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LLOYDS is going to FLY

lse:lloy

#2418

OK @swamp_rat, Just a couple more points on SIPPs from me and then I’m going to shut up as I’ve reached the limits of my knowledge:-

SIPPs are there to help you save for retirement, they aren’t just money making schemes. The government provides its contributions to help you fund your retirement, especially with the self employed in mind. BUT once you’ve put money in YOU CANT TAKE ANY OF IT OUT TILL YOU ARE AT LEAST 55. At least that used to be the situation – it might have changed but I don’t think so. Really not sure how this fits with buying a property and putting it in there – and certainly not with using SIPP money to pay for renovations.

You are clearly developing an elaborate scheme for using a SIPP to your advantage, that’s fine. BUT you really MUST talk to a SIPP specialist who can provide you with up to date and informed advice on your proposed scheme. You would be foolish in the extreme to embark on this based on inputs from a few people on an investment discussion board – doing so might lead you into making a very expensive mistake indeed. And not all SIPPs are exactly the same so you might need to talk with more than one.

There ARE no easy answers in this world. YOU NEED TO DO COMPREHENSIVE RESEARCH TO ENSURE THAT WHAT YOU WANT TO DO IS FEASIBLE. YOU SHOULD NOT MAKE ANY FINAL DECISIONS BASED ON THE INFORMATION THAT HAS BEEN PROVIDED HERE.

That said it is good to hear that you are interested in SIPPs and intend to take the matter further.

ATB

Pref


#2419

Thanks again @PrefInvestor1 and @J_Westlock, her indoors hasn’t knocked off work just yet so I managed to read replies.

One quick though after reading into sips further is a loophole on withdrawal fees in the future. Surely you can ignore withdrawal fees and concentrate on annual fees, trading fees and deposit fees if they apply. Then use the cheaper option of transferring to a provider with fair withdrawal fees nearer the time at a much reduced transfer cost.

BTW, would you know a sipp specialist, I would pay a fee for good advice in this department. I am based in West Yorkshire so Leeds and Manchester are both easily accessible.


#2420

Don’t you have a company accountant?
They will be well used to Ltd companies paying pension contributions and the tax implications.

Personally, I would knock on the head all this stuff about putting property into a SIPP… that is a specialist thing.
The rest ain’t that difficult and I’ve been doing it for over a decade now.


#2421

56.45 .

Down 1.35 % and heading to it s appointment with 55.

The only truth is the tape

soi


#2422

It could be 57 if @swamp_rat is young enough to have been caught by that (proposed?) change.

“The age at which you can access your private pensions is 55, and is expected to rise to 57 in 2028. The UK doesn’t have a default retirement age anymore, so you can choose when to retire.28 Mar 2019”

One of the reasons I avoided putting money in pensions was because I never trusted that things would just stay the same, despite assurances from those trying to sell me policies.

Sure enough my private pension access (now SIPP) was pushed back to 55 from 50 (with just 7 years notice) and if we hadn’t had all this government Brexit mess I’m sure the law would be 57 by now for a certain age range (it might have been done, younger people need to check), and NO GUARANTEE that it wont get pushed back further yet. The only comfort is that the closer you get to the age the less likely you are to be caught by any change.

Similarly the state pension age has been pushed up to 67 for me, and 68 for younger people. Before May called her general election every indication was it was set to to go to 70. I believe that is inevitable, although life expectancy has taken a small step backwards in recent figures. 70 is beyond the life expectancy of males in some parts of the country.

Limits on immigration will push the retirement ages up further in theory, although I very much doubt any government is going to really limit numbers entering the country and paying N.I. contributions. In fact immigration is the easiest way to raise GDP figures governments can then take credit for. Many of those immigrants themselves are going to very probably end up in a pension crisis in another 40 years or so the way things are set up currently.


#2423

No

You are posting false info/suggestions.

Also some might find the use of the word dingbat offensive.

How about posting your views in a polite manner even though they are totally wrong.

