Pension Question
Discussion
I had a pension review with an IFA recently - fixed price to review all my private pensions (3 that I no longer pay into and one that I do contribute into along with my employer). I'm 53 with a view to semi-retiring in the next 12 -18 months but hopefully not beginning any drawdown for at least another 5-10 years depending on my other investments and plans.
The upshot of this is that for the IFA suggests I consolidate the 3 that I no longer contribute to in order to simplify things, reduce charges (2 are charging around 1.2%), potentially up the returns and lessen the risk as a lot is in Asia and Emerging Markets.
The 2 options he has suggested are either:
1) a managed fund solution (Royal London Governed Portfolio) which has a fund cost of around 0.45% OR
2) a bespoke fund solution (a selection of funds from the panel of the company the IFA works for (local company formed in 2004 with about £350m of client assets under management) that has higher costs (around 1-1.25%) but potentially better returns (based on past performance). He also offers ongoing advice fees of 0.5% for option 1 or 0.75% for option 2 for ongoing advice, review and monitoring.
The transfers from my existing pensions into these options would also incur a charge or around 1%.
My gut feeling is that the charge to transfer the existing funds seems high at 1% (is this something I can do myself?) and I'm not sure if the ongoing advice fees are reasonable or not. Can anyone provide any input on this?
I'm also wondering if an off-the-shelf platform product might be a better bet as I am happy to be involved in monitoring the funds and changing (with my risk appetite) as time passes. Would this be a sensible way to go and, if so, what would people recommend?
Hopefully these questions make sense?
Thanks
Gary
The upshot of this is that for the IFA suggests I consolidate the 3 that I no longer contribute to in order to simplify things, reduce charges (2 are charging around 1.2%), potentially up the returns and lessen the risk as a lot is in Asia and Emerging Markets.
The 2 options he has suggested are either:
1) a managed fund solution (Royal London Governed Portfolio) which has a fund cost of around 0.45% OR
2) a bespoke fund solution (a selection of funds from the panel of the company the IFA works for (local company formed in 2004 with about £350m of client assets under management) that has higher costs (around 1-1.25%) but potentially better returns (based on past performance). He also offers ongoing advice fees of 0.5% for option 1 or 0.75% for option 2 for ongoing advice, review and monitoring.
The transfers from my existing pensions into these options would also incur a charge or around 1%.
My gut feeling is that the charge to transfer the existing funds seems high at 1% (is this something I can do myself?) and I'm not sure if the ongoing advice fees are reasonable or not. Can anyone provide any input on this?
I'm also wondering if an off-the-shelf platform product might be a better bet as I am happy to be involved in monitoring the funds and changing (with my risk appetite) as time passes. Would this be a sensible way to go and, if so, what would people recommend?
Hopefully these questions make sense?
Thanks
Gary
LeoSayer said:
I can't answer most of your questions but 'simplify things' is not a good reason to stop contributing.
You've misread what the OP was saying. He has a pension that he's currently contributing to and a few older pensions where he is no longer contributing, simplifying his arrangements by combining these older pensions is entirely reasonable.Gary,
You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
Is 1% a lot? Depends what is being done for it, and (not in the money grabbing sense), what you've got that might represent value. You haven't dropped to a charge of 0.40% so as a speculative punt as to fund size, I'd suggest it's there or thereabouts - unless you want to pay a fixed fee. And why pay 1.2% if you can pay 0.45%? What is the difference in end result to you if both perform the same (ask for reduction in yield figures.)?
If you're contributing to an employer's scheme, though, would that be cheaper still? It might be worth asking what the inactive cost of running it is, between you finishing work and drawing benefits. Of course, the downside to that approach, amongst others, is that you have to take an informed view about institution risk and the spectre of the Financial Services Compensation Scheme getting involved.
Finally, if the adviser *is* Independent (is he?), I'd question the value of a decision based upon the product being picked simply because it's from his panel.
Hope that's of some help.
You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
Is 1% a lot? Depends what is being done for it, and (not in the money grabbing sense), what you've got that might represent value. You haven't dropped to a charge of 0.40% so as a speculative punt as to fund size, I'd suggest it's there or thereabouts - unless you want to pay a fixed fee. And why pay 1.2% if you can pay 0.45%? What is the difference in end result to you if both perform the same (ask for reduction in yield figures.)?
