| Non-motoring > Pensions query | Miscellaneous |
| Thread Author: Bobby | Replies: 27 |
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Thu 22 Oct 26 09:07
Pensions query - Bobby
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We got a financial advisor who was recommended by a friend to look at our pensions. Great online feedback etc as well. Primarily for my wife as she will be 60 next year but also to look at mine, just to make sure everything I am currently doing is correct. So wife has an NHS and Civil Service scheme that she previously had and currently a work personal pension so advice was everything is fine, just keep paying into the PP. I have previous company defined benefit schemes, current civil service scheme, and 3 previous personal pensions. These personal pensions have a current combined fund value of c£230k. Her proposal is a £1000 cost to provide the actual financial advice report and she would recommend transferring the 3 personal pensions into one that is managed by them – proposed cost is 3% of fund value (about £6.5k) and then 0.75% charges annually thereafter. Without obviously getting into the specifics of the actual advice, as this is totally outwith my comfort zone, was just wondering do those charges sound right? I believe they just come off the fund value when transferred but each of the personal pensions have grown around 10% in last year so I am wary about moving them. And in my head its better to spread the risk whereas she seems to be coming from an angle of when I come to retire it’s a lot easier to work with one pension. She has mentioned as I get closer to retirement (57), the existing funds will automatically be directed to less riskier funds whereas, based on my risk profile, she would be more inclined to stay at the same risk level as you want the fund to continue to grow all through retirement. When you do come to retire and take money from a pension are you obliged to get financial advice at that time or do you just sign a form and send it back to the provider? All very confusing……… any thoughts appreciated |
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Thu 22 Oct 26 09:31
Pensions query - Andrew-T
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| My only comment, as a non-expert layman (altho a pensioner of one sort or another since 1992 :-) and who employs a financial adviser) is that the proposal sounds like putting all the eggs in one basket, which would carry a risk of its own. Your choice. |
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Thu 22 Oct 26 10:27
Pensions query - smokie
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My knowledge is about 10 years old but likely of some relevance. I had a defined benefit scheme (or maybe final salary, can't recall exactly but the principle was the same for my purposes) from my earlier working days and a defined contribution from later, then a PIP from my last few years when I was contracting. The defined benefit predicted pension was disappointing, but the transfer value was reasonable. I knew at least three people with civil service-type pensions who passed on shortly after taking their pension, which left (virtually) nothing (maybe a modest widows pension) so I decided to cash in the defined benefit and consolidate everything into one, except the smaller pot in the PIP as it just didn't seem worthwhile. Getting a suitably qualified adviser who could approve the transfer of the defined benefit was 1) not easy and 2) fairly expensive - I think around your £6.5k - as giving such advice is considered extremely risky. (I have a mate who at the time was one of the best qualified IFAs in the UK and his specialism being retirement planning and he wasn't adequately qualified to provide that advice, even on a paid basis.) I paid for advice which on the whole was sound but I also read a lot myself to try to understand it all, and challenged some of the suggestions - not to be a S******** but just because I felt they weren't ideal for me - and they agreed with it. IFAs don't come cheap and after the transfers etc were over I now manage my own. The major lump sits in a Royal London Governed Portfolio which has performed well enough and is fairly cheap, while the smaller PIP is my gambling pot where I move money around occasionally and has done OK but nothing spectacular. Trustnet is a handy tool for looking up find performance and risk, here is a link to one of the RL funds as an example. www.trustnet.com/factsheets/P/BUNYC/rli-governed-portfolio-moderate I have money other than what's in pensions which I suppose spreads my risk and that is largely in cash ISAs, govt bonds (e.g. premium and savings) which will never achieve the returns of a fund but do grow a bit and are fairly safe. There is a govt body where you can get limited advice but it is fairly low level and generic. However it always seems to be something you are expected to have done. They may be able to assist with some advice now. It's free IIRC so don't depend on it!! Lastly although you may have achieved 10% last year I think that's been fairly exceptional (on the back of AI etc) so don't assume you can consistently hit that much! |
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Thu 22 Oct 26 10:38
Pensions query - Bobby
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cheers Smokie - yeah have already been through the Govt pension wise process who said everything I was doing was fine. Yeah, I know someone who had an old style final salary scheme, he died 6 months after retiring and then his widow died a year later and that was the pension pot all gone (back to Standard Life) From what I have seen and read, yeah personal pensions or SIPPS seem to be the more flexible going forward as opposed to old style annuity plans from the final salary schemes. As an aside it is weird thinking of trying to plan for 5 years time when you see whats happening in the world with wars and AI and trying to plan for where your life will be at that point! |
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Thu 22 Oct 26 11:20
