which stakeholder pension

Sorry to be an idiot - does she have to declare that she wants to donate £100 or £80? If she pays £100 pre-tax she is effectively only paying £80 but sending £100 to her pension. Or does she pay £80 after tax and the HMRC then send £20 to her pension?

Reply to
blackbat
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Yup - ISTR my employer setting up something along those lines.

Reply to
blackbat

:-)

She wouldn't spend it on new shoes but I'd like to keep it out of harm's way if we move house for example.

Ah, right - thanks. So, the underlying funds are still owned by my wife and she loses nothing. Unless money is in transit or she has just paid a lump sum to the Sipp and it hasn't been invested yet.

I have just posted my initial post on the TMF forums. Didn't realise you guys were regulars on there too. Don't blackball me as a crossposter!

I *think* I understand :-)

Brilliant reply - thanks for taking the time.

Fantastic. I'll have a look throught these this evening. I'm supposed to be painting the kitchen.... On the face of it though, there's a lot of high income funds there. I thought the idea was to build up funds regardless of their income/growth flavour and then buy an annuity at the end, with maybe

25% lump sum? If so why recommend High Income funds - I thought they were moreso vehicles for providing income for people that want to skim and live off their investments. If you're buying an annuity you's surely just want the best performing funds regardless of their growth or income style.

HTH?? It certainly does - thanks again.

Reply to
blackbat

There will be a form to complete. It will ask how much she wants to pay, and it will ask it in terms such as 'x per month net' in which case she puts '80', or 'x per month gross' in which case she puts '100'. In either case she will actually pay 80 and HMRC will pay 20 to the pension company.

The latter

Rob

Reply to
Rob graham

Well, I wouldn't go for a SH (too inflexible). I probably would not go for a SIPP either because I've come to the conclusion that trying to self-invest is less of a money-maker than using professionally managed funds (and I don't mean Managed Funds - if you see what I mean).

Also being lazy I would prefer to put my money into something and tend to leave it until there's a good reason to switch. I have a horrible suspicion that many people who invest in SIPPs are deluding themselves thinking they are doing better than fund managers. They may well be, if you compare them with average fund managers. But you need to look at the top 10% or so, and these can be quite consistent.

Rob

Reply to
Rob graham

High income funds are funds where the manager chooses shares in companies that tend to pay higher than average dividends. These dividends can be reinvested into the funds to buy extra units if the holder does not want the income (and this will be the case if the funds are within a pension). But the income is not fantastically higher than would be the case with capital growth funds.

There is a body of opinion (to which I subscribe) that high income funds tend to do better over the years than capital growth funds if you let the income accumulate within the fund Invesco Perpetual High Income, for example). This is partly because the shares within the fund tend to be the shares of smaller companies, which have historically been a good place to invest.

Rob

Reply to
Rob graham

The only thing here is that it might reduce her S2P entitlement slightly (because she's on a smaller income), although this will depend on whether her income is above the upper income level beyond which there's no S2P entitlement. This ought to be brought into the balance reckoning.

Rob

Reply to
Rob graham

Sure - but I wondered if I was missing something as he was recommending nearly all High Income funds.

Yup - I've held it for some years and reinvested the income.

Thanks Rob

Reply to
blackbat

gotcha

Reply to
blackbat

But it could be a restrictive option in terms of having the money available to pass on as inheritance.

I've not really used them - I bought and sold some warrants 10 years ago but that's hardly relevent - I would have recommended them alongside SD & AT had Andy Pandy not already mentioned them. I'm a little prejudiced against them because of their percentage based fees ie the Unit Trust / OEIC renewal fee - I prefer cost plus based fees.

Money at - Administrator - Sippdeal, AT, HL etc = FSCS investment sub scheme compensation £48,000 Fund manager = FSCS investment sub scheme compensation £48,000 Bank = FSCS deposit sub scheme compensation £35,000

I am, I don't know how many others are. This and TMF are imo the best places for financial advice in the UK. Crossposting is OK - finance is serious stuff so the more views the better. I would, however, have crossposted links on both as a courtesy so that people don't go over old ground. Google Groups keeps a comprehensive usenet archive which facilitates linking; this thread is -

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No worries - keep asking/internet searching until you do or you wear us out and no-one answers !

For some reason, historically, companies paying relatively high dividends, and hence the income funds which invest in them, have outperformed the rest in terms of total return (capital gain plus income). See the research papers. So it's an investment strategy known as high yield. If you don't need the income you simply reinvest it.

