Reply To: Consolidating personal pensions into a SIPP

[Stephen Bland]

I am not permitted to advise on your specific pension situation because that would constitute personal financial advice which I am prohibited for legal reasons from offering to readers.

On the more general aspects of your query, when you wish to take an income from your HYP, as you suggest you simply withdraw the dividends instead of reinvesting them. The idea is that you don’t spend the capital but retain it to continue delivering the dividend income.

Also for the above legal reason, I cannot comment on whether investing in an HYP is “very risky” because that is a judgement personal to each investor. One person’s “very risky” is another’s attractive investment so you need to decide for yourself if you can live with the degree of risk that comes with HYPs.

I agree with you though that vested interests who will receive no fee or commission if you stick with an HYP, are likely for that reason to lack impartiality and to encourage you in the direction of products from which they derive a cut in some way.

From my personal point of view, HYPs are certainly not “very risky”, though of course they do carry risk, both to income and capital. I practise what I preach so am very heavily invested in my own HYP and add to it if additional cash becomes available. I’m no spring chicken myself but definitely do not see that age changes my view, remaining quite happy to embrace equities within the structured approach of an HYP and accept the risks that go with this because for me it’s not “very risky”, quite the contrary. The level of risk that HYPs unavoidably attract is perfectly acceptable to me. But that’s just me, I can’t decide that for anyone else.

I’ve always intended the HYP strategy to offer lifetime potential from age zero up. The dividends are reinvested if not required, thereby boosting the future income when it is required. There is no cost or problem in switching from reinvesting to withdrawing.