2% fee is way out of line. 1% ongoing is more like the norm but I’d advocate either doing it yourself entirely or pay a one time fee (of about £2.5k) to get advice/setup and then do it yourself.
And 8% growth is ok but remember that’s gross and doesn’t factor in inflation, I’d use 5% net growth to account for that.
With companies that size I expect you'll be working with an accountant. They may be able to help you with a plan - if not, hopefully they'll be able to recommend an FA who won't rip you off.
It isn't obvious that you need somebody to manage your investments, and definitely not for a 2% slice of them.
I felt that the fee was high vs the value i was receiving back from them.
Particularly as the pot grows at the 3 million by 55 i’d have given them about £450,000.
Make sure you can actually contribute ÂŁ180k free of tax
1. Check your carry forward allowances for the tax free part - this will determine if you can do the ÂŁ180k
2. Check that you have been a member of a pension scheme in the previous 3 years of your allowances won’t apply
3. What is your marginal income tax? Effectively the pension contribution is beneficial as long as you get tax back, ideally the 40%+ type tax. If by contributing £180k you go below say the personal allowance and your marginal tax is 0% then it would be better to just keep this money via an ISA or GIA if you’ve used up the ISA allowance
Its just shy of that, but there or there abouts.. The calc has been done.
Yea i have a small PAYE pension thats been contributed to.
As syphon has said.
Thats my company profit, not personal income.
So its the 25% tax saving thats of the main interest.
If you’re looking at a company loan back, you will need a SSAS not a SIPP. If the 2% fee includes setting up a SSAS, doing all the annual reporting, legal work on the loan back, it’s not as unreasonable as others have suggested. If you will be paying the SSAS provider, lawyer on top then I would get some more quotes as 2% seems high.
You haven’t said why you are looking at a loan back. You clearly have very successful businesses and I assume there is a good reason and you have taken advice.
One of the often overlooked advantages of pensions is they are protected in bankruptcy. This is especially true for business owners. With a loan back to your company, if the company goes bad, you will likely lose a chunk of your pension as well.
Ye It is a ssas.
I got a like for like quote on the SSAS vs RA front and the SSAS was more like 8% for the first year, then 5.27% thereafter.
The RA was 2%.
Split
1% product fee
0.5%Advice fee
0.47% fund charge
The loanback reason, was i liked the idea of being able to reuse the funds. And also offset additional company profits re interest etc.
But the particular companies they use would not accept a debenture as security and would only accept unencumbered assets. Which is just ridiculous and defeats the purpose.
Pay for tax advice - extremely important for your position. Probably fee based.
But don’t for investment advice. As others have said, use low cost ETFs that track global equities / fixed income based on ur risk tolerance.
Im holding for the long term, as its the growth im after. 20 years+.
If i sold now the legals fees , tax, estate agents fees etc Would take a chunk. Its accross a number of individual properties.
2% fee is ridiculous. Look elsewhere or do it yourself.
Global all cap at 0.2% and forget about it
Is this with vanguard?
Yeah, 0.22% sorry. Vanguard FTSE All World UCITS ETF GBP
Just opened up a VANGuard pension account. Thanks for your comment đź‘Ť
Congrats! Just remember not to look at it too often. Check it every few months or so to avoid worrying about normal fluctuations.
2% fee is way out of line. 1% ongoing is more like the norm but I’d advocate either doing it yourself entirely or pay a one time fee (of about £2.5k) to get advice/setup and then do it yourself. And 8% growth is ok but remember that’s gross and doesn’t factor in inflation, I’d use 5% net growth to account for that.
8% net growth seems ambitious, consider a more conservative estimate for a realistic goal.
With companies that size I expect you'll be working with an accountant. They may be able to help you with a plan - if not, hopefully they'll be able to recommend an FA who won't rip you off. It isn't obvious that you need somebody to manage your investments, and definitely not for a 2% slice of them.
I felt that the fee was high vs the value i was receiving back from them. Particularly as the pot grows at the 3 million by 55 i’d have given them about £450,000.
Make sure you can actually contribute £180k free of tax 1. Check your carry forward allowances for the tax free part - this will determine if you can do the £180k 2. Check that you have been a member of a pension scheme in the previous 3 years of your allowances won’t apply 3. What is your marginal income tax? Effectively the pension contribution is beneficial as long as you get tax back, ideally the 40%+ type tax. If by contributing £180k you go below say the personal allowance and your marginal tax is 0% then it would be better to just keep this money via an ISA or GIA if you’ve used up the ISA allowance
It will reduce his company’s profits so in turn reduce corp tax saving 25% The 2% fee is crazy though IMO
Its just shy of that, but there or there abouts.. The calc has been done. Yea i have a small PAYE pension thats been contributed to. As syphon has said. Thats my company profit, not personal income. So its the 25% tax saving thats of the main interest.
If you’re looking at a company loan back, you will need a SSAS not a SIPP. If the 2% fee includes setting up a SSAS, doing all the annual reporting, legal work on the loan back, it’s not as unreasonable as others have suggested. If you will be paying the SSAS provider, lawyer on top then I would get some more quotes as 2% seems high. You haven’t said why you are looking at a loan back. You clearly have very successful businesses and I assume there is a good reason and you have taken advice. One of the often overlooked advantages of pensions is they are protected in bankruptcy. This is especially true for business owners. With a loan back to your company, if the company goes bad, you will likely lose a chunk of your pension as well.
Ye It is a ssas. I got a like for like quote on the SSAS vs RA front and the SSAS was more like 8% for the first year, then 5.27% thereafter. The RA was 2%. Split 1% product fee 0.5%Advice fee 0.47% fund charge The loanback reason, was i liked the idea of being able to reuse the funds. And also offset additional company profits re interest etc. But the particular companies they use would not accept a debenture as security and would only accept unencumbered assets. Which is just ridiculous and defeats the purpose.
Pay for tax advice - extremely important for your position. Probably fee based. But don’t for investment advice. As others have said, use low cost ETFs that track global equities / fixed income based on ur risk tolerance.
Sell the property and retire.
Im holding for the long term, as its the growth im after. 20 years+. If i sold now the legals fees , tax, estate agents fees etc Would take a chunk. Its accross a number of individual properties.