With profits v Stakeholder

daisyrose

I know that with profit funds are not having any bouses added at present but are there any alternatives other than a Stakeholder to transfer a pension into? When (looking on the bright side) the economy picks up will the With Profits perform better? When this happens if the pension was transferred would this still have been a good move?
As you can see I know nothing about pensions so would appreciate any thoughts that you may have.
Thank you in advance.

dunstonh

I know that with profit funds are not having any bouses added at present

Some are. Its not so simple to say they are not being added as unitised with profits funds can take advantage of the current low prices in just the same way as a unit linked fund will.

but are there any alternatives other than a Stakeholder to transfer a pension into?

Firstly, you need to think of the investment and the pension as two different things. Its car and petrol. Bucket and water. The pension is the tax wrapper. A container for your investments. The investments are what you put in your pension container. You can have with profits in stakeholder pensions, personal pensions and SIPPs. Which leads us on to your question as they are the three main options.

When (looking on the bright side) the economy picks up will the With Profits perform better?

No. With profits smooths the ups and downs. This means it doesnt go down as much in bad times but will not go up as much in good.

When this happens if the pension was transferred would this still have been a good move?

Only time will tell. It will also depend on how you build your new portfolio and what potential that offers.

EdInvestor

daisyrose wrote: »

I know that with profit funds are not having any bouses added at present but are there any alternatives other than a Stakeholder to transfer a pension into?

Your current pension will no doubt have alternative funds available apart from the With-profits fund.Ask for a list and a "switch form".You can then move all (or just some) of the money out of the WP fund (but you may be charged an MVR penalty) into other funds.

It's usually best to choose a selection of funds, not just one.

There is no need to transfer the entire pension, just switch some of the money within it..

daisyrose

Thank you I have found your reply's very helpful although I do not fully understand all of it. The reason I asked initially was because I was told that my current provider did not offer any other options. I was advised to change to a stakeholder pension with another provider but was given nothing else to choose from.

dunstonh

daisyrose wrote: »

Thank you I have found your reply's very helpful although I do not fully understand all of it. The reason I asked initially was because I was told that my current provider did not offer any other options. I was advised to change to a stakeholder pension with another provider but was given nothing else to choose from.

Older legacy plans did often only offer one fund; With Profits. However, modern plans offer a range of funds. That said there are some pretty low quality stakeholders out there that offer one or two funds and they should be avoided. You tend to find the direct providers have lower quality stakeholders (supermarkets, direct to provider, companies you wouldnt normally associate with financial services).

EdInvestor

daisyrose wrote: »

The reason I asked initially was because I was told that my current provider did not offer any other options. I was advised to change to a stakeholder pension with another provider but was given nothing else to choose from.

Could you tell us who the provider is and what kind of pension it is - or year started?

daisyrose

The with profits is with CIS there are two parts. One is the frozen pension and the other is the opted out of SERPS.I don't know when the serps started but the pension was taken out around 1990. The recommended fund is with L & G both parts will be put into one stakeholder.

EdInvestor

Before moving the CIS pension I suggest you check 2 things

1) Are there any guarantees attached yo your policy (eg guaranteed annuity rates).These could be valuable and you would lose them if you moved

2)Will an MVA exit penalty be levied if you move the money, if so how much.

Also, when do the pensions mature ( ie what is your selected retirement date for them?)

daisyrose

I have contacted the CIS the Frozen part of the pension has no mva or guaranteed annuity rates although it has the added bonuses and I think there there was mention that part may be lost if transferred but I will check the original paperwork.
The serps pension is different. It does have guaranteed annuity rates of £40 per £?? pre something and £28 per ?? post something. I don't understand this.