What Should I Do About My Personal Pensions ?

[Isakndar]

I was forced to review the status of my current pension schemes I had aquired over the years through changing jobs today when I found my stakeholder personal pension statement hidden on my desk. All of my pension plans are personal or money purchase schemes as I have mostly worked in the private secton for over 20 years. This is something I detest doing because it usually makes me feel nauseous at the thought of the rip offs I have suffered from the very beginning when I took out my first personal pension, which what turned out to be a very dodgy company.

I currently have an occpational money purchase scheme with my present company.

A large Stakeholder PP scheme which had been moved to L&G 3 years ago.

A contracted out scheme also with L&Gwhich is no longer contributed to.

A PP scheme from my last company with Aegon.

There were others but they have been collapsed into the above 4 schemes, including a sum gained from the mis selling scandal of the 1990s

They are all being devoured by high charges - except the present company scheme.

The stakeholder scheme takes 20% of my monthly contributions and the others are declining by 5% per annum. 20 years of charges have almost removed any real gains made - the schemes seem nothing more than method for extracting the tax rebates into the hands of the financial industry.

There must be a fair few HPCers who are or have been in the postion - what have you done to move away from this situation and what advice would you give?

[Butthead]

Can you combine them into your present company scheme? It's often possible, and you say it is better charged so may be advantageous.

If not, consider combining them into one better charged new contract. Charges are more competitive today than they were some years ago and some providers offer discount for larger fund sizes which strengthens the argument for bringing them together.

[Guest tbatst2000]

I was forced to review the status of my current pension schemes I had aquired over the years through changing jobs today when I found my stakeholder personal pension statement hidden on my desk. All of my pension plans are personal or money purchase schemes as I have mostly worked in the private secton for over 20 years. This is something I detest doing because it usually makes me feel nauseous at the thought of the rip offs I have suffered from the very beginning when I took out my first personal pension, which what turned out to be a very dodgy company.

I currently have an occpational money purchase scheme with my present company.

A large Stakeholder PP scheme which had been moved to L&G 3 years ago.

A contracted out scheme also with L&Gwhich is no longer contributed to.

A PP scheme from my last company with Aegon.

There were others but they have been collapsed into the above 4 schemes, including a sum gained from the mis selling scandal of the 1990s

They are all being devoured by high charges - except the present company scheme.

The stakeholder scheme takes 20% of my monthly contributions and the others are declining by 5% per annum. 20 years of charges have almost removed any real gains made - the schemes seem nothing more than method for extracting the tax rebates into the hands of the financial industry.

There must be a fair few HPCers who are or have been in the postion - what have you done to move away from this situation and what advice would you give?

Transfer them all to the lowest cost SIPP you can find and distribute the investments around the lowest cost trackers available within that SIPP. Hargreaves Lansdown are good but there's plenty of others too. This doesn't mean your investments will necessarily do any better but you'll be paying out the minimum possible in charges at least.

[Guest tbatst2000]

Can you combine them into your present company scheme? It's often possible, and you say it is better charged so may be advantageous.

Good advice, but again check the charges carefully of course.

[doahh]

I had a chat with a friend last night and he told me about a family member. He had several well funded pensions and so decided to merge the all into one. The company that he choose to manage his pension went bust, and the story is that he has lost everythinng. Apparently he is not covered by any guarentees at all. So you may want to be careful before merging them all together, make sure you choose a well funded company to go with,

Can anyone confirm that pensions are not covered by government guarentees? I was amazed by my friends story. It sounds like the pension industry is no better than share brokers such as MF Global.

[shindigger]

However you decide to proceed,

DONT

GIVE

THEM

ANY

MORE

OF

YOUR

MONEY.

[riverside]

What is the % contribution by your current employer to the money purchase scheme you will lose this if you stop contributing to the company scheme

What are your current earnings taxed at the benefits of SIPP are 25% and 40% so obviously its a better bet if you are a higher rate tax payer

SIPPS are the way to go imho mostly because of the tax break and the autonomy but the government has already had a nibble at them with regard to the rate at which you can empty your pension pot so nothing is guaranteed in the long term

Alternatives to Hargreaves Lansdown to consider

Sippdeal (AJ Bell)

Jame Hay (part of santander)

Killick

Fidelity

Also you could read up on the forums for pensions and savings on moneysavingsexpert and motley fool they are pretty informative

For investments investment trust etfs and the newer american low cost provider Vanguard products are worth looking at

[rit]

What is the % contribution by your current employer to the money purchase scheme you will lose this if you stop contributing to the company scheme

What are your current earnings taxed at the benefits of SIPP are 25% and 40% so obviously its a better bet if you are a higher rate tax payer

SIPPS are the way to go imho mostly because of the tax break and the autonomy but the government has already had a nibble at them with regard to the rate at which you can empty your pension pot so nothing is guaranteed in the long term

Alternatives to Hargreaves Lansdown to consider

Sippdeal (AJ Bell)

Jame Hay (part of santander)

Killick

Fidelity

Also you could read up on the forums for pensions and savings on moneysavingsexpert and motley fool they are pretty informative

For investments investment trust etfs and the newer american low cost provider Vanguard products are worth looking at

It's also worth looking at http://www.cavendishonline.co.uk/ if you go for a general unit trust based SIPP. Your funds can be invested into the Fidelity based service, but just about all the yearly unit trust backhanders that all of the above companies will hold on to will be refunded. Most unit trusts pay out .35%pa to the service provider and around .5%pa to the IFA. So with Cavendish they refund the .5% and Fidelity retains the .35%.

