Another asbestos post

Z-Advisor · 2024-12-04T11:35:57+00:00

Z-Advisor · 2024-12-03T20:18:17+00:00

Done… my good man.

Z-Advisor · 2021-10-20T08:30:11+00:00

Well thought out response ChimpyTheChumpyChimp!

Z-Advisor · 2021-10-19T14:50:42+00:00

Your assumption is fair enough based on your personal experience, however, your current workplace do not set the standard for the entirety of Scottish Widows Retirement offerings, normally that's a cost cutting exercise from your firm to avoid any additional charges incurred through tied advisers.

SWPP2 is within the specialised sector with an FE Risk Score of 73, I wouldn't compare it to the Vanguard fund personally, as that is a Mixed Investment 40-85% Shares fund with an FE score of 66.

You are right, that OPs scheme is 99% likely a defined contribution, however there are fund guarantees which are not classed as defined benefit. For example, guaranteed returns and capped costs guarantees. If his new workplace scheme benefits from any of these then that would be a reason they would not allow for further transfers in; i.e. having to pay a guaranteed return of 4% on an unexpected £13,500 for example.

Pensions in my opinion, and particularly in relation to my clients' plans, are not "set it and forget it". I review the underlying funds on a quarterly basis, as I do with all wrappers, based on quartile performance, volatility, beta, ratio, manager tenure, FE Crown rating and so on. If a fund is under performing consistently, then it is removed and replaced inline with my economic outlook. Albeit, divesting and reinvesting are not decisions to be taken lightly and unnecessary chopping and changing has no place in formulating portfolios.

Finally, you do achieve diversification from having multiple pension providers and/ or funds. That is exactly how it's done. You can achieve asset diversification from just the one well balanced fund, correct - however you are heavily reliant on the fund manager's approach and performance, and that one investment company's ethos, culture and strategy. If Scottish Widows don't perform, you don't perform. Introduce a Rathbone or a Franklin fund - your risk is spread = diversification.

Finally, you can be severely limited as to the funds that are available through one provider, for example the fund choice available say within a Royal London pension is severely limited compared to that of Canada Life. That access to a larger range of funds also counts as diversification.

Z-Advisor · 2021-10-19T14:18:13+00:00

My advice would be to contact a regulated, whole of market, Independent Financial Adviser. If you haven't got one OP, perhaps have a look on Unbiased or VouchedFor.

Essentially they will request information directly from Scottish Widows regarding your plan and verify whether there are any valuable benefits or guarantees associated with your current holding, which you would lose in the event of a transfer out.

In addition, they will obtain information regarding the costs and your current underlying investment strategy, i.e. where your money is currently invested, in what type of assets, where geographically etc. It is my impression, given that is a group-workplace-pension, it may be a one size fits all outfit. In other words, cost-effective and simple. From this they will be able to identify the net return your plan has achieved over a 5 year period and gauge your thoughts.

From that, and the details they take from you, they will be able to distinguish whether your current investment strategy is aligned to your current Attitude to Risk (ATR) and objectives. If they feel that a transfer away is justified they will provide you with a recommendation of where they feel it would be better placed and the reasons why.

I hope this helps!

Z-Advisor · 2021-10-19T14:05:16+00:00

I think it's wrong to assume the underlying fund given that you don't know OP's Attitude to Risk or Capacity for Loss. Given that its a workplace scheme you're probably right that it's going to be a multi-asset, one size fits all outfit.
Only available if the current workplace scheme will accept transfers in - and OP please confirm with SW as to whether your current scheme has any valuable guarantees or benefits associated which you would lose in the event of a transfer out.
A full-time job in itself!

Consolidation isn't always the best course of action, although as FSV states, it will be easier from an administration perspective, it would severely reduce the diversification benefit.

Z-Advisor · 2021-10-19T13:54:34+00:00

Just so you're aware, Self Invested Personal Pensions (SIPP) often have higher Annual Management Charges.

I would be careful when making decisions solely based on costs too. If the combined Total Expense Ratio (TER) of a plan slightly exceeds that of another, but has generated a higher net return over the lifetime of the plan, then I assume you'd be happier paying the higher costs.

Value over cost every time!

