Rip off pensions

Don't let ignorance and apathy allow you to be ripped off by your pension provider. Many older pension contracts don't have the competitive charging structure modern pension contracts do. Worse still are you suffering high charges and poor performance? We can investigate what pension you have, and discuss the options with you.

There are two key issues your need to consider with an existing pension with an insurance company or bank. They are charges and funds.

Pension Charges

Initial charge, bid/offer spread, accumulations units, nil/reduced allocation period, monthly plan fee, annual management charge. All these are the jargon names given to the charges applied to many pension contracts, especially those taken out before 2000. Although some insurers have changed their charging structure on older pension contracts, many have not, and you could still be incurring excessive charges regardless of whether or not you are still paying into the pension.

Pension Funds

Funds, and in particular fund performance of your pension fund is the other key issue. This in many ways is more important than charges. If you are paying high charges and your funds are providing you with excellent performance, then is there any need to transfer your funds? The answer is probably "no".

But many clients find they have taken out a pension and have been investing into a "Balanced Managed" fund which may be offering limited returns. Do the underlying funds still suit (and have they ever suited) where you want your money invested?

It may be possible to switch funds within an existing pension contract, but then you would need to consider the performance of these funds, compared to other companies funds with a similar level of risk. Equally you might want to question how many funds they offer suit your attitude to risk. Old style pension contracts, even those with the big name companies of today may only offer a handful of funds to choose from.

With-Profits Pension Funds

Investing pensions into with-profits funds was very common in the eighties and the nineties and many companies still have large amounts of funds invested in with-profits funds, companies such as:

• Resolution Life
• Phoenix
• Royal and Sun Alliance
• Pearl
• NPI
• Equitable Life
• Alba Life
• Eagle Star
• Guardian Royal Exchange
• Scottish Widows
• Abbey Life

Pensions invested in with-profits funds in particular need careful consideration. Many with-profits funds are now heavily invested in low risk, and therefore low return investments, and some will be unlikely to grow significantly during the remaining term. These are often known in the press as "zombie funds".

If you have a pension invested in a with-profits fund with any company then you ought to at least review whether the funds remain there, since the bonus rates have fallen with many companies. As independent financial advisers we can help discuss the implications of any with-profits investment you may have. Contact us now online or call us on 0800 0725987 to discuss your options.

Other considerations

There are some important considerations before you transfer your pension, as not everything with old style contracts are bad. Some offer benefits not available with new contracts. In particular guaranteed benefits, such as a guaranteed annuity rate, or maybe even a guaranteed pension, or even a higher tax-free cash than under a new contract.

We can help

You may not know the the details about your pension, but if you want an appraisal of your pension then please contact us now so that we can investigate this on your behalf, and discuss the advantages and disadvantages of your existing contract.

transferyourpension.co.uk is a trading style of the The Policy Servicing Company Ltd which is an appointed representative of Independent Investment Solutions Ltd, which is authorised and regulated by the Financial Services Authority.
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