Pension Advice!

MoneyMan-SOS

Hi, I am new to this and I also have a questions on PENSION which you may have answered number of times. I apologize if it is obvious or dopey so please bear with me.

I am 32 years old now and I have a small amount invested in a personal pension with Lincoln Financial Group (fund managed by Schroders), for the last ten years. I have been putting in a small amount of around £41.56p and they contribute further £10.39p (don’t know if that’s my tax return there claiming for my pension?).

While the cost of living was going up and before the market was tumbling. I decided to increase my fund to roundup to £100 to be with and above inflation. I have been checking on the value of my pension for the past two weeks and it doesn’t look good. (I am losing a lot of money)

So was this a good idea to do to increase my fund to £100 at this current market clement?

Should I be worried about how my pension is doing NOW when I have many years to go? (I do remember when the last time when the market went down back in 2001-2003 when the World Trade Centre went down, when I looked back at my statement. But I thought nothing of it at that time!)

How secure is my money with my provider, if they go bust. And how much money will I get back even though I have lost some?

Will I end up losing all if the market continues to fall?

Is it wise to stick with my provider or change? If so then with whom?

Which is the best fund manager to go for?

I also opened a new account with a building society. Are my bank and building society (Natwest/Nationwide) safe from being bust from this financial market clement?

I also have an ISA and Saving with ING Direct. Is that also safe?

I have been calling Lincoln Financial Group for some advice on my pension. But they will not provide me any. So if they can’t provide me any then who can? I’m not sure if I am paying fund management fee. But on my statement these Plan Value and Transfer Value, what do they mean and why do they differ?

I thank you for taking your time to read my comments and questions and I look forward and would be very grateful to receiving on your feed backs.

Once again I thank you in advance.

dunstonh

So was this a good idea to do to increase my fund to £100 at this current market clement?

Yes. Cheaper unit prices means you get more for your money. Plus, to be honest, £100 isnt much money and £50 even worse. You aren not going to get much of a retirement on those so increasing the payment is sensible.

Should I be worried about how my pension is doing NOW when I have many years to go?

No. Were you worried in 2000-2002 when the FTSE dropped by more than it did now? You say you thought nothing of it then. So why now? You are not retiring now so ride the wave.

Financial crisis like these occur once every 7 years on average. This is the 8th since 1956. You will see 5 or 6 before you get to retirement.

How secure is my money with my provider, if they go bust. And how much money will I get back even though I have lost some?

Your money is as safe as the risk you take with the choice of your investments.

Will I end up losing all if the market continues to fall?

Theoretically possible but that would mean the total collapse of every company on the stockmarket and the Govt failing. Your pension will be the least of your worries.

Is it wise to stick with my provider or change? If so then with whom?

You need to understand that the pension is one thing and the investments are another. If you just change pension providers but choose the balanced managed fund with each one then you are making no real difference. Lincoln at the adminstrator. You are invested in one fund.

Which is the best fund manager to go for?

Doesnt work that way. Best when and for how long and what type of asset/sector are you referring to? different answer would be there for each variable you change.

I also opened a new account with a building society. Are my bank and building society (Natwest/Nationwide) safe from being bust from this financial market clement?

The UK Govt hasnt let a saver lose money yet and whilst it cannot come out and give a 100% guarantee, they have effectively done so with their actions. You are covered upto £50k with each even if the Govt decided not to protect the money.

I have been calling Lincoln Financial Group for some advice on my pension. But they will not provide me any. So if they can’t provide me any then who can?

You need to speak to an IFA. Product providers nowadays dont usually have advice authorisation unless they run a salesforce. Salesforces are neve r the best place to get advice anyway. So, using an IFA is the best option.

I’m not sure if I am paying fund management fee.

You are. However, you are on your savings as well. You just dont see those. Fees exist on every financial service product out there whether they are explicit or implicit.

on my statement these Plan Value and Transfer Value, what do they mean and why do they differ?

one is your current value and one is the value if you were to transfer to another pension.

MoneyMan-SOS

Hi Dunstonh,

I like to thank you for looking into my questions and commenting on them. I have taken your comments into account and I will make my judgment from there.

Once again THANK YOU very much and I hope we keep in touch in the near future. Thank you and take care.

MoneyMan-SOS

Hi Dunstonh,

Yes. Cheaper unit prices means you get more for your money. Plus, to be honest, £100 isnt much money and £50 even worse. You aren not going to get much of a retirement on those so increasing the payment is sensible.

As I am now paying in £100 to my pension. The contribution has also gone up to £25, so it's £125 each month to my pension fund. What is the reasonable amount to invest into my pension east month? As I can only aford £100 so far. The rest are going into my ISA and saving!

[I quote]
I have been putting in a small amount of around £41.56p and they contribute further £10.39p.

Is this the providers contribution to my pension or that's my tax return there claiming for my pension?

What happens to my pension when I get to my retirement age? Do the provider stop investing into the stock market from like this happening again or invest somewhere safer for it to grow where the stock market dose not effect my pension?

Do I pay tax on my pension, if so, on what part? Cause I’ve paid tax through my wages!

Look forward to receiving your comments and advice.

Thanks.

EdInvestor

MoneyMan-SOS wrote: »

As I am now paying in £100 to my pension. The contribution has also gone up to £25, so it's £125 each month to my pension fund. What is the reasonable amount to invest into my pension east month?

When looking at pension saving it's sensible to factor in the 2 state pensions as well.Get a forecast of how much you will get from them here:

www.thepensionservice.gov.uk

I can only aford £100 so far. The rest are going into my ISA and saving!

Nothing wrong with that at all

I have been putting in a small amount of around £41.56p and they contribute further £10.39p.Is this the providers contribution to my pension or that's my tax return there claiming for my pension?

That's the tax relief @20%.

What happens to my pension when I get to my retirement age? Do the provider stop investing into the stock market from like this happening again or invest somewhere safer for it to grow where the stock market dose not effect my pension?

Yopu need to choose the "lifestyle" option if you want this done automatically.Of course you can always switch your money to lower risk funds yourself, just a matter of calling them up or writing to them with instructions.

Do I pay tax on my pension, if so, on what part?

You can take 25% of the fund as tax free cash, the rest is taxable. From 65 you get a higher tax allowance, shortly to rise to 10k a year, so that helps - but state pensions will often take up much of that allowance.

That's why investing part of your money in ISAs (stocks and shares as well as cash) is a good idea as this income will be tax free - and you can get the capital out if you need it.

MoneyMan-SOS

Hi EdInvestor,

Thanks for your comments and advice, much appreciated.

[You quote]
Yopu need to choose the "lifestyle" option if you want this done automatically.Of course you can always switch your money to lower risk funds yourself, just a matter of calling them up or writing to them with instructions.

That’s fine, but knowing me, I have no idea where to start which lifestyle to choose and understanding the risk.

When I took out the pension ten years ago, I did not understand at all what the provider was saying (I was young then). All it attracted me was if I pay in £41.56 (back then) I will get so so back in my retirement age. Even though I have many years to go to my retirement, it’s best to have the knowledge now how to make the most of my pension, then later!

EdInvestor

MoneyMan-SOS wrote: »

That’s fine, but knowing me, I have no idea where to start which lifestyle to choose and understanding the risk.

The "lifestyle" option is where they automatically move your money into safer investments in the years coming up to retirement.Ask them if they have this option on your pension.