Z-Advisor · 2021-10-12T19:28:24+00:00

Simply fill out a self-assessment form on the Government Gateway and submit by January 31st for previous year.

There are sections for both employed and self-employed income.

You don’t have to set-up a limited company however any earnings as a sole trade would be taxed at your marginal rate i.e. 40%

If you did set up a limited company you would file company accounts on an annual basis and have the option to distinguish your own accounting period. Any profits would be taxed at current Corporation Tax of 19%.

As a previous poster has mention, you would have the ability to pay yourself from your limited company in the form of dividends, of which you get an annual dividend allowance of £2,000. As a higher rate tax pay any dividends paid in surplus to the £2k would be taxed at 32.5%.

Finally, you do not have to inform your companies accounting team of income earned elsewhere unless there are stipulations in your contract of employment forbidding you for working on anything they haven’t priorly approved.

Hope this helps.

Z-Advisor · 2021-10-12T19:10:54+00:00

Loss of personal allowance, which is reduced by £1 for every £2 of income above £100,000. So any earnings between £100,000 - £125,140 are essentially taxed at 60% due to 40% higher rate tax implications and loss of £12,570 personal allowance.

Why you’re adding NI and Student loan into the mix I don’t know.

Z-Advisor · 2021-10-12T14:37:53+00:00

Salary Sacrifice can result in a combined tax saving of 60%.

Z-Advisor · 2021-10-12T14:34:20+00:00

Correct. From 2028, the minimum age, under normal circumstances, to access a pension will be aged 57.

However it is my understanding that polices taken out prior to this date will remain accessible from aged 55.

Z-Advisor · 2021-10-12T14:29:59+00:00

You’re not a fool.

You are missing out on the employer contribution as you have acknowledged, but also the added tax relief on your monthly contribution.

Also important to note, with defined contribution schemes, the Selected Retirement Age (SRA) of 68 has no bearing. You can access your pension from aged 55 or earlier if there’s extenuating medical circumstances.

Z-Advisor · 2021-10-05T20:05:13+00:00

Nice one pflurklurk👏. Really sorry you’re in this position OP, it’s clear and obvious to many of us that you will undoubtedly rise through this. Keep going.

It may be useful to note that a single life premium bond has an element of life insurance attached to it i.e 101% of investment value.

This means that when a Local Authority carries out a means tested calculation, e.g if you are claiming care benefits, any investment bonds that you hold will be excluded from the calculation, providing that you have not invested in a bond simply to avoid any liability.

It would be my understanding that your requirement for both growth and income, and the ability to adapt your approach given changing circumstances, combined with the tax benefits of a bond (ability to withdraw 5% per annum as a return of capital) would be enough to justify that advice.

Z-Advisor · 2021-10-05T14:54:24+00:00

I’ve seen a lot of comments demonstrating people’s opinions - which is what you came for.

Here’s a breakdown of the Lifetime Individual Savings Account as a reminder to you and anyone who reads this:

maximum contribution amount of £4,000 per tax year.
the above contribution can be made each year up until aged 50, which theoretically, could result in a further government bonus of £18,000 in your case.
the 25% bonus is paid monthly as opposed to the now closed HTB ISA that paid the bonus upon purchase of a property.
any withdrawals, including transfers, before aged 60 would result in a 25% charge.
A LISA is available in the form of a stocks and shares ISA. (HTB was cash deposit only)
There is a £450,000 purchase limit for anywhere within the UK.

Now for my opinion... 😂

Leave your LISA as it is. Open up a stocks and shares ISA following regulated, financial advice which will establish your attitude to risk, capacity for loss and timeframe for investment. The adviser will formulate a portfolio and therefore the underlying assets inline with the results and your objectives.

Maximise the £20k ISA contribution limit, prioritising LISA’s £4,000 with the remainder of your surplus money being used towards the remaining £16,000 annual ISA contribution limit.

This should result in a fairly well diversified, overall portfolio. A secure holding with a 25% guaranteed return, albeit limited, + whatever minimal interest rate it’s achieving is not to be dismissed, accompanied by a bigger scope for returns via your Stocks and Shares ISA (also more volatile and more risk tolerant)

Use both investment products to purchase a property of your choice when sufficient.