I wish ii would bring back the ignore function.

soi


#2424

Hi @soi, I looked up the official definition of “dingbat” in the Oxford English dictionary. This gave the meaning as:-

A stupid or eccentric person.

Coming from the poster concerned this starts to make sense !. Unlike many of their posts…

ATB

Pref


#2425

Well you are obviously right there but ultimately the Government of the day can pass laws to do pretty much anything.
As an example, they could eliminate the ISA tax shelter and also the divi allowance… which would suddenly expose large numbers of investors to an increase in income tax.

You can only work with the rules as they are today and take advantage of the tax breaks where they exist and whilst they do.


#2426

Hi Pref,

I expect that there are many of us who were in good occupational pension schemes, who never gave other schemes, including SIPPs any thought.

Many occupational pension schemes also allowed AVCs to significantly enhance one’s retirement income.

In any case, SIPPs weren’t introduced until the very late 1980’s, and the take-up rate then was nothing like it is today.

Some of us would already have had many years in employment by that date, and the good occupational schemes (especially those providing “final salary” pension benefits) performed really well, and many pensions still tend to be index-linked - some to CPI, others much better.

Just picking up on a another topic on this “multi-purpose” thread, all of us have considerable exposure to the mighty greenback (US$) in our everyday lives, and especially through our investments, including several FTSE 100 companies, which report and declare dividends in that currency.

I am convinced that some of the high yields quoted are partly due to the strength of the dollar against the pound, or putting another way, the weakness of sterling against other currencies since the BREXIT referendum.

The HSBC dividends have certainly much improved, because of the exchange rates since then, and as the share price is also relatively low at the moment, dragged down a bit further by the poor third quarter update, the yield is as good as it has been for a long while.

This year, we will have increased our number of shares by over 6% simply by taking scrips, and for the current dividend payable on 20th of this month, we are taking a bigger proportion in cash than we did for the previous three dividends.

One of the best ways to reduce any future IHT liability is to give the money away during our lifetime, then live for a further seven years, and in that way we also have the pleasure (or otherwise) of seeing others benefit from our money.

Obviously we need to retain sufficient funds to ensure that we are adequately provided for in our old age (if we live that long).

My Mum is 96, and currently in a nursing home, so we are very aware of (the potential) costs of old age.

In about 1970 my Gran gave each of us (her three grandchildren) £500, which was a big help in putting down a deposit for the first house we bought in 1978, which sadly she never saw - as she died just before we took possession of the property.

Now that Premium Bonds can be given to any child (under 16) for as little as £25, up to (I assume) the maximum holding per individual of £50,000, there is potential for low-risk gifts.

We each need to make the decisions best suited to our own circumstances, appetite for risk, and how simple or complex we are willing to make our financial affairs.

Once our time is up, someone else will have to deal with what is left - we certainly can’t take ANY of it with us!

Have a good weekend.

Regards,

Steve


#2427

Yes, I agree and also about the danger to the ISA allowance especially, which , at a current level of the average salary after tax, is offensively high, I would suggest.

Specifically to do with someone considering a SIPP in the way @swamp_rat is, requiring a lot of effort and forward planning, I think its valid to point out that the change from 55 to 57 at a minimum should be taken into account.

If It didn’t happen, it was about to and surely will (because the maths hasn’t changed) once we have a government that has time to get down to normal business.


#2428

I wasn’t sure what you meant with the above @swamp_rat but just as when you selected an ISA provider… similar criteria need to be looked at with your SIPP provider.
Some of this will depend on your intended portfolio breakdown between stocks and funds (they usually have different ongoing charges for both, different trading fees, different volume discounts, discounts across other trading accounts etc… so you’d need to have a go at modelling that yourself.

Personally, if I was choosing a SIPP provider again, I’d go for AJ Bell (and not the one I actually do use)… maybe at least you should compare/contrast their charges against others ( www.youinvest.co.uk/sipp/charges-and-rates )

You also mentioned about SIPP contribution carry forward… I didn’t quite follow your figures… but these are the rules:

  • you must make the maximum allowable contribution in the current tax year (£40k at mo) and can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago.
  • You can’t receive tax relief on contributions in excess of your earnings in a tax year
  • If a particular tax year’s unused annual allowance is not fully used, it can only be carried forward for up to three years, after which it is lost.

