How to Start a Pension in the Face of Economic Armaggedon - The Bear and Badger

LivDiv

I'd sooner invest in China than the UK.

I have noticed my funds doing well recently. USA has picked up. An Asia Pacific fund is doing well. The star is an Indian fund I picked up when we got Trussed, absolutely smashing it.

Armitage_Shankburn

Funkstain wrote:

Not that is pertains much to pension investments but your comments about China are interesting given how they control, what, 75%+ of the world’s resources and early supply chains needed for green energy?

If anyone is serious about transitioning from fossil fuels (haha yes I know lol) China have serious leverage. Maybe they have an actual plan to deal with manufacturing moving on (which certainly seems the case: exports down double digits YoY is an astonishing figure post Covid)

The transition towards green in china seems to correlate with increasingly belligerent rhetoric towards it (and alliances, exercises etc)

Almost as if our lot are in cahoots with hydrocarbon

Funkstain

You’re such a conspiracist honestly

SpaceGazelle

China are getting an unfair deal for no good reason. America was always nervous about the reliance of it as a manufacturing powerhouse and seem to be using the post covid/ukraine era to fuck them up.

They're obviously worried about Taiwan too, probably with good reason. There's only really 4 major chip maunfacturers left in the game and 2 are in Taiwan.

I can't see any scenario that China isn't fucked no matter what they do. Maybe a green new deal which they're doing anyway might help a bit. They've done this weird thing of being a sort of strict dictatorship yet sort of full on capitalism and it seems like the worst of both worlds sometimes. Both seem intent on fucking the other up.

I found this guy while I was looking into China. He knows bits about many things but doesn't seem to be an expert in anything but I find that useful in looking at long term trends. Basically he uses common sense which is absolutely the best thing for also buying shares.

He might grate on some but I reckon he's right.

GooberTheHat

Armitage_Shankburn wrote:

Funkstain wrote:

Not that is pertains much to pension investments but your comments about China are interesting given how they control, what, 75%+ of the world’s resources and early supply chains needed for green energy?

If anyone is serious about transitioning from fossil fuels (haha yes I know lol) China have serious leverage. Maybe they have an actual plan to deal with manufacturing moving on (which certainly seems the case: exports down double digits YoY is an astonishing figure post Covid)

The transition towards green in china seems to correlate with increasingly belligerent rhetoric towards it (and alliances, exercises etc)

Almost as if our lot are in cahoots with hydrocarbon

Why would you think Rishi "100 new oil/gas licences" Sunak was in bed with the Fossil dogs?

Diluted Dante

I knew it was his fault.

Armitage_Shankburn

Funkstain wrote:

You’re such a conspiracist honestly

It's in my blood

drumbeg

Funkstain wrote:

The tax free nature of a pension / self invested personal pension (SIPP) means it thrashes the pants off any other investment, especially if you’re a higher rate tax payer: effectively for every 80p you put in you get 20p back in tax as a lower rate and 53p back as higher rate.

What happens when you are bang on the limit of the basic rate? i.e. If you earned a penny more it would take you into the higher rate threshold. Does this mean that pension contributions made by your employer would benefit from the higher rate relief?

I'm guessing so, because if you were to take those contributions as income instead, then the higher rate tax band would apply.

Armitage_Shankburn

GooberTheHat wrote:

Armitage_Shankburn wrote:

Funkstain wrote:

Not that is pertains much to pension investments but your comments about China are interesting given how they control, what, 75%+ of the world’s resources and early supply chains needed for green energy?

If anyone is serious about transitioning from fossil fuels (haha yes I know lol) China have serious leverage. Maybe they have an actual plan to deal with manufacturing moving on (which certainly seems the case: exports down double digits YoY is an astonishing figure post Covid)

The transition towards green in china seems to correlate with increasingly belligerent rhetoric towards it (and alliances, exercises etc)

Almost as if our lot are in cahoots with hydrocarbon

Why would you think Rishi "100 new oil/gas licences" Sunak was in bed with the Fossil dogs?

