Pensions

[deblet]

Hi is there anybody on here who knows about pensions? I am trying to get my husband to sort out his pensions and don't know what to do for the best. He has a current pension with work which is performing well and five other pensions ranging from one with £200 in it to one with £38000 in it which are obviously just sitting doing nothing. He lost money on two of them this year. A friend who is a pensions adviser is keen for us to let him sort out a pension to put them all into which will cost us about £3500 but this would be our years holiday so would it be worth it. Sorry.

The pensions aren't doing 'nothing'. They are managed by someone to hopefully grow until your husband is ready to retire. It's normal that they fluctuate too. Does your husband get an employer contribution from his current employer? If so, then he should carry on with pension. He could look at consolidating the other ones so that they are easier to keep track off. Personally, though, I wouldn't pay 3500 for someone to do that.

Depends on the type of pensions they are. Final salary (defined benefit schemes) are rarely transferred out. Pensions with guaranteed benefits, same. So you will definitely need advice.

An independent pensions specialist is the best way and are worth the money. In the long term with the right management that £3500 will be well worth it.

JoJOSM2 Yes he is in a good scheme at work with employer contributions. Do you think we should transfer the other ones into his current one instead?
PollytheDolly no not final salary ones. He is good at his job so will consider it thanks.

How can it make a loss this year? The value of the pot will fluctuate, its overall growth over a 20,30,40 year period that's the important factor.

If his employer contributes to his current one it might be worth transferring the others rather than have his own that his employer doesn't contribute to.

Is your friend an independent IFA? If they're tied to one company avoid!

Investment 'skill' is a rare commodity indeed. So.... Most people would just be well advised to minimise transaction costs/trading costs and sit with sensible portfolio allocations in low cost funds for the long term.

£3500 sounds like a very steep consolidation fee (rip off) to me. I would investigate a SIPP to DIY any pensions consolidation. You could identify a low cost FTSE/MSCI tracking fund and fire and forget (and go on holiday).

A lot of very average intellects make a lot of money by shifting your hard earned money around.

A money purchase scheme that has lost money this year - that takes some doing . what on earth happened there?

Not sure why they went down as we don't understand pensions. And thank you TyrionRocks for your help but I did not understand a word you said except I may shop around for a pension adviser. We wanted to put it all into the workplace pension as that just seemed easier to us.

For a start, your DH should ask for an up to date statement including transfer values and projections for his current pensions and identify what they are and where they are invested.

It could be a good idea to consolidate them or not, it really depends on what they are/how much is in them. Alternatively it's sometimes good to keep them separate in order to spread any risk.

If his current pension is a defined benefit (final salary) scheme and he thinks he may be there until he retires, it may be worth seeing how many extra years he could get if he was able to transfer in some of the money from his other pensions.

and not all final salary schemes are great - my current one is based on 80ths and is pretty shit compared to previous 60ths schemes I've been in. Still better than nothing at all though.

Also not all schemes will accept transfers in.

and I totally agree with Tyrion - there is no way i'd be handing over £3.5k to a "friend" to sort it for me - some friend that is!

How old is your husband? What provision do you have for yourself or are you relying on his pensions to provide for you both?

A friend of mine developed this calculator which might be useful:

howlongwillmyfundlast.co.uk/Calculator3.html

and if you do want to go down an advised route, look on here for FAs

www.unbiased.co.uk/

Unbiased isn't unbiased anymore.

It would also be worth checking that your DH's work pension will let you move the other pensions in. Although I usually caution against putting it all in one pot as the work pension scheme may not offer the best option for your DH when he does retire. And sometimes it's more flexible to be able to phase in retirement by reducing hours and starting the smaller pensions before you completely stop working.

£3.5k is probably quite a lot to pay to consolidate. He's unlikely to be able to advise you to move the work pension scheme which is where a lot of the cost of the review will be incurred.

My 'advice' would be

1. Get together details of the 5 other pensions, figure out what the costs are on each one and where the money is invested. If you can't figure this out from the paperwork, call the companies and ask them.
2. When you have all that info, choose the fund with the lowest charges. If you don't understand about investing, you could choose a lifestyle fund whereby the level of risk is lowered the closer you reach retirement age.
3. When you have chosen that, call the companies back and tell them you'd like the paperwork to transfer the money in their policy into the one you have chosen. And call the one you have chosen to ask them for the forms to transfer money into the policy. And/or ask how you can change where it is invested with them.

