Multiple ex-employer pensions - Would you consolidate?

[seapod]

I think this is a scenario familiar to many on here and its something that has been bugging me for a while without me ever getting around to doing anything about it. An annual statement in the post this morning is the trigger though!

First an apology, I don't know the correct lingo so I hope the following makes sense.

I have 3 'dormant' pension schemes which I have paid various amounts into over the last 15 years. They all came from companies I worked with. 2 are what I would call commercial, offered by my previous employers but run by a high street name - Prudential and Aegon. Both are typical balanced lifestyle equity funds that seem to achieve modest returns year on year. However I am paying a 1% management fee for both. Neither has a massive amount invested, about £70k between them.

The 3rd pension is from my last employer which was a FTSE100 company and had a self-managed (funded?) pension scheme. There is about the same amount again in this one. Again, similar management fee.

I am now working for a new small company that will pay a contribution to a pension but doesn't have an 'in-house' scheme, so is recommending that I go and set up a personal pension and they will contribute into it. However, this means that I will then be paying 4 lots of management fees every year...

So - what should I do?

Some people have said its good to spread risk and portfolio so leave alone

Or I consolidate everything other than the FTSE100 company on the basis they are probably all investing in pretty much the same asset classes and funds?

Or I go the whole hog and consolidate the lot? (not sure how I transfer the FTSE100 one but I am sure there must be a way)

I have had a look around but there is surprisingly little information available considering this must be a no means uncommon scenario.

Any advice or comments appreciated

[Cheib]

You won't be paying four times the fees as the fees are based on the amount...i.e. if you are paying 1% on two pensions of £40,000 you could still be paying 1% on one pension of £80,000 afterwards.

I would personally consolidate them as it's much easier to keep an eye on it and you can obviously invest them in different asset classes...i.e. some in FTSE, some in Europe etc etc

You really need a good IFA to help you on a fixed fee basis. That said you are paying a lot at 1%....I have a SIPP which I pay half that on and have full flexibility about what I can invest in...i.e. any fund managed by any fund manager and pretty much and stock listed on any major stock exchange in the world.

[dalenorth]

it will be hard for anyone on here to advise you. I would recommend you speak to a G60 qualified IFA?

[seapod]

Good point about the management fees - 1% is 1%!

I will book in to see an IFA which I thought would be the next step. Good to hear that its possible to reduce the management fee with some judicious selection though.

Cheers all

SP

[Welshbeef]

Things to think about.

Transferring incurs cost which could be so high as youd Not bother.
All eggs in one basket is risky
Benefit from having all in one pot/company is less paperwork correspondence that's it
All pensions can be transferred even if you had a public sector final salary fund you could transfer it out and lose the final salary element
The fund you have now may not be the best
The pension your contributing to now may not be the final one do could face this issue again.

You could of course put it all into a SIPP but buy to let properties and make a lot out of it

[Cheib]

Welshbeef said:

Things to think about.

Transferring incurs cost which could be so high as youd Not bother.
All eggs in one basket is risky
Benefit from having all in one pot/company is less paperwork correspondence that's it
All pensions can be transferred even if you had a public sector final salary fund you could transfer it out and lose the final salary element
The fund you have now may not be the best
The pension your contributing to now may not be the final one do could face this issue again.

You could of course put it all into a SIPP but buy to let properties and make a lot out of it

Some poor advice there......especially as you can't put residential property into a SIPP.

There's nothing to stop you having it all with one SIPP or PP provider but using multiple asset managers or asset classes. You wil generally have lower costs by consolidating.

[Welshbeef]

Cheib said:

Some poor advice there......especially as you can't put residential property into a SIPP.

There's nothing to stop you having it all with one SIPP or PP provider but using multiple asset managers or asset classes. You wil generally have lower costs by consolidating.

What can you put into SIPP?
My understanding was anything but classic cars and fine art.

[richtea78]

Your understanding is wrong then. :P

Commercial property is allowed, residential property isnt. So a Doctor can put his practice property into it if he owns it and many of them do, but he cant put his house in. You can track property indexes with an ETF

[Cheib]

Welshbeef said:

Cheib said:

Some poor advice there......especially as you can't put residential property into a SIPP.

There's nothing to stop you having it all with one SIPP or PP provider but using multiple asset managers or asset classes. You wil generally have lower costs by consolidating.

What can you put into SIPP?
My understanding was anything but classic cars and fine art.

Well pretty much any financial asset class from any major financial market in the world....which you can't in a personal pension.

Residential Property is the big red flag....it was being discussed for a while but they rightly decided the then frothy property market didn't need that boost. If we started to see a bearish property market they might allow it though personally I don't think they should.

Not really sure why anyone would want to put Classic Cars, Fine Art or Wine etc in because they are all CGT free anyway. Plus it's a potential minefield....in theory every maintenance or restration bill for that car would have to come from the SIPP because that impacts the value of the car and would have to be treated like a Pension contribution.

[CaptainSlow]

Do you still need a SIPP provider if you want to only have a commercial property?

Also, how does the funding work, if say you needed a mortgage on the property?

[Olf]

Some pension funds have to return a minimum amount once you've paid over a min threshold so consider that also in your checks...