Pension help - cheap storage

[Spearo77]

Hi there

Sorry for the noob question, I did try and search but failed to find anything.

Essentially I want to buy physical gold with my pension.  I'm no expert but nothing feels overly safe to me right now in investment terms. So I just want to try and keep the savings as safe as I can which has lead me to gold.

If anyone has any advice on this generally please to do hola, mainly in terms of any noob mistakes I could make.  My plan was generally just to get the pension turned into a SIP and then find a good deal.

The main question I see is the storage costs seem to be pretty damming.  I was quoted 1% annual by the Pure Gold Company which seem like it would just eat any gains it made.  

Is there some good cheap storage out there, what % should I be aiming for or does anyone have any nice recommendations?

Thanks a million, any help very much appreciated!

 

 

 

[Silverlocks]

You will have to go with an outfit that does gold pension services - not all vaulting services offer this.  Sharps Pixley and maybe Direct Bullion do this, and there are a handful of SIPPs that will allow you to use BullionVault.  The cheapest vaulting services sit around the 0.5% pa mark, but I'm not sure how much the cheapest pension service is.

As an alternative, you can keep CGT-free gold such as britannias or  sovereigns outside the pension, but you have to pay self-assessment tax on the money you spend on it.  As a part of a portfolio, putting some money into physical gold will still let you keep a hedge.  Also, if you go to sell this gold you've already paid tax on it and there's no CGT, so you also have a fund that you can sell to pay for a big expense without any tax implications.

This is not financial advice etc.  Do your own research.

[Spearo77]

3 hours ago, Silverlocks said:

You will have to go with an outfit that does gold pension services - not all vaulting services offer this.  Sharps Pixley and maybe Direct Bullion do this, and there are a handful of SIPPs that will allow you to use BullionVault.  The cheapest vaulting services sit around the 0.5% pa mark, but I'm not sure how much the cheapest pension service is.

As an alternative, you can keep CGT-free gold such as britannias or  sovereigns outside the pension, but you have to pay self-assessment tax on the money you spend on it.  As a part of a portfolio, putting some money into physical gold will still let you keep a hedge.  Also, if you go to sell this gold you've already paid tax on it and there's no CGT, so you also have a fund that you can sell to pay for a big expense without any tax implications.

This is not financial advice etc.  Do your own research.

Thanks Silverlocks thats great, I will look into the companies you mentioned.  0.5% still feels a bit steep but certinly better than 1% lol.

I'm also planning on buying some Britannias as you mention above with my general savings.  Sorry to ask but would you mind explaining 'you have to pay self-assessment tax on the money you spend on it.', I don't quite follow.

Thanks a million,

 

 

[Silverlocks]

31 minutes ago, Spearo77 said:

Thanks Silverlocks thats great, I will look into the companies you mentioned.  0.5% still feels a bit steep but certinly better than 1% lol.

I'm also planning on buying some Britannias as you mention above with my general savings.  Sorry to ask but would you mind explaining 'you have to pay self-assessment tax on the money you spend on it.', I don't quite follow.

Thanks a million,

Self-assessment tax applies if you're working as a contractor or self-employed through a limited company.  If you're on a salary in permanent employment you just pay PAYE and National Insurance.  Unless you're on a big salary (say: 80k+) then the benefits of an employer contribution may outweigh the benefits of a SIPP.  I'm not sure how keen your employer would be to drop their pension contribution into a SIPP, so you might still be better off taking that employer's pension up to the maximum of its matching  contribution as well and then doing the SIPP on top of that.  A SIPP will let you take on some less conservative investments, although you're still subject to compliance restrictions on what you can buy. 

You will need to do your sums on this.  

A SIPP gets a subsidy from the government that cancels out the tax you would have paid on the money you put into the SIPP, so the money you put into it is effectively tax-free.  There is another vehicle called a SSAS, but they're quite expensive to run and only cost effective if you have a large income - they're really aimed at family businesses that want to manage a pension fund for the whole family.  

An ISA works a bit like a SIPP but is paid downstream of tax.  What you take out of the ISA isn't taxable as it's already had income tax paid on it, and the ISA shields its contents from capital gains tax.  This is the main difference tax-wise between a SIPP and an ISA, although you can also put more money into a SIPP than an ISA.  If you hold physical CGT exempt gold then you get essentially the same tax benefits as an ISA.

I'd do your sums to see if it's more cost-effective to pay the vaulting fees on the SIPP than to pay the tax and buy the physical gold out of your after-tax income.

Edited January 12 by Silverlocks

[Orpster]

Gold will have to literally go to the moon to outperform a traditional pension scheme, I would strongly suggest getting professional financial advice.

