Pensions, worth combining or not?
Discussion
I have a few old pensions that I have not paid into for many years. The total value of these is a fair amount.
Now I'm getting closer to an age where I might want to use the funds, I was wondering about keeping them all or consolidating them.
I know there are often transfer fees etc and that I should get an IFA to advise and not rely on what some bloke said on a forum, BUT what I have done is compare the performance of each pension over the last, turbulent, five years and one seems to have weathered the storms better than all the others. It also seems to be less volatile. It's shown 20% cumulative growth over the last 5 years. Worst -1%, best 13% annual. Another shows a cumulative growth of 37% but worst of -15% best of 32%.
Perhaps it might be worth moving them all into that pension that seems least volatile but still grew by 20%?
Just wondering if there are any online pension comparison tools that might show how the pension companies compare? I guess they should all be more or less the same because its the underlying funds that change. So the investment mix is far more critical than the company running the scheme.
On the flipside, spreading risk, even randomly (maybe that's a good approach!) is always recommended...
Just thinking out loud really!
Now I'm getting closer to an age where I might want to use the funds, I was wondering about keeping them all or consolidating them.
I know there are often transfer fees etc and that I should get an IFA to advise and not rely on what some bloke said on a forum, BUT what I have done is compare the performance of each pension over the last, turbulent, five years and one seems to have weathered the storms better than all the others. It also seems to be less volatile. It's shown 20% cumulative growth over the last 5 years. Worst -1%, best 13% annual. Another shows a cumulative growth of 37% but worst of -15% best of 32%.
Perhaps it might be worth moving them all into that pension that seems least volatile but still grew by 20%?
Just wondering if there are any online pension comparison tools that might show how the pension companies compare? I guess they should all be more or less the same because its the underlying funds that change. So the investment mix is far more critical than the company running the scheme.
On the flipside, spreading risk, even randomly (maybe that's a good approach!) is always recommended...
Just thinking out loud really!
OutInTheShed said:
In my totally amateur opinion, I'd suggest understanding the charges and what the funds are actually invested in.
Agree with this, sensible suggestion. Especially if you haven't looked at the underlying investments in quite a few years, are the charges reasonable or could you potentially consolidate into another scheme and pay lower charges both platform and fund fees (consolidating into a current work pension if applicable) or your SIPP. The other aspect to consider is whether the underlying investments are appropriate for your age and risk tolerance (taking into account all your other sources of income, investments etc).
I have a current work pension and alongside that have consolidated 3 old pensions into a SIPP where I pay £45 per year platform fees (capped as I use ETF's).
Just for balance it's not always necessary or optimal to consolidate pensions, 'it depends' on various factors so if you think you need to take advice from an IFA or tax specialist (or both) then consider doing so especially if we are talking about fairly sizeable numbers that you have accumulated over your lifetime.
I am not an investment guru unfortunately so take the above for what it is, a random on the internet trying to help but DYOR and consult the folks who do know their stuff!
- All the above is assuming you have DC pensions, DB is a whole different world that is alien to me. I would say if you have a DB pension(s) is even more important to get proper advice before deciding if transferring out is a good idea, there are plenty of people who are in a world of pain after doing so though others who have done ok.
Edited by VR99 on Friday 7th October 12:46
VR99 said:
Agree with this, sensible suggestion. Especially if you haven't looked at the underlying investments in quite a few years, are the charges reasonable or could you potentially consolidate into another scheme and pay lower charges both platform and fund fees (consolidating into a current work pension if applicable) or your SIPP.
The other aspect to consider is whether the underlying investments are appropriate for your age and risk tolerance (taking into account all your other sources of income, investments etc).
I have a current work pension and alongside that have consolidated 3 old pensions into a SIPP where I pay £45 per year platform fees (capped as I use ETF's).
Just for balance it's not always necessary or optimal to consolidate pensions, 'it depends' on various factors so if you think you need to take advice from an IFA or tax specialist (or both) then consider doing so especially if we are talking about fairly sizeable numbers that you have accumulated over your lifetime.
I am not an investment guru unfortunately so take the above for what it is, a random on the internet trying to help but DYOR and consult the folks who do know their stuff!
Good advice, thanks. I'll expand my spreadsheet to include fees and take a detailed look at what asset classes each is invested in. BRIC is no longer flavor of the month after all and I should really reduce risk to a minimum at my age!The other aspect to consider is whether the underlying investments are appropriate for your age and risk tolerance (taking into account all your other sources of income, investments etc).
I have a current work pension and alongside that have consolidated 3 old pensions into a SIPP where I pay £45 per year platform fees (capped as I use ETF's).
Just for balance it's not always necessary or optimal to consolidate pensions, 'it depends' on various factors so if you think you need to take advice from an IFA or tax specialist (or both) then consider doing so especially if we are talking about fairly sizeable numbers that you have accumulated over your lifetime.
I am not an investment guru unfortunately so take the above for what it is, a random on the internet trying to help but DYOR and consult the folks who do know their stuff!
- All the above is assuming you have DC pensions, DB is a whole different world that is alien to me. I would say if you have a DB pension(s) is even more important to get proper advice before deciding if transferring out is a good idea, there are plenty of people who are in a world of pain after doing so though others who have done ok.
Edited by VR99 on Friday 7th October 12:46
OutInTheShed said:
In my wife's case, some pension funds were with schemes with high enough ongoing charges that a transfer was worthwhile.
In my totally amateur opinion, I'd suggest understanding the charges and what the funds are actually invested in.
Most are 1% fees. Most are balanced managed type funds. One is charging 2.5% but its a global equity fund which is doing better than the others.In my totally amateur opinion, I'd suggest understanding the charges and what the funds are actually invested in.
I have a stocks and shares ISA too that is invested in 24 different funds, so it will take a while to look into how those are all doing.
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