I wasn't aware of that chicaguapa - what happened and where can you go now?

Thank you all so much for your advice. We are going to send off for all the information this weekend and get some information of other advisers. Thanks again.

Glad you are further ahead with the now deblet
Pensions can be a tricky area and it can be very worth paying for specialist pensions advice - I think the normal MO is that they don't charge unless the advice is to move, and they act upon this for you.
I would see and IFA advisor first who will then refer you to a specialist pensions advisor. The high fees cover the insurance against advising you incorrectly. Ours charged 3% as standard but due to the sums involved we were able to haggle this down a bit (IFA was then paid by them). Unless the total pension pots are worth more than £120K - £3500 does sound like a complete rip off. Not that I would use a friend for this kind of work anyway.
Disclaimer - I only know this from our recent experience and have no/little knowledge beyond that!

There may be no reason to consolidate at all, so long as you keep a list of the various pensions so you don't forget about one of them.

Always worthwhile reviewing them every year or so. Look for the following

• charges (lower the better obv)
• guarantees (some can be very valuable)
• funds invested in (good to have some diversification).

The companies should be sending an annual statement of fund value, and if not call them and get them to send this. They might allow transfers in for no charge too.

Generally it's not good value to move anything with a guarantee or anything in a defined benefit fund.

£3.5k is a lot of money for advice unless you're a millionaire!

If you have retained benefits in company schemes, they don't always send an annual statement but private pensions should.

Unbiased has a paid-for lead generating service which makes it somewhat biased!

The Personal Finance Society lists all its fully qualified members at www.findanadviser.org and you can search for pension specialists local to you.

The fee for this type of work is generally deducted from the pension pot, as opposed to a client writing out a cheque. The benefits of this to a client are that they don't have to find spare cash up front to pay the fee (thus sacrificing holiday fund), and also that the fee is paid out of gross funds not net income which is more tax efficient.

When you say they've lost money this year, do you mean the actual fund has fallen in value, or the projected pension at retirement has fallen? I'd be more worried about the former than the latter as you don't know what the conditions will be when you come to buy a pension on retirement and at this stage should just be seeking a fund that increases (by as much as possible balanced against the risk you take) each year.

I personally would be putting the pensions from old schemes in the scheme with the lowest fees in some sort of FTSE/world equity tracker. But you should seek professional advice for your own circumstances.

Wankers - an 80ths final salary scheme is still extremely good and much much better than the vast majority of employees will get. I recently moved jobs and the move from defined contribution to 80ths career averaged (not even final salary!) was a key attraction of the new job.

Yes Teaching I agree that it can be better than DC depending on lots of factors (my current one is a 80th career average" with an age 65 retirement date), I was saying that not all DB schemes are equal so it's worth checking what the schemes that OP's DH are. I've had previous schemes with 60ths and age 60 retiral.

For example one of my previous company FS schemes included a clause that gave retirement at 50 with no actuarial reduction if you were made redundant. Given that i was in my late 20s when I was made redundant, that has been a brilliant benefit that had I transferred probably wouldn't have been as worth it.

That's a phenomenal benefit Wankers, and not often seen these days.

(DB of any kind is pretty much always going to be better than DC unless your employer is contributing over 20% at least to the DC scheme.)

Now if you want to transfer a DB sum over £30K you have to take independent advice, which is good. I'd hate to see people transferring such valuable benefits because they don't realise their value.

The pensions won't be sitting there "doing nothing", they will be invested to hopefully grow. There's really no need to move them unless the fund management charges are much higher than the consolidated pension management charges.

£3500 sounds like a huge amount of money to move everything. No wonder your "friend " is keen to help you out!!

Twas teaching. I was only there for 10 years from when I left school so obviously at the lowest end of my earning power, but I turned 50 last year and am now technically a pensioner! Still working full time though and look to get less for my last 21 years in my current pension than I got for that pension. Hoping not to do the last 5 years though. I appreciate that it's just the way of things now and that the investment returns really aren't what they were (as well as having not such a good employer as I've had in the past).

When I say they have lost money one of them said it had 44000 last time we had a statement type of thing and this years one was only 38000. The other one went from 4520 to 3820. The others seem to be pretty much the same amount every year.

Are those two both final salary schemes? The transfer values will vary from time to time depending on a ton of factors within the actuarial calculations about the cost to the scheme trustees of providing the annuity benefits that have been accrued. It isn't as straightforward as looking at what's built up in the pot of a DC scheme where the values are more directly stock market linked.