I don't mean it like that. I mean, like, US hegemony is so nearly entirely based on energy production that if China was to actually transition to other sources of energy that would be a pretty big problem - so my conspiracy theory mind comes up with correlation = causation.

drumbeg

Been reading last few pages here. I'm forever wondering if my pension is distributed in the right way. Here is the way it's split at the moment. Main worry is not having too much in UK, but looks like that only makes up 20%ish of the fund. Here is the breakdown. Any thoughts welcome...

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-100-equity-fund-accumulation-shares/portfolio-data

On another note, I cut my financial advisor loose some time ago because he just set me and the Mrs up with one fund each and felt like I was paying him for nothing. Spoke to another advisor and he said it was unusual to pay someone and not have them manage an actual bespoke portfolio. Either way, quite happy with the way this fund has performed.

Funkstain

How old are you - vanguard 100 is a cheap (0.22%), passive fund but is 100% equity (quite well diversified imo) so it's great for those who are some years from retirement, it's an easy fire and forget

drumbeg

Funkstain wrote:

How old are you - vanguard 100 is a cheap (0.22%), passive fund but is 100% equity (quite well diversified imo) so it's great for those who are some years from retirement, it's an easy fire and forget

43. Also been wondering whether to switch to 80/20 stock/bond split. I read that bonds are perhaps a better buy now.

Funkstain

eh who the fuck knows. only bond traders think bonds are cool. in the long term, equity is your friend, especially with revenue from dividends, in my view, and my portfolio is also passively invested in tracker funds like yours, and I won't start moving that out in to less volatile stuff until I'm nearer mid fifties. So - FWIW, and this is not fucking financial advice, I'm doin the same as you: 100% equity, global with an emphasis on US stocks, cheap tracker fund, cheap SIPP wrapper, contributing monthly, waiting to die but hopefully with a champagne cocktail in hand

drumbeg

Yeah. Sounds like we are pretty aligned for the moment. Mine isn't a SIPP, it's a personal pension, which means it's a bit of a pain switching contributions and funds (have to fill out big forms). It's one of those platforms that's more set up for plans that are managed by advisors. I'm paying a platform fee, which I think is something I should sort out. It may as well be a SIPP.

Funkstain

100% sounds like it should be a SIPP. You can invest directly using any number of cheapo platforms with access to vanguard (and other) passive funds, this should be the priority. Any charges drag your returns down - moving to a cheap platform enabling quick and cheap fund changes is important

Funkstain

Fwiw I chose AJBell as my platform with just 0.25% platform fees (to add to your vanguard 0.22% fund fee). Anything with total costs below 0.5% is good with me.

You can save even more if you use Vanguard SIPP but you can then only invest in vanguards funds (no shares, no other funds) which may be ok for you

Diluted Dante

Which reminds me, when my Dad was in hospital, I found out he has a pension with just under 5 grand in it, which hasn't been paid into for years. He's getting charged more a year than it earns. He's 62. What's the best option for him?

Funkstain

Sorry , a few more things. Your fund is not amazingly cheap. You can get vanguards with a similar profile for much less annual cost (more like 0.1-ish%). May be worth a look if you examine differences between funds when you are on a platform allowing quick and cheap fund switches.

Funkstain

Diluted Dante wrote:

Which reminds me, when my Dad was in hospital, I found out he has a pension with just under 5 grand in it, which hasn't been paid into for years. He's getting charged more a year than it earns. He's 62. What's the best option for him?

Move it. Open a cheap SIPP (aj Bell is one option), and “transfer in” the pension. This is a relatively straightforward online process these days, for AJ Bell it’s here: https://www.ajbell.co.uk/transferring-to-us

Then when transferred move the money into a cheap lowish risk tracker fund (uk equity is not lower risk than US; bonds are lower risk than equity; find something with a mix that costs less than 0.2% a year, vanguard has something for everyone)

drumbeg

Funkstain wrote:

100% sounds like it should be a SIPP. You can invest directly using any number of cheapo platforms with access to vanguard (and other) passive funds, this should be the priority. Any charges drag your returns down - moving to a cheap platform enabling quick and cheap fund changes is important

One thing I didn't mention. I work through a limited company and my company (as my employer) pays into my pension on my behalf. Not sure I can do this with a SIPP. Will do some research.