I've been using them for my ISAs and pension for a number of years and while they can only offer a limited service they seem able to do what they claim on their web site. It's also rather nice to have my pension paying me each year before I can even take it

One thing to be very careful about is none of the above offer good solutions if you wish to hold your SIPP in cash. To do this you have to go for a more costly solution that allows you to invest in a range of term deposit accounts - as such it's only worth doing if you are sure you can get a return that pays the yearly fees charged.

Roger

[porca misèria]

I had a chat with a friend last night and he told me about a family member. He had several well funded pensions and so decided to merge the all into one. The company that he choose to manage his pension went bust, and the story is that he has lost everythinng. Apparently he is not covered by any guarentees at all. So you may want to be careful before merging them all together, make sure you choose a well funded company to go with,

Can anyone confirm that pensions are not covered by government guarentees? I was amazed by my friends story. It sounds like the pension industry is no better than share brokers such as MF Global.

Erm, sounds like a possibly-muddled account (chinese whispers?) What company was that that went bust? Surely the failure to separate clients money from its own assets (thus putting clients at risk of wipeout through going bust) would've made a Maxwell-sized scandal we'd all have heard of?

[doahh]

Erm, sounds like a possibly-muddled account (chinese whispers?) What company was that that went bust? Surely the failure to separate clients money from its own assets (thus putting clients at risk of wipeout through going bust) would've made a Maxwell-sized scandal we'd all have heard of?

It sounded odd to me as well, but that was the story. I would have assumed that there would have been some sort of government cover as a last resort as well. I don't have any more details unfortunatly, I will try to remember to ask him next time I meet and repost back.

[Isakndar]

Sorry not to have engaged any of your replies to date though they are much appreciated - busy weekend and a trip to Milan ( not much fun when you have to be up and on site a 3 am) got in the way. I will take your replies in turn. thanks

[Isakndar]

Can you combine them into your present company scheme? It's often possible, and you say it is better charged so may be advantageous.

If not, consider combining them into one better charged new contract. Charges are more competitive today than they were some years ago and some providers offer discount for larger fund sizes which strengthens the argument for bringing them together.

Thanks - I have tried to incorporate my unfunded Aegon scheme to my present Company scheme - but it seemed to run into gorund through lack of interest on part of the company Bluefin.

This is something I have noticed if pension schemes are not going to make any personal gains out of changes to pension schemes they are not motivated

[Isakndar]

Transfer them all to the lowest cost SIPP you can find and distribute the investments around the lowest cost trackers available within that SIPP. Hargreaves Lansdown are good but there's plenty of others too. This doesn't mean your investments will necessarily do any better but you'll be paying out the minimum possible in charges at least.

I am interested in SIPPS but know very litlle about them. One of my problems is that I an scared of making decisions about large sums of potential and real cash, I would want to know more from a disintersted party before I embark on such a change.

[Isakndar]

I had a chat with a friend last night and he told me about a family member. He had several well funded pensions and so decided to merge the all into one. The company that he choose to manage his pension went bust, and the story is that he has lost everythinng. Apparently he is not covered by any guarentees at all. So you may want to be careful before merging them all together, make sure you choose a well funded company to go with,

Can anyone confirm that pensions are not covered by government guarentees? I was amazed by my friends story. It sounds like the pension industry is no better than share brokers such as MF Global.

I think this is excellent advice - one of the reason I have not merged more of my pension schemes if for this reason - it is probably better to be diversified to an extent. but if I am to keep a level of diversity then they all need to be funded rather than stagnent and losing thought charges.

[Isakndar]

However you decide to proceed,

DONT

GIVE

THEM

ANY

MORE

OF

YOUR

MONEY.

If I was 29 I would agree with you knowing what I know now - but I have roughly £220K invested at current valuations ( soon to be £10 at 2015 prices), and the awful way the charging structure is implemented means you have to commit more as the valuation increases just to hold the line, Obviouslt this has nothing to do with admin effort.

[Isakndar]

What is the % contribution by your current employer to the money purchase scheme you will lose this if you stop contributing to the company scheme

What are your current earnings taxed at the benefits of SIPP are 25% and 40% so obviously its a better bet if you are a higher rate tax payer

SIPPS are the way to go imho mostly because of the tax break and the autonomy but the government has already had a nibble at them with regard to the rate at which you can empty your pension pot so nothing is guaranteed in the long term

Alternatives to Hargreaves Lansdown to consider

Sippdeal (AJ Bell)

Jame Hay (part of santander)

Killick

Fidelity

Also you could read up on the forums for pensions and savings on moneysavingsexpert and motley fool they are pretty informative

For investments investment trust etfs and the newer american low cost provider Vanguard products are worth looking at

I currenlty contribute 3.5% to my company scheme - my company makes this up to 12% and there is a little tax advantage extra added in I also still contribute to my main PP scheme - I can improve on my work scheme next year - this is an excellent scheme. Even if it is still a money purchase scheme. And yes I am a higher tax rate payer have been for a long time - my current salary is about £55K with bonuses which amount to 10% of my income. I know this is a lot by many people's standards but I live in a council style terrace in London which I rent from the private BTL with my partner for a stupid amount of cash. If we did not do our current jobs here we could not live here.