Pensions query - Falkirk Bairn
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I have known 2 Financial advisers over the years. Both seemed to have made /make a good living but I did not take their advice. The first, 1993, recommended cashing in the final salary pension pot and moving to Equitable Life Equitable famously went bust a few years on. Years later the 2nd adviser, I had known of him for a long time, collected the facts and I, the potential customer, could see holes in his plans. I just left things as they were - 4 pension pots + State Pension plus Serps uplift. It all worked out OK for me. On reaching 65 the State Pension was a "good pay rise" |
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Thu 22 Oct 26 10:33
Pensions query - Bromptonaut
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Hi Bobby, do I take it that like me you're younger than your wife? - a toy boy!! Assume the DB schemes will pay from whatever their retirement age is - will some at least be 60? - and are reasonably clear cut. Options to commute payments to lump sum or to give up lump sum for more monthly pension. Have you discussed/looked at options with the DB schemes? Leave or take an income? Where one has multiple amounts in penny packets or want to avoid that then merging/moving makes sense. I moved my DC scheme from CA form Nest to AN Other and back again 'cos folks on my team were TUPE'd from Northampton to Leicester and I moved back to Northampton to another role. That was to keep one very modest fund in one place. If the current providers are outfits we've all heard of, are manageable in number and are providing good and consistent performance I think the eggs/basket argument carries considerable weight. A £1,000 fee looks pretty good if that's proper independent advice from somebody doing that as opposed to working for a company that physically takes investments. OTOH the fee structure looks a bit like St James Place. We ended up with them because my Mum was and it seemed easier to take inheritance in specie with them than faff about with a sale purchase spread to go elsewhere. We fell out when I had around £40k cash to invest and they wanted well over a grand just to take it on and then a frankly uncompetitive annual charge. I posted here at the time. Before I'd had time, or rather gotten round to, working out where else we might go the SJP guy let us know he was going elsewhere. He moved to an outfit called True Potential who have done pretty well for us since. If it is SJP then on my experience advice would involve barge poles!! There are plenty of providers who'll take on cash without an up front fee. Any number advertise on the radio or in the papers - Vanguard, Hargreaves Lansdown, AJ Bell and Prosper name but a few. For clarity I'm not recommending any of them. Moneyhelper www.moneyhelper.org.uk/en has loads of info on retirement and pensions. CA also have page www.citizensadvice.org.uk/debt-and-money/pensions/ Last edited by: Bromptonaut on Thu 22 Oct 26 at 10:37
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Thu 22 Oct 26 10:50
Pensions query - Bromptonaut
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The thread I mention above is here: www.car4play.com/forum/post/index.htm?t=30792&v=f The amount I potentially had to invest was twice what I remembered and the fee was even more outrageous. |
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Thu 22 Oct 26 11:51
Pensions query - Bobby
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Interesting - and confusing! Life would be easier if we all knew when we would retire and when we will die! :) |
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Thu 22 Oct 26 12:21
Pensions query - legacylad
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>> Interesting - and confusing! >> >> Life would be easier if we all knew when we would retire and when we >> will die! :) >> Without being flippant, more important than knowing when you will cark is knowing when you will lose the ability to enjoy your dotage. Health and mental issues raise their ugly heads, so do your expensive long haul trips , if that floats your boat or buy your Caterham whilst you can. I speak from experience…bed bound Aunts & Uncles who wish they had toured Canada in a MH when they were so able, and visited far flung places on their wish list. Or simply bought another flight home and stayed an extra week in Majorca. |
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Thu 22 Oct 26 12:32
Pensions query - Bobby
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LL, yeah in my reply further up, the couple I knew dream was to travel on the Orient express but couldnt afford it. When they died, they had over £50k in cash sitting in bank accounts with diddly squat interest! |
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Thu 22 Oct 26 18:03
Pensions query - Andrew-T
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>> ... bed bound Aunts & Uncles who wish they had toured Canada in a MH when they were so able, and visited far flung places on their wish list. << There's no point in reaching old age and regretting things you haven't done - there will always be those if you waste time like that. If such things are now out of reach, either find easier ones, or recall good times instead. While I was middle-age-active I was a keen but ordinary orienteer for 50 years, until an ankle needed surgery and the sport turned into something that no longer attracted me. So I went back to choral singing and volunteering at a steam railway. And digging up family history, now that so much stuff is online. Certainly don't think about things I haven't done. |
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Thu 22 Oct 26 11:54
Pensions query - Bobby
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Brompt , yip toyboy. Between May and Oct each year its 3 years which I like to remind her about! The company I am looking at is Mattioli Woods |
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Thu 22 Oct 26 12:42
Pensions query - smokie
