which stakeholder pension

wrote:


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
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On Fri, 30 May 2008 15:26:26 +0100, "Rob graham"

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.
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approx

break

her

SIPPs aren't always expensive, have a look at Hargreaves Landsdown or sippdeal.
H-L don't charge anything for most managed funds (unit trusts, OEICs etc) since they get the renewal commission, they also normally rebate all or nearly all the initial charge.
http://www.h-l.co.uk/pensions_and_retirement/sipp_charges.hl
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On Thu, 29 May 2008 11:14:25 +0100, "Andy Pandy"

hmm that is food for thought. Not sure I wanted any further options though :-) On the face of it a free Sipp may be cheaper than a typical 1% p/a management fee by a stakeholder. As for sippdeal, what happens if that company ceases to trade? they're hardly a household name - presumably the funds she invested in would still exist in her name and could be transferred into another Sipp.
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Just to add some more points -
Don't become fixated on the type of product - it's the fact that your saving that's important. The tax benefits of pensions and ISAs are similar - money into pensions is tax free, money out is taxable (unless below your tax free allowance). Money into ISAs is taxed (unless below your tax free allowance), money out is tax free. Pensions restrict when and how much you can take out, ISAs don't. Pensions are not included in bankruptcy proceedings or means tested benefit calculations, ISAs are.
Is her existing pension going to use up her tax free personal allowance ?
I think you've fallen for FUD as regards SIPPS.
See Sippdeal and Alliance Trust in addition to HL already mentioned.
If employers willing to contribute 6% to a personal pension, then that's quite rare I believe. Normally they limit it to group personal pensions.
The Pensions Advisory Service (TPAS) http://www.pensionsadvisoryservice.org.uk/ are superb.
also the TMF boards -
http://boards.fool.co.uk/Messages.asp?bidQ267 http://boards.fool.co.uk/Messages.asp?bidP065
hth
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On Thu, 29 May 2008 15:57:55 -0700 (PDT), Daytona

Fair enough but an ISA won't make use of the 6% contribution match from her employers. And a pension is a better discipline, she can't get her hands on it so readily should the temptation arise.

No, her previous pension is frozen now until she retires.

Will do - it's just that I've *heard* of HL, not so much of AT and nowt about Sippdeal. Do you know off the top of your head which is the biggest company of the three? What happens to her sipp if Sippdeal go under - her independent funds will still be held by the parent company (e.g. Gartmore) I guess.

Hmmm. She says both her employers are willing to do that as they don't offer a plan themselves.

Yes - I have rung them already.

Well, maybe but the TPAS said a stakeholder seems a better prospect. Maybe I rang them with that mindset. I might try another call.

Yup - I'll have a look through. Thanks for the reply.
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I think what he means is, when the pension is paid to her at retirement will it use up her personal allowance?
Rob
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On Fri, 30 May 2008 11:49:31 +0100, "Rob graham"

Aaah
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True and true again if she's not disciplined <g> !

I meant her income tax nil rate band upon drawing the pensions, but it matters not since you've confirmed the 6% employer contribution to a pension, which makes the alternative of ISAs a non starter.

They're what I'd call medium size with £4bn under administration -
http://www.ajbell.co.uk/

I'd guess AT the market cap. is £2.3bn, but that won't include assets under management/administration.
http://investor.alliancetrust.co.uk/AboutUs/KeyFacts/tabid/68/Default.aspx

Correct (and a good question!). I dealt with that here -
http://boards.fool.co.uk/Message.asp?mid 996217

Excellent news ! Perhaps times have changed and I'm a little out of date. It makes perfect sense of course, I can only think that employers I came across wanted to play the controlling, paternalistic role and try to keep what control they could of assets.

g.uk/

I'd say that they're wrong. It's simple enough to do the sums yourself -
http://sippdeal.co.uk/charges.aspx (for instance)
fwiw I've been using Sippdeal since just after they started and am almost completely content. My only minor bones of contention, which are by no means limited to Sippdeal, are cash balances that pay 1% below base - I'd prefer 1% below LIBOR, but maybe I'm being unrealistic, and equity dealing commission which is above 1% for amounts in the >£2,000 to <£4,000 range and the fact that they keep the annual renewal commission on Unit Trust/OEICS (not that I use them - I'd avoid it by using Exchange Traded Funds ETF)). I'd say it's a close run thing with AT and having had a PEP with AT I have a lot of respect for them.
Personally, at the moment, I feel that the odds of underperforming risk free investments is greater than that of outperforming and so I wouldn't invest in equities or property. I'll review when I think that the full effect of the rise in lending rates / lack of lending are apparent to business and the man on the street, it always takes 12-18 months for the full effects of such changes to become widely felt.
I'd go Sippdeal or AT and dump the lot in a cash fund, wait until pessamism abounds and invest in one of the following in order of personal preference -
High yield, buy and hold strategy http://www.fool.co.uk/specials/2006/specials060208.htm
High yield, change each year http://boards.fool.co.uk/Message.asp?mid 414020
iShares FTSE UK Dividend Plus http://www.trustnet.co.uk/etf/funds/?fund4
Jupiter Income http://www.trustnet.co.uk/ut/funds/port.asp?fund 24
Invesco Perpetual Income http://www.trustnet.co.uk/ut/funds/?fundG7
Invesco Perpetual High Income http://www.trustnet.co.uk/ut/funds/?fundG6
Barclays Global Investors (BGI) iShares FTSE 100 Exchange Traded Fund (ETF) http://www.trustnet.com/etf/funds/?fund (8
For the fundamentals of investing, see -
What Has Worked In Investing - http://www.tweedy.com/library_docs/papers/what_has_worked_all.pdf
and for glorious simplicity, see -
The High Dividend Yield Return Advantage: An Examination of Empirical Data Associating Investment in High Dividend Yield Securities with Attractive Returns Over Long Measurement Periods - http://www.tweedy.com/library_docs/papers/highdivresearch.pdf
from the long running and respected value investors Tweedy Browne (one of about 5 people/organisations that offers insight imo).
hth
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On Fri, 30 May 2008 03:52:34 -0700 (PDT), Daytona
:-)
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.

Any thoughts on Hargreaves Lansdown as a company?

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.
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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
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On Fri, 30 May 2008 15:34:45 +0100, "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
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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 - http://groups.google.co.uk/group/uk.finance/browse_frm/thread/02d71e3a9006bd ce/7b464f03b656b4c4?#7b464f03b656b4c4

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

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 - http://boards.fool.co.uk/Message.asp?mid 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 <g> !
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On Fri, 30 May 2008 10:42:12 -0700 (PDT), Daytona

You said keep asking so I will. I thought one had to buy an annuity, although you can take 25% lump sum.

Don't get this I'm afraid...
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Not if you are using, or can transfer to, a personal pension (inc. stakeholder or SIPP). http://www.pensionsadvisoryservice.org.uk/personal_and_stakeholder_pensions/retirement/

http://www.pensionsadvisoryservice.org.uk/personal_and_stakeholder_pensions/income_drawdown/
--
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On Fri, 30 May 2008 14:22:46 -0700 (PDT), Daytona

Oh I see.

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.
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"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?
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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.
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What?? How do you get a guaranteed 9.2% investment return?
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wrote:

Where did I say that it was guaranteed ?
Daytona
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