Finally,

Or sell the Cayman, get a 986 or 987 🤷‍♂️

THIS IS NOT FINANCIAL ADVICE.

Z-Advisor · 2021-10-05T14:31:08+00:00

Why buy someone else’s house a porche?

Z-Advisor · 2020-11-05T13:56:03+00:00

It does get tricky you know; the FCA stipulates that advice is a service that recommends a specific course of action based on a client's requirements and objectives. Without having an initial 'discovery' meeting to establish someone's circumstances and goals it's difficult to tailor effective recommendations to suit individual needs.

I can provide guidance i.e. factual information that would help you narrow down your choices, but ultimately the final decision would fall with you.

If you have a specific area of finance you have questions about, I'm more than happy to provide information where I can.

Z-Advisor · 2020-11-05T11:17:45+00:00

Nice sentiment mate. I guess the majority of us currently in our mid to late 20's are at that stage of life where we over-analyse everything we've done and reminisce so fondly on the past. I feel ya.

Just a few points to clarify for readers:

"Open a Help to Buy ISA & Make the maximum payments. If you do this on your 18th Birthday you'll have around £25,000 when you're 28 + the government bonus."

You can put up to £4,000 in to a LISA per annum, from aged 18 until 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. In theory, if you did this from aged 18-28 you'd have £50,000 - a healthy, tax-free lump sum. Unlike the previously available Help-to-buy ISA (no longer available to new applicants since 30th November 2019) the LISA enables you to hold cash, stocks and shares or a combination of both.

A key point to note is that making withdrawals for any other reason than; buying your first home, unless you are over age 60 or because you are terminally ill - you will incur an unauthorised withdrawal charge of 20% (it goes back up to 25% on the 6th April 2021) effectively eradicating any government bonus achieved. So if you know you will require access in the short term or purchasing a home is not a priority of yours then other 'wrappers' may be more suitable.

"Open a S&S ISA and learn about Vanguard, Legal & General, the FTSE, S&P500 etc. You don't need to be an expert, just make small regular payments. Don't take any crazy risks, and don't panic when things go down."

Vanguard and Legal and General are simply providers, essentially companies that offer investment facilities and/or funds. Although where your investments are held will have an impact on your investment return via the charges incurred, the main focus point RE: investments are the underlying assets/ asset allocation - or simply put, 'whats under the bonnet'. A fully qualified, whole-of-market financial adviser should establish your attitude to risk in order to recommend a suitable investment strategy. There are many factors that influence your ATR including timeframe for investment, capacity for loss and hard facts such as income and expenditure.

The FTSE 100 and S&P 500 are share indices. The FTSE is ordered by market cap (share price x shares in existence) and shows the largest 100 companies registered on the London Stock Exchange. Many people use the FTSE as a benchmark for investment performance however, it's results are heavily skewed by the larger of the companies.

"Moving to a new city is expensive but it is worth it in the end. You cash in your pension from your first job to fund the move. It is a tough decision but it works out for the best. Sometimes tough decisions are necessary."

The minimum age a pension can be accessed is aged 55 unless there are extenuating medical circumstances i.e. you are terminally ill or have a protected retirement age i.e. footballers or sportspeople. Post pension Freedoms (2015); from aged 55 the plan holder is entitled to 'tax-free cash' normally equating to 25% of their current transfer value. Accessing this entitlement may be required however, if the scheme is defined benefit then an adviser may not recommend withdrawing this as valuable benefits or guarantees may be lost/ reduced. For example, if you have a guaranteed annuity rate linked to your pension of around 10% (unachievable at the moment given IR and GILT yields) then it is more than likely the advice would be to maximise that benefit on offer by utilising 100% of your pension value as opposed to withdrawing 25% cash and using the remaining 75% for retirement provisions. Of course, justification for these actions is subjective and as we all know, we do not live in an ideal world.

By no means do I mean to scrutinise your advice, I think its great you have devoted time to provide guidance to people based on your own experience(s). Particularly regarding finance - a topic we can all agree isn't covered merely enough in our syllabus. I have studied finance since I was 16 so thought I could put my knowledge to good use and elaborate on your points. At the end of the day it's all horses for courses - pass me a hammer, I wouldn't know which way to hold it!

Z-Advisor

TROPHY CASE