Should I Tidy Up My Pensions?

Should I Tidy Up My Pensions?Written on February 18, 2014 by Kirk Rice LLP

Financial Services Questions

The Question:

I worked for 4 previous employers leaving pensions with them. When I moved home for my latest job, it took more than a year to change my details. Should I transfer them to one plan so that I can look after them more easily? I put this off last year because I could not afford to pay for advice on top of the move.

Kirk Rice LLP answers:

There are several aspects to consider, including the effect of paying for advice, which I will return to later. Pensions have been a core financial planning product for more than 25 years. Most people seek advice when they first start one and at the point they come to retire and want to draw it. However, they neglect the period in between. As Pension Rules regularly change, most people could benefit from regular advice.

A common remark we hear from clients is “I could have and should have put more in”. In relation to your Pensions, an employer scheme generally had lower costs than an individual Pension and once you left the charges may have changed. The money in all schemes may be in very similar ‘default’ funds. Some funds are designed to protect the fund value towards a target retirement date, which may no longer be your desired retirement date. Some schemes provide for higher cash sums at retirement and this is lost on transfer. Your chosen Adviser will review each scheme on your behalf and report on issues including charges; any guarantees; transfer fees; financial strength of providers; suitability of funds; past performance.

Your Adviser will recommend if you should transfer or stay put for each scheme and establish anything else you should do now for better financial security. I note you put off paying for advice last year. Until 2013 most advice was given without you making direct payment for the advice. E.G. The Pension Provider deducted charges from your fund to cover its costs which included the commission payment made to the Advisers.

If any of your plans were on this basis you would have received details of the costs in a personal Illustration before joining. Since January 2013 all advisers must charge a fee for Investment & Pension Advice and it can no longer be paid via commission. You decide how to pay the fee and it can be taken from one or more of your Pension Funds on transfer. This option means you could have taken advice last year without an additional cost on your household budget.

If you would like more advice regarding this issue or any other financial services matter, please contact us.

If you would like to receive Kirk Rice’s Financial Services Questions regularly by email, simply email info@kirkrice.co.uk stating Financial Services Questions in the subject heading and we will add you to our distribution list.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. There is no guarantee that your new pension or pension fund will outperform the ceding/old pension scheme(s).

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