In theory, it shouldn't be that way because money kept with the company and reinvested (and hence untaxed) should lead to a greater return than money which is taxed and distributed to shareholders. I think I've explained it correctly, but others will no doubt dive in if not.

As for annuities, I wouldn't. Escalating annuities are a waste of space see -

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061203 I see annuities as for people who are desperate for the security of an income if you live to 105. But the state pension and in your wifes case her teachers pension handles that, so that any further investment in a restrictive environment aint great. I subscribe to the 'pension plundering' view - as early as possible, take the maximum tax free cash and use unsecured pension (aka income drawdown) to extract 120% of the equivelent level annuity amount and reinvest the excess in a more benign environment eg ISAs or using a plain non ISA account.

Thanks, it's nice to be appreciated !

Reply to
Daytona

Err, no. " professionally managed funds" as opposed to "Managed Funds"?

If I go for a Sipp then I guess I would run it in the same way as my investment portfolio below. This consists of a group of funds that hopefully give me a reasonable geographical spread.

5%ABERDEEN ASIA PACIFIC A 8%ARTEMIS UK SPECIAL SITUATIONS 11%AXA FRAMLINGTON UK SELECT OPPORTUNITIES 6%FIDELITY EUROPEAN OPPORTUNITIES 1%FIDELITY JAPAN 7%FIDELITY SPECIAL SITUATIONS 5%GARTMORE EUROPEAN SELECTED OPPORTUNITIES A 6%INVESCO PERPETUAL CORPORATE BOND 5%JPM EUROPE SMALLER COMPANIES 8%JPM NATURAL RESOURCES A 5%JUPITER EMERGING EUROPEAN OPPORTUNITIES 6%JUPITER INCOME 4%LEGG MASON US EQUITY A 5%NEW STAR EXTRA HIGH YIELD 2%NORWICH PROPERTY 5%OLD MUTUAL UK SELECT MID CAP A 7%RENSBURG UK EQUITY INCOME 5%TEMPLETON GLOBAL EMERGING MARKETS A

These are all managed funds and by keeping an eye on them I occasionally weed out the under-performing ones. I'm due a spring clean now.

I thought I'd use similar principles for the Sipp. Start out with 3 or 4 managed funds and add other funds over the years. Unless someone in here tells me otherwise.

I wouldn't want individual shares and try to beat the market if that's what you mean.

Reply to
blackbat

Don't get this I'm afraid...

Reply to
blackbat

Not if you are using, or can transfer to, a personal pension (inc. stakeholder or SIPP).

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Reply to
Daytona

"Daytona" wrote

Oh dear. 55 years until break-even? Didn't that ring alarm bells that your calcs were wrong?

You have year 1 'level' annuity payment of

7,030 used as 4,267 'income' (equivalent to 'indexed' annuity) plus 2,763 invested. OK so far.

Next year the 'level' annuity payment is still 7,030, but the 'indexed' annuity grows to 4,437, so 2,593 is invested, or 2,493 in today's money. Still OK so far. However...

2,763 invested from first year grows to 2,907 in second year, plus 2,593 invested from second year is 5,500 which is 5,288 in today's money. NOT 5,400 !!! [Looks like you forgot to convert the 2,907 back to today's money...]

The website doesn't seem to allow you to download the spreadsheet without registering, so I haven't. Can you tell us what the correct break-even duration is, when the above error is corrected?

Reply to
Tim

Right. As you say - she's already covered long term to some extent by her teachers pension and AVC, so use some creative accounting on the Sipp. Thanks mate.

Reply to
blackbat

Also if income is below the Low Earnings limit (about 12,500 IIRC) then it makes no difference. And up to about 30,000 the accrual is only 10% divided by working years (usually 49 except for older women) so it's pretty trivial - definitely not worth paying 23% NI (employee & employers).

Reply to
Andy Pandy

Sure.

Rob

Reply to
Rob graham

5.2% is the real investment return, inflation is 4%, giving 9.2% nominal investment return.

Nominal -

2,763 invested from first year grows to 3,017 in second year (@ 4% +5.2%), plus 2,593 invested from second year is 5,610.

Real -

2,763 invested from first year grows to 2,907 in second year (@ 5.2%), plus 2,493 invested from second year is 5,400.
Reply to
Daytona

What?? How do you get a guaranteed 9.2% investment return?

Reply to
Andy Pandy

Where did I say that it was guaranteed ?

Daytona

Reply to
Daytona

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