I am not so sure...

[Fred Bloggs]

I like passive global tracker funds. It's comforting that I'm not heavily exposed to one particular sector or region, although looking at how much the stock market has risen over the past 5 years, I can see a fall fairly soon.

But I know absolutely zero about trading so I might be wrong. It's more me looking at the historical graphs and thinking "hmm that seems too good to be true".

It's true. It's the eighth wonder of the world - Compound Interest.

[Fred Bloggs]

I have had a SIPP for 10+ years, I've changed my mind a few times along the way about "investment policy", but I'm also gravitating towards the "single global tracker"; partly inspired by recent posts on Monevator. Every time you change your mind, of course, you infer a few extra costs in dealing fees and or/pension transfer fees. I guess the investment side of it has been something of a "hobby" at times over the years.

If I were "starting again", I might not even bother with the SIPP, I'd be looking at Cavendish Online for the lowest-cost _personal_ pension I could find - which might of course turn out to be a SIPP - and plugging away with the contributions for a couple of decades.

Sure, I think the two best options now for contractor pensions are SIPPs with Cavendish (for a % fee, but almost half that of HL) and for bigger pots, II (for flat fee SIPP).

[BigRed]

looking at how much the stock market has risen over the past 5 years, I can see a fall fairly soon.

Most of the recent rise is to do with the decline in the pound and the companies essentially being global

[Ebenezer]

I have had a SIPP for 10+ years, I've changed my mind a few times along the way about "investment policy", but I'm also gravitating towards the "single global tracker"; partly inspired by recent posts on Monevator. Every time you change your mind, of course, you infer a few extra costs in dealing fees and or/pension transfer fees. I guess the investment side of it has been something of a "hobby" at times over the years.

If I were "starting again", I might not even bother with the SIPP, I'd be looking at Cavendish Online for the lowest-cost _personal_ pension I could find - which might of course turn out to be a SIPP - and plugging away with the contributions for a couple of decades.

[blackeye]

I like passive global tracker funds. It's comforting that I'm not heavily exposed to one particular sector or region, although looking at how much the stock market has risen over the past 5 years, I can see a fall fairly soon.

But I know absolutely zero about trading so I might be wrong. It's more me looking at the historical graphs and thinking "hmm that seems too good to be true".

[cojak]

‘Rip-off’ fees of top 10 pension fund provider | Money | The Times & The Sunday Times

"This article is the subject of a legal complaint from St James’s Place"

but it was re-reported here:

https://www.moneymarketing.co.uk/sun...-over-charges/

They don't seem to get a good press regarding fees:

https://www.google.co.uk/webhp?sourc...s+place+fees&*

Yes - their sort is highly litigious.

One the schemes went after CUK in 2013 for putting their names forward in the same breath as EBT schemes (a previous incarnation was an EBT).

Their trajectory was identical to every other EBT scheme, however...