If you're contributing to an employer's scheme, though, would that be cheaper still? It might be worth asking what the inactive cost of running it is, between you finishing work and drawing benefits. Of course, the downside to that approach, amongst others, is that you have to take an informed view about institution risk and the spectre of the Financial Services Compensation Scheme getting involved.
Finally, if the adviser *is* Independent (is he?), I'd question the value of a decision based upon the product being picked simply because it's from his panel.
Hope that's of some help.
Ginge R said:
Gary,
You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
Is 1% a lot? Depends what is being done for it, and (not in the money grabbing sense), what you've got that might represent value. You haven't dropped to a charge of 0.40% so as a speculative punt as to fund size, I'd suggest it's there or thereabouts - unless you want to pay a fixed fee. And why pay 1.2% if you can pay 0.45%? What is the difference in end result to you if both perform the same (ask for reduction in yield figures.)?
If you're contributing to an employer's scheme, though, would that be cheaper still? It might be worth asking what the inactive cost of running it is, between you finishing work and drawing benefits. Of course, the downside to that approach, amongst others, is that you have to take an informed view about institution risk and the spectre of the Financial Services Compensation Scheme getting involved.
Finally, if the adviser *is* Independent (is he?), I'd question the value of a decision based upon the product being picked simply because it's from his panel.
Hope that's of some help.
Thanks Ginge.You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
Is 1% a lot? Depends what is being done for it, and (not in the money grabbing sense), what you've got that might represent value. You haven't dropped to a charge of 0.40% so as a speculative punt as to fund size, I'd suggest it's there or thereabouts - unless you want to pay a fixed fee. And why pay 1.2% if you can pay 0.45%? What is the difference in end result to you if both perform the same (ask for reduction in yield figures.)?
If you're contributing to an employer's scheme, though, would that be cheaper still? It might be worth asking what the inactive cost of running it is, between you finishing work and drawing benefits. Of course, the downside to that approach, amongst others, is that you have to take an informed view about institution risk and the spectre of the Financial Services Compensation Scheme getting involved.
Finally, if the adviser *is* Independent (is he?), I'd question the value of a decision based upon the product being picked simply because it's from his panel.
Hope that's of some help.
Can you expand on this a little as I'm not sure exactly what you mean.
Ginge R said:
Is 1% a lot? Depends what is being done for it, and (not in the money grabbing sense), what you've got that might represent value. You haven't dropped to a charge of 0.40% so as a speculative punt as to fund size, I'd suggest it's there or thereabouts - unless you want to pay a fixed fee. And why pay 1.2% if you can pay 0.45%? What is the difference in end result to you if both perform the same (ask for reduction in yield figures.)?
The 1% to do the transfer equates to a few £k and so I'm wondering if that is something I am able to do myself? Are there any restrictions on this sort of thing that only IFA's can do for example. It's good that you like the Royal London product but just wondering if there is anything else I should consider.Thanks for your input, really appreciated.
Of course.
If the adviser is independent, why is he suggesting his panel pension? Ok, he might be contractually obliged to offer you his company product, and that doesn't automatically make it bad, but it should put its value in context until you scrutinise it closely. I'm not saying it's better or worse, but I'd certainly question him really closely about why he's suggesting it - if he's Independent, why should he even have a panel? I'm Independent, and I know some great 'restricted' or panelled advisers, and I know some independent ones who'll rob you blind, but I'd question the inclusion of his panel pension until you had really got to the nub of it.
You want to derisk, and get out the emerging market-sequel funds, so I'm assuming you know what you want your pension to make for you. Royal London is a really good pension provider, and compared to a SIPP (which, unless it's a vanilla, bog standard cheapie one) makes much better sense for 99% of people. RL offers withdrawal strategies now, and it *might* be that that's better for you than the Governed Portfolio option.
Three grand or so, is a lot to simply move some relatively modest but very above average and worthwhile pensions - how many months did you work for those contributions? I'm not diminishing the value of good advice, just contextualising it (and cheapest isn't always best). I don't know what's being done for your money, but if it was me for that kind of fee, I'd possibly want dancing girls. Moving pensions is easy, it's a question of establishing suitability, running the research and transacting the administration. I offer a fixed fee - I'm not saying I'm better or worse (frankly, I'm annoying as hell and I have few friends, and the ones that I do have only feel sorry for me) but I'd certainly bash that cost down a bit, or ask what he's doing for your money (that better include someone dancing in your lap).