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Comments above reminded me that well in advance of retiring I did a detailed spreadsheet on how much money I thought I'd need in retirement and how much my income was likely to be. I had some variables like how I thought cost of living might rise and similar with pensions and investments so I could do some best/worst case modelling. I just started out with all the standing orders we had, and put in (quite generous) amounts for all other expenditure (holidays, presents, insurances, entertainments and hobbies, car purchase and maintenance, "going out" etc etc) and did a forward spend prediction based on anticipated changes over the years (e.g. we'll likely spend less on holidays after age 75) to see how much I would have left going forward. It was a very useful exercise (as I packed in work at 59), in fact was so useful that we continue to maintain it annually- our annual costs have now risen well beyond whatever my last annual salary was, but we have included in the spreadsheet details of all investments (with account numbers etc) so it will serve as a reliable basis for whoever has to sort out our financial affairs once we can't. Also it's a check that we are still living within ours means!! :-) |
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Thu 22 Oct 26 12:52
Pensions query - Bobby
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Yeah one of the downsides of WFH is that when I retire I wont suddenly save lot of money on commuting, lunches, chipping in for collections etc. Utility costs will probably be higher than they are now as I am cosy in my wee office and dont need any heating or much electricity! |
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Thu 22 Oct 26 13:10
Pensions query - Bromptonaut
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Re reading the OP I'd summarise to two points: 1) Charging a fee to take your cash on board is outrageous and; 2) The % annual fee is far from competitive. If there's active management it might just buy something worth having but if it's just a spread of units to achieve the required income/growth you want you can do better. |
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Thu 22 Oct 26 13:21
Pensions query - Manatee
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>> Re reading the OP I'd summarise to two points: >> >> 1) Charging a fee to take your cash on board is outrageous and; >> >> 2) The % annual fee is far from competitive. If there's active management it might >> just buy something worth having but if it's just a spread of units to achieve >> the required income/growth you want you can do better. I don't really know what a competitive FA fee structure is but 0.75% + platform fees + fund management fees is high cost, probably 2% off your return. And I'd rather pay a flat fee for advice if I wanted it. FA's used to know stuff that we couldn't easily learn but there's so much available online now it's debatable how much value they add for people who are able to research. OTOH they can stop you from doing something silly. Pay no heed to hardwood plantations, classic car investment schemes, storage rental etc. |
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Thu 22 Oct 26 13:12
Pensions query - Manatee
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The £1000 fee is nominal. The real prize for the FA is the 3% and 0.75% annually. if that is for management and annual reviews, there will be a platform fee on top. Then you will have fund management charges assuming they use funds. Ask for an estimate of the total charges Compare that with a low cost platform and Vanguard funds, there could be a big difference. Obvs keep the DB. Unless there is a good reason not to, take the 25% TFLS (tax free lump sum). It depends on scheme rules but often you can choose to commute just your pension for that and not the contingent spouse's pension. E.g. the pension form my last employer was about £20k/yr which I reduced to £15k to take a TFLS, but my spouse's £10k pension would still be payable in full should I fall off the perch first. DC schemes including personal pensions often have 'lifestyling' whereby in the years leading to retirement they 'derisk' which reduces returns but also reduces the risk of a market crash cutting your annuity value just before you retire. That's less relevant if you plan to use drawdown but you might still consider derisking to protect the 25% TFLS or even taking it now if you are over 55 if you think the market is near the top. Basically of you intend to use annuities and you are near retirement you are a short term investor. If you are using drawdown you will be a long term investor for most of it for a few years yet. But consider the lump sums. The die is cast for me with my DB pensions but I still have some in a SIPP in drawdown which I don't currently take anything from (I had the TFLS long ago). I was leaving that as it was outside IHT but that changes from April and it has suddenly become potentially much less valuable to my heirs as it will be taxed at 40% and then again at their marginal rate when they get it. I aim for funds that (look as if they) have a good chance of avoiding big losses. Some of those still perform quite well, or at least they have done so far. But about 20% of my SIPP is in cash today. I don't think I am a good investor - I'm sure I have missed opportunities, but I aim to have a 'plan' that doesn't leave us broke regardless of how long either of us is going to live (planning would be easy if we knew that). The SIPP in drawdown is with HL and I am considering moving it somewhere cheaper (there are now fee-free platforms) but I do get a discount on the platform fee from when they put their prices up years ago and I threatened to leave so it's not too bad. And they discount many of the funds. Look at the funds available and fund management fees when comparing platforms. None of this is advice! |
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Thu 22 Oct 26 13:29
Pensions query - Manatee
