I set myself a target to have £50k in my Future Fund by the end of the year.
A combination of wobbly markets and not saving enough has meant that this goal had became unattainable – my September update showed a value of £42.3k, and unless the markets see-sawed massively in my favour, there was no real way to make up the big gap to my goal.
However, looking at my numbers today, my Future Fund stands at £56,335.87!
Celebrations all round!?
Not exactly….
Switching
I mentioned recently that I often suffer from procrastination and one of the things I’d been putting off for months was the transfer of my stakeholder pension into one of my SIPPs.
I read some recent posts on procrastination, realised what I was doing (or not doing!) so I just went ahead and finally did it.
The whole transfer process from requesting a quote from my provider (Scottish Widows) to submitting the transfer form and seeing the funds in my SIPP has taken just under two weeks – pretty painless and I can’t believe I dragged my feet so long over it!
One of the reasons I’d wanted to transfer was fees – the management fee for the stakeholder pension was 0.8% – not a huge amount but it all adds up in the long run and neither of my current SIPP providers charge this much.
Another reason was that I wanted more control in how my money is invested.
Previously, my stakeholder pension, whilst included in my net worth, was not part of my Future Fund as I had planned to take a small annuity (a few hundred pounds) from it upon retirement age. This plan was obviously made before the recent changes to pensions.
It’s now all lumped in with the rest of my Future Fund, so there’s no change overall to my net worth but a big boost to my Future Fund total.
I however won’t count this as reaching my annual goal – it feels like cheating to me as I had aimed to get to £50k without the help of this pension transfer.
My Future Fund is now however over the half-way mark to my first big milestone of £100k – got to keep at it!
What Investments?
The money has been transferred to my AJBell YouInvest SIPP – I will buy a bunch of ETFs and build these up in accordance with my Portfolio For All Seasons, reinvesting the dividends.
Yes, this should hopefully bump up my dividend income by quite a bit! Happy days!
Seems harsh but fair and probably how I would have viewed the transaction with regards to your target.
However apart from that great news all round! Nice one for beating the procrastination and getting on with it. Many times the thought of doing this type of thing is far worse than actually doing it.
And those extra dividends sure will be nice 😉
Slightly sucky that you can't go straight to celebration mode but given the circumstances, I think you can still celebrate a little bit. The extra dividends will be nice for sure.
I always used to wonder if I should include pensions as part of my "Future Fund" calculations. Until the point that it became a necessity! Someone posted a comment on my blog stating that it was really important to take the big picture into account when looking at your investments, so include everything that you feel will contribute to your future financial projections. Otherwise you could make some short term decisions that might not be in your best interests. Look after the pennies, as my mum would say.
Congratulations on your stakeholder transfer weenie, and I'm glad to hear it all went smoothly (that's not my experience at all but then I'm "blessed" with a far more complex "with profits" type of thing).
I expect it feels great to have your personal pension fund consolidated into one of your SIPPs where it can be managed as a whole. I hadn't actually realised you had more than one SIPP and am a bit curious as to why but I'll do some backreading – I'm sure you explain somewhere. 🙂
Great news Weenie, now you have control of your own money you can have great fun deciding what investments to buy. Also, as you say this should bump up your dividends nicely.
I had a similar experience around three or four years ago, where I managed to transfer a chunk of cash from a company pension into my SIPP, and I have to say that was the point that I really noticed the increase in dividend income, and the benefit of being able to re-invest.
Hope you enjoy the feeling over the next few months.
Best Wishes
FI UK
Hi Weenie,
As TFS said, harsh, but I would also have done the same – I try and put a goal in for each of my pots (ISA / Pension / Work Pension / Cash etc.) as then I can focus my efforts for each.
Great news that the pension transfer went so smoothly, and I would be interested to know how you find AJ Bell! I've started at looking to add a SIPP as well (for diversity of providers), but it would be a start from scratch so I need to crunch the numbers on charges as well!
Onwards and upwards to the magic 100k – good luck!
London Rob
Well done Weenie, I would actually celebrate, why not? You can at least celebrate moving to AJ Bell who I have found to be excellent. In fact, I am hoping to open a second SIPP with them next year. You now have total control over the money, and that is important. The good thing about AJ Bell is that they offer the £1.50 regular investing and they have no extra weird charges on ETFs (they do on funds though).
Cheers
Hey TFS
Yep, it is great news, feels great to have beaten procrastination in this instance, just needed to get on with it. Am looking forward to those extra dividends!
Hi Tawcan
I'm celebrating a little because it's great to be halfway to my first big milestone – I was so hoping to getting to £50k without the help of this transfer though. Yes, I will make those extra dividends count!
Thanks FIUK.
I felt a bubble of excitement when I saw the cash had been transferred. I had already made up my mind what I'd be investing in and think this should at least double my dividend income. I look forward to reinvesting them to make that 'snowball' grow bigger!
Thanks Cerridwen and yes, I'm lucky it all went smoothly and I did think of the issues you had when you were trying to transfer!
My Scottish Widows pension hadn't been online so the only time I really knew what the balance was, was when I received an annual statement – I really had to transfer it into one of the SIPPs for more control.
Why two SIPPs? I opened my first one with HL and that has predominantly funds and a few shares. I wanted to invest in ETFs and investment trusts and the only economical way to do that was via regular investment. You can't invest in ETFs with HL this way, so I opened a second SIPP with AJBell YouInvest, where they charge a flat fee (£15 per quarter, rising to £25 per quarter for SIPPs > £20k) and £1.50 for regular investments on ETFs, shares and investment trusts.
Funnily enough, while HL works out a bit more expensive now, when you come to draw down on the SIPP, it's cheaper than AJ Bell for ETFs, ITs and shares (7 Circles did a comparison here http://the7circles.uk/moving-into-pension-drawdown-happy-birthday-to-me/)
Hey London Rob
As I mentioned to Cerridwen above, I've found AJ Bell good for regular investments for ETFs, ITs and stocks (£1.50) but funds will attract a £4.95 fee. SIPPs have a flat fee (starting from £5/quarter up to £10k and £25/quarter up >£20k). I'm quite happy running my two and like you say, it's good to diversify with providers too.
Website-wise, HL's is very slick, AJ Bell's a little bit clunky and not as intuitive but you get there in the end!
Thanks for the best wishes – onwards and upwards for definite!
Hi Jim
My pensions are part of my Future Fund because at some point, I will be drawing on them! However, my fund has always been over and above my work pension and state pension, although both feature in my retirement plan, so are part of the bigger picture. I can't influence either of them though, not like with my own investments, though only to a certain extent in terms of what to buy and sell.
I still pick pennies off the floor when I see them, much to my friends' disgust, haha!
Thanks M – I am happy that I've done this – I just can't believe I've been thinking about it for so long and never did it til now! As I am planning on increasing my investments in shares, ETFs and investment trusts to build up my dividend income, I will start putting more money into AJ Bell, not just in their SIPP but their ISA (from next year) and I also have a share account with them. And yes, no weird charges on ETFS is a bonus. I'll leave my fund investing with HL, where they have no charges on funds.
The other advantage of AJ Bell is you can buy foreign stocks in your SIPP e.g. US stocks with no tax deductions due to the agreement between UK and the US! If only we could do that in our NISAs…
Hi M
I hadn't considered buying US stocks but now that I know it's possible…..thanks for letting me know!