Virgin Pensions

red_tiger_2

Hello everyone,

I have a Virgin stakeholder pension worth about 16k. It dropped 8% in my last statement. I'm 39 years of age.

I was wondering whether to transfer my pot to another stakeholder pension, such as Legal and General that might have more funds, less risk?, etc. If I do this is there likley to be penalties? and If so do you think it makes sense to do this?, or rather keep my Virgin pension on hold and start a new one?.

Best regards,

Jeremy

dunstonh

The Virgin stakeholder pension is probably one of the worst stakeholder pensions out there. It offers no discounts over a stakeholder pension arranged by an IFA taking maximum commission, let alone discounted. It only has 3 funds, the main one is FTSE tracker which is medium.high risk which is higher than the average consumer risk profile. The other two are only really suitable for the years close to retirement.

I was wondering whether to transfer my pot to another stakeholder pension, such as Legal and General that might have more funds, less risk?

L&G is cheaper and they do have more funds. Obviously, if you pick a FTSE tracker with L&G you will get the same performance. However, the choice of funds allows you to build a half decent sector allocated spread that can average out to every risk profile if needed. Something that Virgin cannot do.

If I do this is there likley to be penalties?

No.

do you think it makes sense to do this?

Yes. Whether L&G is the best option for you will depend on what you are after and how you intend to buy the pension but it would be a hard job to find a stakeholder as poor as Virgin.

red_tiger_2

Many thanks for your help. As I mentioned my pot according to my last statement is worth around 16K, if I move to a different stakeholder pension is that same value transfered?. I guess if I leave it another year the way things are going Imight only be transferring 10K?. So when does it make sense to transfer?

sdooley

red_tiger wrote: »

according to my last statement is worth around 16K, if I move to a different stakeholder pension is that same value transfered?

They value the pot on the day of transfer, but there won't be any extra charges or reduction in the value from a stakeholder.

EdInvestor

red_tiger wrote: »

I guess if I leave it another year the way things are going Imight only be transferring 10K?

Or 26k?

So when does it make sense to transfer?

Whenever your crystal ball tells you.

What was actually going down was not the Virgin pension (that's just a tax wrapper) but the fund inside the pension ( the FTSE tracker).The idea of a tracker fund is that it goes up and down with the stockmarket index.

There is a fairly strong expectation that the FTSE index will be rising in the fairly near future because inflation is coming down and interest rates are likely to start to fall.So if you plan to stay in that type of fund there may be little point in moving (except to secure lower charges).

But if a tracker fund is too risky for you, you need to pick a lower risk fund selection.Try doing some research into that and you may get a better idea of the best way forward.

dunstonh

Of course if you do want a FTSE tracker then you can get it cheaper in other pensions. About 1/3rd of the cost potentially.

But do remember that single fund investing is old fashioned and will result in lower returns over the long run. Plus, it does appear to be above your risk profile and that should come before everything else.

red_tiger_2

Many thanks everyone for their help.

Last question :-). Do you think it would make sense and keep my Virgin pension which I'll just top up occasionally and then start a second pension which is lower risk and more funds. The idea being not to keep everything in one basket. Although at 39 maybe by not transferring my Virgin pension I won't get much return on my new pension by starting off with £300 a month

dunstonh

Do you think it would make sense and keep my Virgin pension which I'll just top up occasionally and then start a second pension which is lower risk and more funds.

Can you get lower charges? Yes
Can you get better fund choice? Yes
Is there anything the Virgin pension offers that is not offered elsewhere better or cheaper? No

So, its a no brainer to move.

The idea being not to keep everything in one basket.

Having multiple pension providers is not diversifying especially if you go and pick a FTSE tracker with the no provider. The pension provider is just an administrator. Its the investments within the pension where you diversify.

Although at 39 maybe by not transferring my Virgin pension I won't get much return on my new pension by starting off with £300 a month

It wont make any difference unless you pick a provider that offers fund based discounts.

red_tiger_2

okay many thanks, I'll go and see a IFA and move my Virgin Pension to another Stakeholder that has lower fees, better funds and less of a risk, then hope everything will be okay!. By the way how much will the IFA charge to help me move my pension for me and to give me advise?. Is it normally a one time payment of say £200-300?.