Hi all,

in heart of the bleak mid-winter here’s something to cheer you on the old pension front if you have a contracted out fund.

Following new legislation that came into effect on 1 October 2008 investors can now transfer their protected rights funds into a SIPP (self invested personal pension). Protected Rights funds are made up of national insurance contributions from taxpayers who opted out through The State Earnings Related Pension Scheme (SERPS) or the State Second Pension (S2P).

Previously these funds have been limited in the type of assets they could invest in as self investment was considered to be subject to increased risk. However the FSA introduced a new regime in April 2007 which gave consistent protection across all types of pensions including SIPPS.

It is estimated that there is between £75 and £100 billion currently sitting in these funds and in many cases they are not doing very much at all and their performance is often weak. Quite a few clients I advise have money in very mediocre funds and are therefore are delighted that they can now access different assets such as shares, gilts, unit trusts, investment trusts, insurance company funds as well as commercial property. Clients can have more control over where they invest the money or they can get their IFA or stockbroker to make changes on their behalf. This kind of control is a valuable asset these days in such volatile conditions – as is the ability to act quickly and make changes when required without delay.

A huge proportion of contracted out money is also lying in closed pension funds (closed to new investors) which tend to be very unexciting to say the least. One example is Pearl who have about £75 bn in assets with much of it in Protected Rights.

If you are one of these people it is well worth getting a proper pension transfer analysis done. It’s your pension and your future so it’s important that you get these funds working better for you and more so than ever in our current ‘chilly’ environment.

Until next time…

Hi folks,

I’ve talked in the past about a certain type of personal pension that’s proven it’s worth for those who prefer to take an active role in managing their own portfolios. Today I want to return to them because I get the feeling that they are often under reported or even maligned a little when they shouldn’t be. As a consequence those of you who are more proactive may decide that the good returns they’ve produced in the past for others are worth considering for yourself in return for a little of your own hands on activity in managing your portfolio.

So what am I talking about?

I mean investing in or transferring to a Self Invested Personal Pension (SIPP) of course.

Here’s why I think they are now good value if you like to feel in control when investing your money.

1. People are becoming increasingly wary about saving for retirement in the conventional way. Even with the recent knock to the housing market – property investment and other alternative ways of providing for when you retire are becoming more and more popular.

Additionally, concerns over possible benefit loss for those with broken work history or low incomes affecting stakeholder pensions and auto-enrolment have spurred many individuals to actively seek out flexible new alternatives to the personal pension. The SIPP is one of them.

2. They are much cheaper now – so the playing field has been effectively levelled. Easy access, low cost SIPP’s are very much a reality now.

Whereas in the past charges were generally high, now they’re often low cost (0.5% for example). In fact some don’t have any charges at all. You will however generally pay a low cost annual administration charge (although some plans such as Fidelity’s recently waived even the annual admin charge for the entire life of the plan, so shop around for the best deal. They are definitely out there). Some low cost contenders for your money are Fidelity, Hargreave Lansdown and James Hay (Santander Group).

In addition, you can now start for as low as just £50.00 a month making this type of plan accessible to just about everyone.

So how’s that as a serious contender to a Stakeholder scheme?

Cautionary word: of course you must be happy with DIY investing and your risk profile should reflect this aspect of your personality. Remember, you’ll make the choice of where you’ll put your money, so if it goes belly up you’ll only have yourself to blame! Expert advice, certainly in the first year of establishing your investment strategy must be considered an essential, especially if this type of do it yourself approach is going to be new to you.

3. Flexibility is one of the biggest benefits you may enjoy from a SIPP – many allow you access to a broad spread of investments including derivatives, private equity, commercial property, residential property trusts, exchange traded funds and even unlisted shares for example. Some regular pensions can often be locked into very limited fund choices, with stagnant or meagre market performance that reflects this lack of investment options. With SIPPs that’ll no longer concern you – in fact you’ll find you’re pretty much spoiled for choice.

Therefore, use a little due diligence beforehand when choosing the right one to suit you and you shouldn’t go far wrong .

You will need to check the following – that the SIPP you choose will actually allow you to access the asset class you primarily want to invest in because some don’t do derivatives, unlisted shares or overseas investments. Find out first and you’ll know in advance.

You will also want to check if the SIPP you’ve chosen is flexible enough to allow income drawdown. This will be important to you if you’re pondering whether an annuity is what you really want before you reach your 75th birthday.

SIPP flexibility means you’ll also be able to consider consolidating other pensions you may have into one easy to manage portfolio – most allow online, phone and postal management so keeping and eye on what’s going on once you’ve done that is pretty straightforward. If you need further information on what a pension transfer is then you can download our pension transfer MP3 here or read an extended article here.

And finally, please do remember Self invested Personal Pension’s are protected by the very same rules that normal schemes are regulated by, so if safety is of primary concern then you should really have no fear.

The biggest question you need ask yourself is whether you are a pro-active or passive person when it comes to investing – because if you are pro-active then access to this type of retirement planning vehicle just got a whole lot easier.

Hi all,

If you are one of those lucky bodkins with a NHS Pension then this involves you!

However…

I’m in a real rush tonight – I’m off to Wales for the weekend with my daughter who’s competing in a dance competition (such is a Dad’s lot, still she’s worth it!) and there’s a tiny scrap of time left to get this out to you so let’s cut to the chase…

I’ve spoken about the advantages of remaining in certain public sector pension schemes in my recent Pensions MP3 and how it wouldn’t be advisable in most cases to transfer out of such schemes as those provided by the NHS for example.

So today, I’ve an important pensions video from the BMA that you should watch if you have an NHS pension yourself.

It details the recent changes to the NHS plan and the introduction of the new ‘enhanced’ scheme – and covers things like why your contribution rates will increase, how you can improve your benefits by buying more annual payment contributions, what happens if you use the NHS income drawdown facility and whether you should transfer from the ‘old’ NHS scheme to the new improved version that’s here.

If you’re in the NHS I’d say this was required viewing.

Here’s also the link to the very handy NHS Pension Calculator.

All the best and have a great weekend.

William.