Which pension for compensation payout?
|Retirement | Investment Choice
Asked by wgoldie, submitted
03 December 2011.
I have received an offer of £192,000 after a successful pension mis-selling complaint. This has to be paid into a pension scheme or provider. Having lost money due to the initial advice you can imagine I am wary of investment charges and possible losses to this sum. I am 53 and hoping to start taking my pension at 55 or 56. I have a company final salary pension also that I intend to start taking at the same time. I assume that I would be best to put this into a SIPP. Given the short time this will be invested for before accessing it (either by annuity of drawdown), would it be possible to invest in a cash fixed income account for two years within a SIPP to guarantee an increase in the fund.
I currently have a Vantge account (not SIPP) with Hargeaves Lansdown and was considering getting advice from them or from St.Jame's Place who have been recommended.
Any pointers would be useful.
Answered by Justin on 14 August 2012
Glad to hear you won your mis-selling complaint, it's good to see the industry pay for its past misdemeanours - although unfortunately it's still massively in profit from doing the wrong thing over many years - just look at most banks and life companies (not to mention a few financial advisers - although sadly they tend to go bust and leave the rest of the industry to pick up the tab via Financial Services Compensation Scheme levies).
If your final salary pension allows it, I'd suggest getting a quote to buy extra years of service within the scheme. If so, you can compare the potential benefits versus using a personal pension.
If you're keen to invest the money for two or three years then buy an annuity, a fixed rate cash account within a personal pension should fit the bill. The James Hay iSIPP currently seems best value for larger pension pots in this respect, as it offers access to several competitive cash accounts. Unfortunately most pension providers, including the Hargreaves Lansdown Vantage SIPP, pay peanuts on cash as it's very profitable for them to do so.
If you'd rather leave the money invested and draw a pension via income drawdown, good investment selection and management is key. A financial adviser could be worthwhile if taking this route, but be very careful when choosing one. St Jame's Place is a large and very profitable financial adviser, so I guess they must have some happy clients. However, I wouldn't personally recommend them as they're tied to selling their own products (albeit they outsource investment management). Plus I get the impression they're a rather sales-driven organisation, which in my opinion is a quality to avoid when choosing a financial adviser.
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