Listener Questions Episode 15

Another mixed bag of questions this week, including pension tax free cash, salary sacrifice for electric cars, de-risking a pension and buying gilts! Join us as we answer your most pressing questions!

Shownotes: https://meaningfulmoney.tv/QA15 

01:05  Question 1

Love the show, and whilst not all relevant to my own circumstances, find it all very interesting and enjoyable.
Question :-You regularly discuss taking the 25% tax free and what to do with the rest (annuity or drawdown) but need advice as I have 4 different pension pots, 3 frozen and 1 existing employer.
I am looking to take the 25% from one of the frozen ones to pay off mortgage but not clear on the below:
- Can I keep the remaining 75% in the pension scheme and not take either drawdown or annuity until a later date (when I take early retirement)?
- More importantly, I am sure I have read that once you start to take your pension, the amount you can contribute is capped.  How does this work if it is a frozen pension I am taking the 25% out of and would this impact on my current employer pension contributions?
Thanks as always Paul

05:19  Question 2

Hi Pete and Roger,
Absolutely love the show, after listening to yourself for a number of years, I'm 30 and would even go to say I'm financially savvy as a result of everything I've learned over the years

I'm wondering if you could help me with a question?
My retired dad was looking for an electric car and as I've got a salary sacrifice scheme with work it seemed the best way to get an electric car for him.

My father said that he would give me the equivalent of the total rental amount in cash as I pay for the car via Salary sacrifice on a monthly basis. I'm obviously the policy holder, with the responsibility for it but my father would be named as a driver (unsure if this is relevant). This amount is around £35k, and I'm wondering if the worst was to happen (father kicking the bucket under 7 years) how would this be treated for tax purposes?

As the money is in effect to pay for a good or service, would drawing up a contract or something of the like allow it to not be treated as a gift and exempt from the estate upon death, the same as if you send a family member money for a holiday or other purchases?

Thanks so much for your help!
Ruben

10:37  Question 3

Hi guys, love the podcast!

I have a workplace pension that’s currently invested in a fairly basic fund, and I’m looking to take more control over it by choosing my own investments. I’m 38, so I still have time before I need to think about de-risking. My plan is to allocate 80% to a global equity fund, 10% to the S&P 500, and 10% to global bonds.

I don’t have a huge amount invested, but it’s enough to make me consider whether I should be a bit tactical with my approach. With global index funds near all-time highs, should I wait for a slight market dip before making these changes, or just go ahead and make the move now?
Steve.

13:59  Question 4

Hi Pete,

Great idea to pause the “new material” and focus on questions. I was thinking that there are only so many ways to skin a cat/re-frame a concept!

I would very much like to hear a little more around the concept of a bond or gilt ladders as one approaches/reaches retirement. Despite being a Chartered Accountant and working in financial services, I’m embarrassed to admit that I become flummoxed when thinking about how to set such up. I understand gilts can be purchased individually and held to maturity (as opposed to gilt or bond funds), but where and how do we buy them if our retirement savings are tied up in our employer’s pension scheme - and they certainly don’t offer such!

I dare say that the demographic of your listeners/viewers are “of a certain age” where this sort of subject would be of interest.

Thanks and all the best

Avid listener

Peter Coleman

22:22  Question 5

Love your podcast, it's been really helpful since setting up our business. Got a question for you, my wife and I set up the business 3 years ago and it's gone incredibly well so far. After pension contributions at £60k each and paying ourselves a salary/dividend equal to £100k each per year, the business continues to accumulate money. We currently have £750k spread across multiple business savings accounts. However, is there a better way to manage this money? We have considered setting up a housing rental company but we have not looked into this in detail. We have a financial advisor who seems to focus heavily on pensions rather than what we can do with the surplus money.

Thanks, Mark C

28:25  Question 6

Hi there,

I’ve invested in vanguard index funds for over a decade and have recently begun to actually think what goes on behind the scenes? When we invest in passive funds, like S&P 500, does that money blindly go into the businesses that make up that fund - ie just giving money to them, not knowing how good they are as companies, just because they happen to be part of an index, they get the investor's cash? I read somewhere, for example, there’s billions of dollars invested in Amazon from index funds yet all that money was given by people like me who have no idea about these businesses?  I feel like I’ve totally misunderstood how it works so interested to hear.

Thanks, Marc