LivDiv

Im not sure if you will be able to treat a SIPP like a Workplace Pension, with the employer contributions and all that. Genuinely dont know. Or if its even worth doing. A question for your accountant if you have one.

If you contribute out of your salary you can either claim that through your platform if they offer that service (Hargreaves Lansdown just add 20% onto what I put in and deal with the rest, Im sure there must have been some hoops to jump when I set that up but I cant remember).

Or you can claim that when you do your self assessment.

drumbeg

It's simple at the mo as my Ltd just pays into the pension and I just deduct corp tax on the company side. i.e. I don't have to worry about accounting for it on my self assessment.

Main thing is moving to a platform that doesn't cost me as much.

hylian_elf

drumbeg wrote:

One thing I didn't mention. I work through a limited company and my company (as my employer) pays into my pension on my behalf. Not sure I can do this with a SIPP. Will do some research.

Sounds like you're in a group personal pension plan or a stakeholdr or something, which your empkoyer provides access to? re SIPP, you can, your employer will just have to make an exception for you and manually send your conts to your SIPP rather than auto via payroll to their chosen provider. Or something. I assume you will need a good reason to give to them to make an exception for you.

hylian_elf

Oh wait you said worth through a Ltd company, not for. Ignore me.

drumbeg

hylian_elf wrote:

Oh wait you said worth through a Ltd company, not for. Ignore me.

Same thing. I am employed by the Ltd company, but I am also the company director.

The pension started off as a stakeholder pension plan through an old job, then later on I transferred it to a platform. Not sure what the right term is, but on new platform it's called "Collective Retirement Account".

LivDiv

Ah ok. Lots to weigh up there, much of which will be personal to yourself and your income.
I think it would be wise to speak to an accountant to get the balance right, it'll be worth the one off fee.

poprock

My workplace pensions are a mess. Current employer has me set up with Nest, which is fine. But I have two legacy pensions from my previous employer, where the in-house accountant was … less than helpful. So I have pensions with Aviva and Legal & General sitting around not being contributed to.

I fancy combining them. Is there any reason I shouldn’t roll them both into the current Nest pension? Or any particular rates/details I should check on and compare before doing so?

My pension pot is tiny, so whatever I do is relatively low risk. There isn’t much to lose.

drumbeg

Yeah, like I mentioned before, I got rid of my financial advisor as I didn't think he was doing anything (other than take a monthly %!).

My accountant (separate to advisor) says the way the contributions are set up to be paid from Ltd is optimal.

drumbeg

poprock wrote:

My workplace pensions are a mess. Current employer has me set up with Nest, which is fine. But I have two legacy pensions from my previous employer, where the in-house accountant was … less than helpful. So I have pensions with Aviva and Legal & General sitting around not being contributed to. I fancy combining them. Is there any reason I shouldn’t roll them both into the current Nest pension? Or any particular rates/details I should check on and compare before doing so? My pension pot is tiny, so whatever I do is relatively low risk. There isn’t much to lose.

You could look into something like PensionBee to combine them? I've no experience of it, but it sounds worth investigating.

Funkstain

Ah! a dirty contractor, thought they'd got rid of all you with the IR35 bullshit.

Anyway I am paid by my company and it makes pension contributions for me. Not all SIPP platforms offer company payments. PensionBee do, and they are not expensive: 0.5% for standard tracker, 0.75% if you want fossil-free tracker; that's all in, including fund cost, and it's halved for any amount over £100K which for larger pensions really is quite cheap.

You contribute from your limited company directly:https://www.pensionbee.com/pensions-explained/self-employed/contributing-to-your-pension-from-your-limited-company

Others also offer this service - when I was looking, some of them required a form to fill in which is way too much hassle in the 21stC - that was intelligent investors if I remember correctly. AJ Bell also require a form which sucks imo: https://beta.ajbell.co.uk/pensions-and-retirement/pensions-explained/employer-pension-contributions

Whether it was worth doing: absolutely. Employer pension contributions are an expense, which means you don't pay corporation tax on them. You don't have to do anything on the self-assessment / tax claiming side if you're high rate payer. It's the easiest and most cost effective way to contribute to your pension as a limited company contractor.

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