Yes I need to look at SIPPS. This seems to be a popular piece of advice.

[Butthead]

Thanks - I have tried to incorporate my unfunded Aegon scheme to my present Company scheme - but it seemed to run into gorund through lack of interest on part of the company Bluefin.

This is something I have noticed if pension schemes are not going to make any personal gains out of changes to pension schemes they are not motivated

This is a common problem, providers won't accept instructions to transfer in funds without an adviser involved and advisers who impement company pension schemes aren't keen to get involved in advising on transfers in for members.

A SIPP avoids this problem because you take responsibility for the decisions, so it's a useful option. You could also find an adviser and pay them a fee to organise the transfers in, check you're not giving up any useful benefits etc.

I think this is excellent advice - one of the reason I have not merged more of my pension schemes if for this reason - it is probably better to be diversified to an extent. but if I am to keep a level of diversity then they all need to be funded rather than stagnent and losing thought charges.

With respect, it's actually terrible advice. If a money purchase pension provider goes bust the only impact on your pension savings is they eventually become administered by someone else. Pension funds are held completely seperately from business accounts, held in trust, and protected in such a way as it's simply not possible to "lose everything and not be covered by any guarantees at all" (unless the investment you choose loses all it's value, investing 100% in Enron shares for example, but then you have only yourself to blame).

Edit: Spelling

Edited January 18, 2012 by Voice of Reason

[porca misèria]

A SIPP avoids this problem because you take responsibility for the decisions, so it's a useful option. You could also find an adviser and pay them a fee to organise the transfers in, check you're not giving up any useful benefits etc.

Indeedie.

I should add to that, if you don't want to educate yourself about investment but leave that to someone else, a SIPP still works fine. A SIPP provider like H-L will offer advice if you want to pay for it. Short of that you can put it into exactly the same (or equivalent) managed funds where it was before, but at much lower costs than old-fashioned providers charge you (and which generate the bad headlines about ripoff).

[jonb]

I had a chat with a friend last night and he told me about a family member. He had several well funded pensions and so decided to merge the all into one. The company that he choose to manage his pension went bust, and the story is that he has lost everythinng. Apparently he is not covered by any guarentees at all. So you may want to be careful before merging them all together, make sure you choose a well funded company to go with,

Can anyone confirm that pensions are not covered by government guarentees? I was amazed by my friends story. It sounds like the pension industry is no better than share brokers such as MF Global.

If you put all your pension money in the shares of one company, and that company goes bust, you are not covered by any guarantees, because it is just poor investment performance. "With profits" funds are linked to the performance of the fund management company and they are best avoided - see for example what happened to Equitable Life. Again, that is poor investment performance which isn't covered by guarantees. Other investments should be held in ring-fenced accounts separate from the fund manager's own assets, so if they go bust, your money is still your money, and it would be transferred to another fund manager. If they didn't keep it in a separate ring-fenced account, then your fraud claim would be covered by the government guarantee, but there will be an issue about how much money you should get.

[jonb]

This is a common problem, providers won't accept instructions to transfer in funds without an adviser involved and advisers who impement company pension schemes aren't keen to get involved in advising on transfers in for members.

That's because most advisers are not qualified to advise on pension transfers so they are not allowed to do it. You need to look for one who does have that qualification.

[porca misèria]

"With profits" funds are linked to the performance of the fund management company and they are best avoided - see for example what happened to Equitable Life.

What happened to Equitable wasn't down to with-profits. Rather it was a case of over-promising, and then suffering a ruling from Their Lordships that gave all the assets to the retired at the expense of the non-retired.

For boomer-bashers, note that boomers were the big losers from that intergenerational transfer. Just as they are the big losers from the collapse in pensions since then, and particularly since 2008. All the wealth has gone to the already-retired.

[doahh]

If you put all your pension money in the shares of one company, and that company goes bust, you are not covered by any guarantees, because it is just poor investment performance.

It sounds like that would only be relevant for a SIPP? Maybe my friends brother did manage his own pension and made some terrible decisions. That wouldn't surprise me too much, he did own 200 properties (all in the same city) and is now apparently underwater with them.

[jonb]

What happened to Equitable wasn't down to with-profits. Rather it was a case of over-promising, and then suffering a ruling from Their Lordships that gave all the assets to the retired at the expense of the non-retired.

For boomer-bashers, note that boomers were the big losers from that intergenerational transfer. Just as they are the big losers from the collapse in pensions since then, and particularly since 2008. All the wealth has gone to the already-retired.

It wasn't related to with-profits, but it was the with-profits fund that suffered as a result. People with unit funds had the money transferred to Clerical Medical with no loss to their pension fund.