#2429

Equally, the divi allowance was being dropped from £5k to £2k, but I think that may have not been implemented because a general election was called by May. Presumably anyone who has recently filled a tax return in and has a high yielding portfolio will be able to tell us the current situation on that.


#2430

Try looking at the very good HMRC website for details, and you will see that the drop in allowance has been valid for quite some time.


#2431

Hi @StevesShares, Yes I certainly remember thinking for a long time that SIPPs were only for the self employed. The last N years that I worked I used the company’s salary sacrifice scheme, I asked them to pay me a salary fixed at £30,000 (which meant I paid no higher rate tax or NI) and ALL of the balance of my actual salary (a significant sum) went tax free into my pension. Perhaps I couldn’t have done that much better in a SIPP……

Sadly there are few defined benefits based company pension schemes left now – outside the public sector anyway. The Civil Service scheme is a good one, but then working there the salary levels were always depressed. Most companies have moved people onto defined contribution schemes now, leaving all of the investment decisions to you. If you’re lucky you might get some employer contributions.

As for inflation increases to your pension, you might get that in a defined benefit scheme but not otherwise. I bought an annuity with most of my company pension (nobody does that much anymore) and the cost of inflation protection was prohibitive and still is I think. These days perhaps half of our income is inflation protected which isn’t too bad I guess.

But it’s the IHT SIPP benefit that I’m mostly missing now, but only if you die before you are 75. I might make that the way things are going, who knows. Yes I am fully aware of the giving away money rules. Trying to determine how much you might need to live out the rest of your days isn’t an easy sum though, and the kids won’t be pleased if we have to ask them to support us in our fading years just because we gave them our money now. Not saying it’s a bad idea if you have the resources to safely do so you understand.

Yes you probably picked up on the discussion of USD exposure earlier in this thread. While I am generally in favour of both sector and currency diversity exposure in ones portfolio I personally am not in favour of moving too far in that direction ATM, just in case the GBP stages a significant recovery. I am conscious of the fact that a fall in the GBP against the USD is an inflation driver, that you cannot avoid that and that you need a rising income to safely cope with it. However taking too much currency risk by holding directly USD priced assets might result in capital losses (or gains admittedly) and currency conversion costs, whereas it seems to me that holding GBP priced assets avoids those issues – but could leave one exposed if inflation rises significantly. I reckon I have about 30% exposure to the USD in terms of overseas holdings and or stocks paying dividends in USD, right now I am not comfortable with increasing that. Others see things differently, I quite understand.

ATB

Pref


#2432

Hi Pref,

I don’t know when you retired, or indeed bought your annuity, but before the 2008 financial crisis, annuity rates were good, and at one time people seemed to have little choice but to by an annuity.

They are certainly out of favour at the moment, because annuity rates seem to reflect the current era of very low interest rates!

There was a time when many people had a “job for life” and their companies used to offer very generous “final salary” pension schemes, which provided a fabulous retirement income.

As you say, that tends to only be available within the public sector these days, and many people with young families, large mortgages and other commitments, do not have the spare resources to put away as much as they should to provide a decent living in retirement, so they end up “trying to play catch-up” in their final years of working life.

Not only are pensions important, making a will is also vital. I remember many years ago, when a friend of the family, who had a good bakery business (and shop), died intestate, it caused all sorts of problems, and all of us very quickly made basic wills.

For those with minor children, it is also important to make provision for their care (including who will look after them) in the even of both parents passing away before they reach the age of majority.

We certainly did that at the time, but when that no longer applied to us, the wills were updated to reflect those (and other) changes.

It is also important to make sure that whoever we would like to appoint as executor(s), agrees to do so, and know(s) where to turn for professional help, if necessary.