How much is your employer's scheme costing you? If it's not a lot, and if you do want to consolidate, why not consider moving the others to it? Aster you leave their employment, the cost might rise, and it might not be particularly suited to flexi-drawdown, but that might be the time to consider moving everything to something like Royal London. If you have over £50,000 investments with any one Financial Services Scheme licence holder, you stand to lose out if they go bust. In itself an essential part of research. The cash savings limit is £85,000 (increasing from £75,000 very soon due to sterling devaluation).
Gut instinct here (and it's not advice) is - if you're certain that you have sufficient grasp of the rational, process, funds, risk, volatility, strategy etc, then I'm sure that your occupational scheme administrator would allow transfers in. If money is an issue (isn't it always?), your few thousand quid would possibly be better spent on paying someone to establish, implement and manage a drawdown in retirement strategy when you finish work, fusing all of your revenue streams and taking all factors into account. The risks to growing wealth (accumulating it) are different to the threats posed to your income or revenue stream (decumulating it) once you've stopped earning money.
Like I said though, that's not advice, just a few thoughts to consider.
If the adviser is independent, why is he suggesting his panel pension? Ok, he might be contractually obliged to offer you his company product, and that doesn't automatically make it bad, but it should put its value in context until you scrutinise it closely. I'm not saying it's better or worse, but I'd certainly question him really closely about why he's suggesting it - if he's Independent, why should he even have a panel? I'm Independent, and I know some great 'restricted' or panelled advisers, and I know some independent ones who'll rob you blind, but I'd question the inclusion of his panel pension until you had really got to the nub of it.
You want to derisk, and get out the emerging market-sequel funds, so I'm assuming you know what you want your pension to make for you. Royal London is a really good pension provider, and compared to a SIPP (which, unless it's a vanilla, bog standard cheapie one) makes much better sense for 99% of people. RL offers withdrawal strategies now, and it *might* be that that's better for you than the Governed Portfolio option.
Three grand or so, is a lot to simply move some relatively modest but very above average and worthwhile pensions - how many months did you work for those contributions? I'm not diminishing the value of good advice, just contextualising it (and cheapest isn't always best). I don't know what's being done for your money, but if it was me for that kind of fee, I'd possibly want dancing girls. Moving pensions is easy, it's a question of establishing suitability, running the research and transacting the administration. I offer a fixed fee - I'm not saying I'm better or worse (frankly, I'm annoying as hell and I have few friends, and the ones that I do have only feel sorry for me) but I'd certainly bash that cost down a bit, or ask what he's doing for your money (that better include someone dancing in your lap).
How much is your employer's scheme costing you? If it's not a lot, and if you do want to consolidate, why not consider moving the others to it? Aster you leave their employment, the cost might rise, and it might not be particularly suited to flexi-drawdown, but that might be the time to consider moving everything to something like Royal London. If you have over £50,000 investments with any one Financial Services Scheme licence holder, you stand to lose out if they go bust. In itself an essential part of research. The cash savings limit is £85,000 (increasing from £75,000 very soon due to sterling devaluation).
Gut instinct here (and it's not advice) is - if you're certain that you have sufficient grasp of the rational, process, funds, risk, volatility, strategy etc, then I'm sure that your occupational scheme administrator would allow transfers in. If money is an issue (isn't it always?), your few thousand quid would possibly be better spent on paying someone to establish, implement and manage a drawdown in retirement strategy when you finish work, fusing all of your revenue streams and taking all factors into account. The risks to growing wealth (accumulating it) are different to the threats posed to your income or revenue stream (decumulating it) once you've stopped earning money.
Like I said though, that's not advice, just a few thoughts to consider.
Thanks again Ginge.
It appears that the more questions I ask, the more I have
As I said in my OP, I will not be going for drawdown for at least 5 years (possibly 10) so the exercise is to se if a consolidation and re-assessment of risk was a sensible thing to do. I come out at around a 4 for risk but the suggestion is to go for Royal London Governed Portfolio 7 now for growth and then switch to lower risk when I begin drawdown.
When you say "RL offers withdrawal strategies now, and it *might* be that that's better for you than the Governed Portfolio option", what exactly do you mean?
