I’ve decided to transfer my final salary public sector pension into a SIPP.
You may or may not agree with this since final salary pension schemes are often touted as the bee knees of pension schemes.
But just look at these changes to the public sector pension I’m a member of that are due in April 2014
- Normal pension age is 65 – I’m determined not to work to the age of 65! And besides, because it is a government pension it means that they will try to increase the retirement age over the years so that by the time I retire it will be more like 70. Stuff that.
- From final salary to career average revalued earnings (CARE) – I simply do not trust the government to value my pension in a way that benefits me because in the not too distant past they made promises about pensions and then subsequently broke them due to no fault of my own. I don’t even care how CARE will impact the ‘revaluation’ of my pension because I have another 25+ years of contributions to make that will no longer go into a final salary scheme.
- Revaluation rate – The revaluation of my pension as described will no longer be based on my final salary but on the use of the Consumer Prices Index (CPI). This is a way for the government to devalue my pension because CPI is not an accurate measure of prices (2-3% on average over the last 10 years) and in fact has been consistently lower than the true rate of inflation (anywhere between 5-10%) eg more than double! I’m not going to allow the government to cut the value of my pension in half.
- Normal pension age – Previously this was 65 but will change to ‘a state pension age minimum of 65′. Minimum? Replace the word minimum with ‘we expect large numbers of people to retire beyond the age of 65’. Stuff that.
There are other acts of thievery that will take place as a result of government changes in 2014 but you catch my drift.
Besides, the ones I’ve already outlined are enough to make me take action.
What Is A SIPP?
SIPP stands for Self Invested Personal Pension and they are available to UK residents.
A SIPP gives people complete control over their pensions – you get to choose the investments yourself instead of relying on a government appointed fund manager.
As with all UK pensions you get income tax taken off pension contributions and no capital gains tax to pay on the gains you make inside your pension including stocks.
WARNING: This article is not and should be construed as financial advice. A SIPP is only useful for individuals who understand and are experienced in investing and you should always seek professional pensions advice from an independent Financial Advisor!
The other great advantage of a SIPP is that you can, under current rules, start to withdraw funds from the age of 55 – a full decade before the current minimum retirement age.
The downside to opening a SIPP is the paperwork and sheer length of time it takes to make the transfers from existing pensions into a new SIPP.
My preferred SIPP provider is currently reviewing my application but it would be a good decision to manage my own pension by buying and selling stocks using a value orientated strategy.
I’ll let you know when the SIPP is open.
To manage your own investments takes years of practice but in the meantime here’s something you can use right away. You’ll actually have somewhere to start and a clear roadmap to success:
- Download the free ebook ‘How To Start Value Investing In 30 Days’
- Practise value investing using a free virtual account for 12 months and see how you get on.
- if you have any questions/need help just send me an email at david[at]sharesandstockmarkets.com
Can’t be bothered finding and researching stocks for yourself but need a reliable investing strategy? – CLICK HERE
-David Thomas, 9 Common Questions About The Stock Market Answered, Shares and Stock Markets.
Image: Enjoying Retirement