Although we haven’t done it for ourselves as yet, a Power of Attorney is something well worth considering, in the event we become incapacitated.

We are certainly very glad that my sister has the appropriate P o A for my Mum.

Nothing is ever very simple these days!

All the best,

Steve


#2433

Soi, at 55 I go long heavy


#2434

Hi All, So I was sitting watching the news tonight, full of all the usual political BS when I thought to myself “What am I going to do to my portfolio on the morning after Dec 12th if (horror of horrors) Labour get a majority”.

Likely consequences for the markets I think are:-

  1. FTSE will drop maybe 1.5-2% ?. Some stocks will be hit worse than others but likely the hit will be across the board.
  2. GBP will drop also, probably back down to 1.2 or lower.
  3. Longer term interest rates will rise as will taxation (but not immediately)

So what does one do to protect against this outcome ?. Cash out (either fully or partially) ahead of the election ?. Move into overseas holdings ?. Hold in the expectation that things will recover after a few days - I don’t think so…

Btw I don’t see LLOY being any exception given labours hostility to the banking sector !.

What if anything are YOU going to do ?. Pretty obviously soi is going to short everything in sight, but what about everyone else ?.

Be interested to hear people’s views.

ATB

Pref


#2435

Pref,

I don’t pick up any Labour antipathy to the banking sector, but the main worry is that in the event of Brexit there could be a collapse in confidence in the UK economy and a recession. I think that the treats to the utilities from a Labour victory are more significant.

Frog in a tree


#2436

Hi Frog, Well if you google “labour banking sector” you will be presented with a large number of articles in which labour policy might significantly impact on the banking sector. So I really don’t think that what you say is correct, banks will take a hit just like everything else - yes maybe the re-nationalisation targets will be worst hit, but that’s not really a big surprise is it. Anyone still holding those is playing “election russian roulette” IMHO !.

ATB

Pref


#2437

Maybe initially, but it wont last - because most of the FTSE 100 doesn’t make its money in the UK. I agree with Frog, the utilities will be hit worst, but make no mistake they’re already down in value because of the threat from Labour policy initially, going back to about 2014, and then from the Tories also deciding that a 5% yield was too much - apart from their 5% VAT on gas and electricity, of course, which they’ve never offered to remove when arguing prices are too high for the consumer.

Don’t forget UK business pays some of the highest utility rates in the world when trying to compete also - or at least that’s what they tell us over the years, and I assume they’re not lying.

Rising interest rates would be good for the banks (and savers), especially banks like LLOY which is now basically a UK-centric retail bank. The higher rates go, which will be dictated by the economy, the more money the banks will make. Its just a fact of banking life.

Ther spending plans of both Labour and the Tories look set to stimulate the economy at last. Unfortunately they both seem set on hamstringing us with Brexit at the same time.

The Tories are still pretending austerity has got us into a position where we can now spend prudently, but if you listen to foreign economists with no axe to grind its pretty obvious they think austerity was a mistake and the UK has missed out on 10 years of the ability to borrow at record low rates and could have been putting the country to rights all through that time.

That isn’t what a lot of the same economists were saying then, of course, but with hindsight there seems to be 100% agreement on the old ‘supply side’ solution.

The main danger is that going large, playing catch up, will see massive waste and inefficiency from the beginning. The Tories will also spend the vast majority in London and the home counties, further unbalancing the economy which should be serving close to 70m people, not just 20m or so.

Personally I have a dread of 70s and 80s protest politicians like Corbyn ploughing money into the public sector in the way it was in the 60s and 70s. I can’t picture him overseeing a slick and efficient and well funded public sector, somehow. Having said that, I’d love to see the railways re-nationalised. They’re a national disgrace at the moment and used more than ever.

The only question for me is why are the Lib-Dems being so miserly with only planning to spend the £50Bn saved from cancelling Brexit? Sure, spend that, but get on the band wagon with the other parties and stick another $100Bn of planned spending in while the other parties can’t criticise you!