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| I should have said I transferred all my defined contribution/PP stuff into my SIPP. It is easier in one place. But check that none of them has penalties (I don't even know how legal this is) or a high guaranteed annuity rate. I had one of those on a Section 32 Buyout policy so I took the annuity on that. |
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Thu 22 Oct 26 14:07
Pensions query - Bobby
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Manatee, you have given me horrible flashbacks to my Norwich Union days with Section 32s! Cant mind the details but think these were used when massive employers closed down and all the benefits were transferred into the individuals names. Jarrows shipyards, Ferranti are two that spring to mind! Were horrible to deal with admin wise but the sales consultants made a fortune of them as their bonus was based on a percentage of the transfer value and these ran into the millions! |
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Thu 22 Oct 26 14:08
Pensions query - Bobby
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| In fact my wife's Uncle and my FIL both also had them through their employment in the steelworks in the area. Did very well out of them. |
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Thu 22 Oct 26 14:13
Pensions query - Bromptonaut
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>> Jarrows shipyards, Ferranti are two that spring to mind! Were horrible to deal with admin >> wise but the sales consultants made a fortune of them as their bonus was based >> on a percentage of the transfer value and these ran into the millions! Mrs B had a relative by marriage - widow of a blood aunt's husband's brother if that makes sense - whose family were big players in Ferranti. |
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Thu 22 Oct 26 15:08
Pensions query - martin aston
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My IFA is part of a small nationwide chain. He has been excellent in the nearly 2 years he’s been advising us. Previously I was with a bigger firm , but not one of the household names. They were OK but very expensive. The initial benefit from the first firm was that they were used by my employer to give me “free” pre-retirement advice and had a very very good understanding of our DB pension, redundancy schemes, share schemes and so on. I invested with them. We parted ways after a couple of errors and when they annoyed me by reducing their fees when I happened to ask for a reduction. I’m being perverse I know but I felt I’d been mugged for all the previous fees which were considerable. The guy I am with now did a full financial review of all our assets and modelled some gifting options to our kids. He also recommended how to convert my Freestanding AVC into a more flexible SIPP. Whether I did this via him or independently was up to me. He was very clear what his charges, platform fees etc were and did a point by point comparison with the previous lot. Needless to say he was cheaper. I reckoned the reduced costs would cover the cost of change in a couple of years. They notionally charged about £2.5k for this initial report but this was redeemable against their 1% charge to take over our ISAs. We duly moved to them so the report was “free”. His own ongoing fee is .75% pa. How this compares to Bobbys (apparently higher?) charges in his initial note would need a proper dig as to how their charges are built up. Finally there is the diy option. However in my case Mrs A has no interest in investment despite having a healthy stocks and shares ISA, and a SIPP. Actuarially she will outlive me by 10 years or more so I think paying a bit for advice is a worthwhile safety net that will continue if I am gone. |
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Thu 22 Oct 26 17:16
Pensions query - smokie
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| What do they do for you each year that you couldn't do yourself? |
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Thu 22 Oct 26 19:35
Pensions quers - martin aston
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Smokie, nothing in theory. However I wouldn’t want to spend time each day/week/month assessing my investments and buying and selling. You can of course reduce that work by buying trackers and widely based investment funds rather than shares. These IFAs and their investment teams do that work for you with regard to your attitude to risk and within a pool of clients and investments. Whether you might beat their returns by managing it all yourself is a moot point. I just prefer to leave it to my IFA and get on with life. I do however have fee free NS&I investments that incur no IFA fee. |
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Thu 22 Oct 26 19:59
Pensions quers - Manatee
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| Are they actually buying and trading stocks? Wow. |
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Thu 22 Oct 26 21:57
Pensions quers - martin aston
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| My current FIA only holds funds but the previous one also held a few shares. |
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Thu 22 Oct 26 19:54
Pensions query - Dave
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| AI should be able to give you a good idea. Cheaper, and probably more honest and less biased. |
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Thu 22 Oct 26 20:23
Pensions query - smokie
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Maybe I'm too conservative but the Royal London funds I mentioned above seem to do OK, certainly more reliable and stable than my picks for my smaller "gambling" pot (one of which i reported here was up 30%+ earlier in the year but is now down 10%.) I'm not sure that a realistic target should be. Funnily enough I was just out having a sundowner with an ex-accountant mate over here and he was bemoaning his ex-IFA, saying they always seemed to have an excuse for why their picks had only done 3% or whatever. |
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