Combining Pensions

[iwishihadknownmore]

Hi all.

I' ve 5 pensions, approx value £110k plus a Final Salary one.

I want to put the 5 normal ones into a single pot, but ringing around, it seems either a fixed fee of £900 or 2 to 2.5% fee is the normal set up charge.

Plus on going 1% charges.

Is this pretty normal and what does it give me over say going to Aviva or PensionBee who do not have these charges.

Ringing around who? Financial advisers or pension companies?

Of course the former.will charge - you are paying them to do a job. That latter is usually free because they get the benefit of holding the combined pension.

FSA/Financial Planners vs Pensionbee or Aviva etc.

Whoever i chose will end up holding the pension pot surely, they all take an annual fee.

I'm also asking is a 2% or 2.5% fee reasonable too?

Do you want advice? If not, you don't need an adviser.

The pension will be held by the pension company, whichever option you choose, and the pension company will charge a fee. That's the 1%.

If you go via an adviser, they charge an additional fee for the intial advice and doing the paperwork. And then an optional fee for ongoing advice and management. They do not hold the pension or receive the pension fee, which is why they charge an extra fee for their own work.

The FSA is the regulatory body
You mean IFA for the individual advisers.

The percentage sounds high for what you want doing, but it depends on what you get for it. If that will give you a full financial plan - and you will get sufficient value from having a plan - it could be worth it.

The charges seem high especially the ongoing charges which you will have to pay every year! Do you have an option to transfer in 4 of the normal (not final salary) pensions into the other one? I have 2 occupational pensions, fees are 0.25% and 0,6% and they allow transfers in (not sure about any fees for that though).
Obviously you know not to touch the final salary one.
You do have the option to just keep them all as well, I probably wouldn't combine them if you are paying so much for the privilege. Compare with your current annual fees on each to see how much it would cost you.

either a fixed fee of £900 or 2 to 2.5% fee is the normal set up charge

Sounds like that's the fee for getting a middleman to do the work for you - a financial advisor.

Just save the fee and arrange the transfers yourself.

Thanks all, they are all giving the BS that they can grow the pot better than any pensions company but then they would have too & i'm not sure that its possible to second guess markets, all my pensions took a big hit after Liz and have only just got back to where they were.

As far as i'm aware, greater gains mean greater risk.

Yes my FS scheme gives CPI increases every year plus a guaranteed lump sum, shame i was only in it for 14 years but its still pretty good unless i die early! as not married and no dependant children.

There are platform providers like ii (Independent Investor) that charge a flat fee of £9.99 a month and you can put all your pots into a SIPP there to manage yourself. If you're happy to do that, you can avoid any ongoing fees.

Pension Bee do transfers for free.... and then the ongoing fee will depend on where it's invested (and the size of the pot).

https://www.pensionbee.com/fees

You should be able to transfer to a platform like Fidelity where they will cover any exit charge from your old pensions. There should not be a charge to transfer from the company you are transferring to.

Then you can expect to pay a platform charge plus a charge for whatever investments your pension is held in. Total for these should be about 0.5 to 1% a year.

Do not transfer your FS scheme.

Hi OP.

I would be careful here. One or more of the pensions that you hold may have some special features that will be lost upon transferring. Examples of such benefits are guaranteed growth rates, guaranteed annuity rates, protected Tax Free Cash, enhanced death benefits, bonuses payable at certain times.

Amalgamating your pensions may help you manage your finances better, but even if it costs you, I'd recommend engaging a Financial Adviser to establish whether such benefits exist and to outline how much of a benefit these might be to you, and whether this is worth sacrificing to simplify your arrangements. The cost of doing the wrong thing may well be much greater in the long term that any fees payable.

If you are comfortable proceeding yourself and are certain that there are no additional special benefits that will be sacrificed, there shouldn't be any initial costs in a DIY approach. Platforms such as Vanguard, Standard Life, Fidelity, HL etc etc. can provide nil initial cost and low ongoing costs.

In terms of what cost is acceptable? Well it depends. 2.5% is fine if you have complex investment requirements and fund ongoing advice. That may represent value. What I don't like to see is laissez faire investments in expensive SIPPs without ongoing reviews exceeding 2%. If cost is a concern, highlight that objective to an adviser who can utilise passives and keep the total costs down.

Do not transfer your FS scheme.

This kind of blanket comment is why I recommend advice. If your objective was to leave an IHT efficient pot of money to your children, and you had sufficient income to meet your expenditure requirements, a transfer of the Final Salary scheme may be appropriate. Likewise, if the Cash Equivalent Transfer Value being offered was generous to the point where the return on cash would still provide a greater inflation adjusted income than the Final Salary Scheme could, then again, another reason to transfer. Perhaps a person might want an active and expensive 60s and 70s, but are happy to live a quiet life off the state pension in their 80s and 90s?

Yes, the starting point is retain unless there is a compelling reason to transfer. But you talk so definitely here, and that is dangerous and wrong.

This is a really insightful article @iwishihadknownmore ....

https://www.thetimes.co.uk/money-mentor/pensions-retirement/should-i-combine-my-pensions