the minefield of pensions

[bettysyourauntie]

I am seeking some initial advice as I begin to map out my pensions, an area of my finances that I have, unfortunately, neglected over the years. Now that I’m getting a bit older and become more aware of the reality of retirement I suddenly feel some urgency to take stock of my pension. The good news is that I mostly have access to my various pots and have been tracking and seeing them (very slowly) grow but I have no doubt a more proactive management is now overdue.

My main question is: What do most people do in this situation? Is it common to work with a pension advisor, or is it feasible to manage on your own? I still have a good few years before I plan to retire, so I’m comfortable taking on a slightly higher risk to make my pension funds work as hard as possible.

I approached a financial services firm that I know, and they quoted £2K for a review, consolidation (if makes sense), and a lifetime plan. Given the size of my pension across the various pots, this seems high to me at the moment.

Before diving into Google, I wanted to get some initial pointers on the best way to navigate this minefield. Has anyone seriously boosted their pension in middle age and turned the picture of their future retirement around?

So i'm making good progress with my research. Anyone have a particular preference for either of the platforms below:
Hargreaves Landown
Vanguard
AJ Bell (and is it different to AJ Bell Dodl?)
Pension Bee...

Reading around, most people seem to like a SIPP with Vanguard!
My initial investment after consolidation is c. £100K and I am planning for 15 yr investment.

Many thanks !

My understanding is that management fees of any investment product can have a long-term effect on the size of the pension pot. Mine and husband's pensions are with AJBell. Clear explanations, low fees and very prompt and intelligent customer service.

@Kosenrufugirl yes, I just realised this. I just got off the phone with Welthify, also a highly recommended SIPP platform. I've used their calculator and the estimated annual fee (first year only as this is a percentage of your total pot) was just over £1K annually! This seems a scary amount of money to be taken off your investment across the next 15 years....calling AJBell...

I have pots with the following
Hargreaves Lansdown - good if you want to go it yourself and be in more control, use it to own individual shares as well as funds.
Aviva - ok steady growth
Royal London - best growth
Aegean - still active - average growth.

I have mine in a selection of funds of mid-risk.

Platform fees for a £100k pot shouldn't be anymore than 0.25% - so £250pa. You do then have to factor in the fund charge, which varies if you are going tracker (Vanguard) or active funds.

I am sure I am paying less than that with AJBell. I am on holiday, unable to check. I wouldn't recommend individual shares to a novice investor. Funds are much better in my opinion. I use Money Week magazine for fund recommendations and for general trends. AJBell have their own funds but they also have access to every Money Week fund I have inquired so far. I have one AJBell fund and a few recommended by Money Week just to spice things up. They are all doing OK

Money helper https://www.moneyhelpr.org.uk/en is very good and free. If you're over 50 you can have a free personal advice session.

@Kosenrufugirl I am on the AJBell website right now, fees and charges section, and looks like that in a SIPP dealing fee only apply to funds not shares. Using their calculator, I tried a scenario of 100% of my money in funds, so say 100k and specify 5 deals a year say (although I have NO idea in reality and if this is realistic - as you say I am a novice! ...)

The fee generated is £275.50. On other comparison websites, for example Financial Intrest they have a table for the 'best SIPP in 2024 - which SIPP boasts the lowest fees?' and AJ Bell is only £138... there is no consistent information anywhere and even AJBell customer service couldn't explain the discrepancy. So what is a good guide to really know the bottom line charges? This is important for me as I don't want to see my growth eroded by expensive fee charges.

When you say "trades" do you mean trading out of one existing fund into another (which is commonly known as switching) ? Almost all platforms & pension providers I have ever used have/had free switches......or certainly enough free ones per year that it didn't matter.

There really should only be 2 sets of fees.....the platform fee (or AMC if using a traditional pension provider) and the fund charge. The first should be around 0.2%-0.3%pa (platform) and 0.5%-0.75% (pension Co) and the latter all depends on the fund(s) you invest in - with passive (tracker) funds being 0.1%-0.2% and active funds being no more than 0.8%pa. Therefore yearly fees should not be costing you anymore than 1% pa and if you want to do it on the cheap then less than 0.5% pa. I'd ignore anything that has additional fees such as trading costs.

£275 is not an expensive charge for a £100k pension by any means. My husband moved to them after his SIPP provider was charging c. £750, by adding lots of unjustified charges on top. When he complained to the Financial Ombudsam they falsified the accounts. I read online, a few law suits against this SIPP provider were recenty upheld. My husband moved the money rather than sue.There are quite a few crooks out there, go with the household name, Vangard, AJBell, Halifax, Scottish Widows or similar.

I would never recommend individual shares to a novice inventors (based on my husband's and mine experience of 20+ years of invensting). Psychology of Money explains why it's important to trade as little as possible.I agree. Money Week magazine says you should rebalance your portfolio every few years. Maybe then you might want to consider paying to IFA a few hundred pounds? My husband and I just follow Money Week ideas, that's good enough for us. We saved so much on our 5 years fixed morgage taken in October 2021 at 1.24%, the subscription paid for itself many times over.

Finally, I have just fished out one of my deleted emails - AJBell offered £100 in Amazon vouchers to both me and a person who opened an accout with them via my recommendation. (I wish they sent it to me before my husband switched!). I am not recommending AJBelll because of this reward. I am simply very satisfied with them. Feel free to message privately, if interested.

I consolidated all my previous workplace pensions (DC pots) into my current Employer's pension scheme which is with Nest.

I then moved my money into their Sharia fund. It's 100% equities and has seen amazing growth. I'm at least 20 years from retirement and figured that I have time to ride out any dips in the market therefore my attitude to risk (volatility) is high.

I know past performance isn't indicative of future performance, but looking at the numbers here, I couldn't resist: https://www.nestpensions.org.uk/schemeweb/nest/investing-your-pension/fund-choices/compare-fund-performance.html

I did this last October and have seen growth at a rate far better than any of my old pensions.

@LoveSkaMusic very interesting! One of my pots is with Nest, the smallest. Somehow I had the impression that Nest is super basic in investment terms and had the lesser appeal overall. Are you paying any fees?

iWeb offer a SIPP (administered by AJ Bell) that is a good low fee option: https://www.iweb-sharedealing.co.uk/our-accounts/self-invested-personal-pension/sipp-charges.html

iweb are part of the Lloyds banking group.

It's true that Nest only have a limited number of fund choices. I found that the choices were fine for me because more choices = more complexity!

I am paying fees. There's a fee on my contributions and a lower annual fee. A lot of providers only charge an annual fee (as a percentage of your pot), which is fine, but I think Nest's fees actually work out better in the long run as your pot grows. They don't charge a fee on pension pots that are transferred in, which makes consolidation easy.