For example my pension scheme I put in 40% of my base salary and my employer puts in 8%.  My contribution may look high but the nature of my work means only about half my monthly wages comes from my basic salary which is the only part that is pensionable.  I am in an 'at source scheme'. and my company add their contributions to my salary so I save 40% tax and 2% NI on the whole lot.  So the stocks & shares in my pension would have to more than half in value before I was in a loss, and even then due to my age a reasonable % of my pension is not in stocks and shares.

Appreciate if your in a private pension scheme and/or pay tax at the lower rate your risk exposure would be different, but consider you will never take a loss on any investment you have not exited.  Maybe buy gold or put your cash elsewhere as well as keeping your pension, so if the markets are in a poor state when you want to retire you can leave your pension and spend your savings/gold/other investments and wait out the market.  If were ever in the situation where the market is that bad investments are worthless we will be in a SHTF situation anyway and it will likely be a case of 'if you don't hold it you don't own it', and you will want physical gold not digital.  I think diversification is the key, reducing your contributions to invest elsewhere may be better then switching 'all-in' to gold.  If you are already of retirement age perhaps take your 25% to put into physical gold, without knowing more about your circumstances making suggestions is quite tricky though, so a healthy pinch of salt is required for everything I have said.

As @Silverlocks said, this is purely opinion and is in no way financial advice.  

Edited January 12 by Orpster

[Spearo77]

Thanks everyone, I'm actually heeding a lot of this advise already in terms of diversification and yes I appreciate its not a good 'investment' but it is a very safe way to store wealth imo.  

My main question now is, is should I be happy with 0.5% storage fees for my physical gold or should I keep shopping?

Thanks a million!

Also out of curiosity what happened in early dec when the price spiked briefly?

 

[MBTPSilver]

I don't think you'll get much lower than 0.5% for storage fees.

No one knows the exact answer for the spike in December, but a record close in the market for that weekend likely triggered some margin calls. All of it was resolved once the market opened back up causing that big spike, but it was over within a few hours.

[Spearo77]

On 18/01/2024 at 09:25, MBTPSilver said:

No one knows the exact answer for the spike in December, but a record close in the market for that weekend likely triggered some margin calls. All of it was resolved once the market opened back up causing that big spike, but it was over within a few hours.

Thanks for that, super interesting and mysterious haha

[Paul]

Also consider if you don't hold it you don't own it. 

And as I read in another thread someone paid for private treatment that would have taken years on the NHS to get done. Cashing in your shiny if you needed to if it improves your quality of life it will far outweigh an % gains or £ tax saved 

And on the flip side of bad health. Money spent on gold you have immediate access to and not locked up until retirement if you are young enough consider paying for the betterment and improvement of yourself wether its education, a new qualification, better tools, ability to employ/ expand, bigger premises, more cash available to grow your business, cash to relocate to a city or country of more potential or better tax rates

We are sold parrot-like from school pension pension pension save save save for old age. The more you save the more there's to take and asset strip you of in retirement and if you're in need of paid care 

Got to think for yourself and outside of the box these days 

Edited January 25 by Paul

[Spearo77]

On 25/01/2024 at 18:43, Paul said:

Also consider if you don't hold it you don't own it. 

And as I read in another thread someone paid for private treatment that would have taken years on the NHS to get done. Cashing in your shiny if you needed to if it improves your quality of life it will far outweigh an % gains or £ tax saved 

And on the flip side of bad health. Money spent on gold you have immediate access to and not locked up until retirement if you are young enough consider paying for the betterment and improvement of yourself wether its education, a new qualification, better tools, ability to employ/ expand, bigger premises, more cash available to grow your business, cash to relocate to a city or country of more potential or better tax rates

We are sold parrot-like from school pension pension pension save save save for old age. The more you save the more there's to take and asset strip you of in retirement and if you're in need of paid care 

Got to think for yourself and outside of the box these days 

Couldn't agree more on this.  

I left the UK 2 years ago.  While I still have a small business there that runs itself, I still do a bit of consulting remotely from any country I care to explore, legitimately paying no tax anywhere.  Currently in Malaysia where my gf is getting some top tier private healthcare for about 1/5 - 1/10 of what we would pay in the UK.  Back to Mexico via SA in April.  The money we save in taxes cover flights / rent, its been fantastic.

I've not put any money in pension for a good while and am not banking on it contributing to a lavish retirement any time soon haha.  Its done okay so far, I pulled it out of the markets when the first covid footage started emerging from China and managed to make some good gains riding it back up.  When I look around I cant see one place I consider overly safe to keep my money, be in it savings or pension.  Even the £85K FSCS bank guarantee now has small print, they can give you 85Ks worth of shares in their bank instead - no thanks. So yeah Im looking at preservation right now over investment lol

[Earthmetal]

My employer pension easily outperforms gold.

However, I do NOT trust that it will not go belly up, (as it has twice before...),
I do NOT trust 100% that it will be available to me.