Regarding my existing work pension, I will definitely have left that company in the next 18 months and possibly within the next 6 (may not have a choice) so whatever I do today I want to leave that as is and if I am going to consolidate move to something else rather than having to go through the same exercise again in the future. One of the pensions I have is Aegon Retire Ready which I was moved to from an old Scottish Equitable private pension I started years ago. This is a self service platform that I could transfer into with 0.82% charges. I also have a Zurich one with 0.5% charges that I could use to consolidate.
At the end of the day, I've not touched things for at least 16 years and luckily the performance has been OK (although not brilliant). What I'm trying to do it lessen the risk/re-balance as I head closer to retirement and also ensure flexibility when I do retire for both cash withdrawal and drawdown.
It appears that the more questions I ask, the more I have
As I said in my OP, I will not be going for drawdown for at least 5 years (possibly 10) so the exercise is to se if a consolidation and re-assessment of risk was a sensible thing to do. I come out at around a 4 for risk but the suggestion is to go for Royal London Governed Portfolio 7 now for growth and then switch to lower risk when I begin drawdown.
When you say "RL offers withdrawal strategies now, and it *might* be that that's better for you than the Governed Portfolio option", what exactly do you mean?
Regarding my existing work pension, I will definitely have left that company in the next 18 months and possibly within the next 6 (may not have a choice) so whatever I do today I want to leave that as is and if I am going to consolidate move to something else rather than having to go through the same exercise again in the future. One of the pensions I have is Aegon Retire Ready which I was moved to from an old Scottish Equitable private pension I started years ago. This is a self service platform that I could transfer into with 0.82% charges. I also have a Zurich one with 0.5% charges that I could use to consolidate.
At the end of the day, I've not touched things for at least 16 years and luckily the performance has been OK (although not brilliant). What I'm trying to do it lessen the risk/re-balance as I head closer to retirement and also ensure flexibility when I do retire for both cash withdrawal and drawdown.
No snags Gary.
It's impossible to say if GP7 is suitable if you're coming out as a four, because none of us know your circumstances. It's not an approach that immediately springs to mind with me though. As I suggested in my first post, what's more important, not losing the farm at the eleventh hour, or going mad for a few extra quid with higher with which you might not need - let alone want? But if you want to de-risk, GP7 is promulgated thus..
<<Who is this portfolio designed for? It is designed for someone who has a moderately adventurous or adventurous attitude to risk and is a long time away from retirement.>>
RL offers what it calls Governed Portfolio Income Portfolio, which is specifically designed for savers who are looking to take a regular income - that's not you, just yet. But it's a strategy that takes into account, more so, various decumulation and sequence of return risks (a bit like pound cost averaging in return).
http://www.professionaladviser.com/professional-ad...
0.82% is beefy, you should get discount though, if you consolidate more money into it.
It's impossible to say if GP7 is suitable if you're coming out as a four, because none of us know your circumstances. It's not an approach that immediately springs to mind with me though. As I suggested in my first post, what's more important, not losing the farm at the eleventh hour, or going mad for a few extra quid with higher with which you might not need - let alone want? But if you want to de-risk, GP7 is promulgated thus..
<<Who is this portfolio designed for? It is designed for someone who has a moderately adventurous or adventurous attitude to risk and is a long time away from retirement.>>
RL offers what it calls Governed Portfolio Income Portfolio, which is specifically designed for savers who are looking to take a regular income - that's not you, just yet. But it's a strategy that takes into account, more so, various decumulation and sequence of return risks (a bit like pound cost averaging in return).
http://www.professionaladviser.com/professional-ad...
0.82% is beefy, you should get discount though, if you consolidate more money into it.
Ginge R said:
Gary,
You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
I don't much like industry awards, and don't vote, but this from last night is worthy recognition IMHO. You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
https://www.ftadviser.com/your-industry/2016/11/25...
Pleased too, to see Parmenion feature strongly.
Ginge R said:
Ginge R said:
Gary,
You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
I don't much like industry awards, and don't vote, but this from last night is worthy recognition IMHO. You possibly want things as simple as possible - so close to the finishing line it might be more important not to lose, than it might be, to take needless risk to make a few quid that you haven't said you actually need. Royal London is a very good provider, I like the product a lot.
https://www.ftadviser.com/your-industry/2016/11/25...
Pleased too, to see Parmenion feature strongly.
I've been doing quite a bit of research since this started and RL do indeed seem a good choice - although maybe portfolio 4 rather than 7 as you pointed out.
I guess I could use someone like Cavendish for a low 0.4% onward charge too!
Have a great weekend Al!
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