Transferring Pensions to avoid IFA Charges!

angelavdavis

I know an article appeared on this quite some time ago, but wondered if anyone can provide me with some pointers on what their advice would be to someone who is 35 and already has four pensions but no current!

I have a Provident Mutual Pension which I took out in 1989 - this has subsequently been acquired and sits with Norwich Union. It is a protected rights scheme and its transfer value is £8,700. Pension payments were stopped when I was made redundant three years after taking out the scheme and hasn't been contributed into since.

I returned to the same IFA when more financially secure in 1994 and instead of resuming the Provident Mutual Pension, I was advised to take out a second pension Scottish Provident scheme - this now has a transfer value of only £2,000 (which seems appalling for the 2 years and £160+ per month I paid in, but the IFA chose Technology shares to invest in!).

I then commenced my own company in 1996 and an IFA recommended by my accountant (thought I wouldn't bother with the other guy!) told me to stop paying into this scheme as more taxable benefits could be realised by taking out a Scottish Mutual Executive company scheme that both myself and my (then) husband could benefit from. The current value of this scheme is £9,000.

I was then (out of the blue) headhunted by a firm that offered me a great salary package. Part of the package was a 10% non-contributory Group Pension package. This fund is with Standard Life and currently worth £16000. This company down-sized on a global scale post-9/11.

In total, I now have four pensions - 3 personal and 1 company scheme and none are current! Its not a great position to be in, but as you can see, I have got here via varied means!

I am looking at trying to clear these messes. I am working, am unlikely to take a career break and pay higher rate tax so I really need to start paying into a scheme somewhere.

I would preferably like to consolidate at least two of the smaller pensions into one - bypassing IFAs and charges if possible.

I am guessing I can't do anything with either the Executive pension or the Group Pension? The group pension in particular is performing well so I am loathe to touch it anyway.

Should I transfer to a SIPP so I have the ability to include buy-to-let property within my plan in future (or will this only be available for policies taken out post-April?)

Should I just transfer these to a consolidated Personal Pension through an organisation like Cavendish?

Any thoughts are welcome!

Thanks in advance

Angela

dunstonh

I returned to the same IFA when more financially secure in 1994 and instead of resuming the Provident Mutual Pension, I was advised to take out a second pension Scottish Provident scheme - this now has a transfer value of only £2,000 (which seems appalling for the 2 years and £160+ per month I paid in, but the IFA chose Technology shares to invest in!).

Tech sector had its issues but there are signs that it is beginning to pick up nicely and there have been a number of articles suggesting it could become a top performing sector again in the very near future. Its a bit of a sign of the times where only one fund was recommended. Nowadays you would get multiple funds or a fund which invests across other funds.

Provident Mutual had closed for new business and couldnt accept top ups or be recommended so no problem there.

I then commenced my own company in 1996 and an IFA recommended by my accountant (thought I wouldn't bother with the other guy!) told me to stop paying into this scheme as more taxable benefits could be realised by taking out a Scottish Mutual Executive company scheme that both myself and my (then) husband could benefit from. The current value of this scheme is £9,000.

Executive personal pension would offer enhanced benefits.

I would preferably like to consolidate at least two of the smaller pensions into one - bypassing IFAs and charges if possible.

You can do that but a couple of those pensions may not be advisable to do it.

I am guessing I can't do anything with either the Executive pension or the Group Pension? The group pension in particular is performing well so I am loathe to touch it anyway.

Wrong. You can. Also it isnt the pension that is performing well. Its the investment fund(s) you are currently in. You dont know if the other providers offer fund(s) in the same sectors which are performing better.

Should I transfer to a SIPP so I have the ability to include buy-to-let property within my plan in future (or will this only be available for policies taken out post-April?)

If you want. Of course, there are lots of issues with doing that and the yeild on rental properties isnt great at this time.

Should I just transfer these to a consolidated Personal Pension through an organisation like Cavendish?

If you want. However, you won't get any advice or consumer protection and there are issues here that you don't appear to be aware of and without advice you could do more harm than good.

EdInvestor

angelavdavis wrote:

I have a Provident Mutual Pension which I took out in 1989 - this has subsequently been acquired and sits with Norwich Union. It is a protected rights scheme and its transfer value is £8,700.

Recently NU offered PM members the opportunity to transfer into another NU fund.Did you take this up? It would be a good idea to move this money out of PM as it won't perform, but also see below. Note that protected rights can't go into a SIPP..

Scottish Provident scheme - this now has a transfer value of only £2,000 (which seems appalling for the 2 years and £160+ per month I paid in, but the IFA chose Technology shares to invest in!).

This one can certainly be moved - check the charges you are paying to see whether you ahould move or just change to a new fund within the same pension.

..a Scottish Mutual Executive company scheme that both myself and my (then) husband could benefit from. The current value of this scheme is £9,000.

Ditto for this one, check the charges and the alleged extra benefits, are they still relevant? You'll probably need an IFA to move this one.

This fund is with Standard Life and currently worth £16000.

If this money is in the With profits fund, don't move it before the demutualisation next year or you will miss out on a windfall.

Std Life usually has 1% charges across the board, and if performance has been good, this could act as a home for the protected rights pension currently at PM and the Scot Prov pension. Consolidating the three at Standard might be the easiest thing for the time being if you are happy with that pension's performance.

You don't have enough money in the pensions to use a SIPP for property purchase. But low cost online SIPPs are good for other reasons and especially for consolidating and investing old pensions. Have a look at the ones at https://www.sippdeal.co.uk (for share investing) and https://www.hargreaveslansdown.co.uk ( for fund investing) and see if they appeal.You should be able to transfer without using an IFA (though HL will probably require one if you want to move the EPP.)

EdInvestor

Angela

Useful discussion here about transferring small high charged EPPs to stakeholders/SIPPs etc.

Note the tax free cash issue now arising before A day.

whiteflag_3

You don't have enough money in the pensions to use a SIPP for property purchase

Can you explain this? I didnt know there was a lower limit for property purchase!

dunstonh

Std Life usually has 1% charges across the board, and if performance has been good, this could act as a home for the protected rights pension currently at PM and the Scot Prov pension. Consolidating the three at Standard might be the easiest thing for the time being if you are happy with that pension's performance.

Some PM pensions have very low charges. Lower than 1% amc.

EdInvestor

Some PM pensions have very low charges. Lower than 1% amc.

Perhaps so, but PM pensions won't perform will they?Even NU says so.

oceanblue_3

EdInvestor wrote:

Perhaps so, but PM pensions won't perform will they?Even NU says so.

If you have a look at the Trustnet website, you'll see that their past performance is fairly respectable.

Where have NU said that PM pensions won't perform?

EdInvestor

Provident Mutual is a zombie fund. NU have suggested members switch new contributions elsewhere.

Mail report

oceanblue_3

EdInvestor wrote:

Provident Mutual is a zombie fund. NU have suggested members switch new contributions elsewhere.

Mail report

But this link refers to a story about Provident Mutual endowment policies invested in the with-profits fund.

The poster's business with Provident Mutual is a pension contract, and we don't know which fund it's in.

Come on, Ed - focus!

EdInvestor

dunstonh wrote:

Provident Mutual had closed for new business and couldnt accept top ups or be recommended so no problem there.

Perhaps you two could sort the situation out between yourselves.