Pension and fund choice

Timo_3

My first post so be gentle !

I'm 36yrs old and have a Scottish Equitable "Reflex" personal pension which I've had for approx 13yrs. I currently also have a 3yr old work related Standard Life stakeholder pension and have been contracted out of SERPS with another Standard Life product for about 15Yrs. My questions are:

Should I change to a Scottish Equitable stakeholder pension which I believe has lower charges ? I'm told by Scottish Equitable I can do this without loss.

What's the best way to pick the fund I invest in; it's always been 100% mixed ? Some friends have suggested putting 25% into gilts to lower my risk.

Given that I've nearly always been contracted out of SERPS should I stay out ?

Is it worth asking if I can merge my Standard Life products to reduce the charges ?


Cheers in advance.

dunstonh

Should I change to a Scottish Equitable stakeholder pension which I believe has lower charges ? I'm told by Scottish Equitable I can do this without loss.

Not necessarily so. I have seen a number of "old" Scot Eq pensions over the last few months and some of them have had lower charges over the term than a stakeholder pension.

The only way to know for sure is to request projections, current value and transfer values and then compare those with a stakeholder or modern personal pension plan. (known as a transfer analysis).

What's the best way to pick the fund I invest in; it's always been 100% mixed ? Some friends have suggested putting 25% into gilts to lower my risk.

Depends on your attitude to investment risk. You should pick a range of investment sectors with percentages that average out to your personal risk tolerance. Everyone is different with that view, some low risk, some high. Pick what suits you.

Given that I've nearly always been contracted out of SERPS should I stay out ?

Almost certainly not given the current situation. See recent threads on this topic.

Is it worth asking if I can merge my Standard Life products to reduce the charges ?

Potentially yes. However, there maybe good reasons not to. Again, a transfer analysis should be done.

Unfortunatly, there are too many variables to give you any real answer to your questions. Without the facts, you cant be advised either way.

Timo_3

Thanks for the reply Dunstonh.

The only way to know for sure is to request projections, current value and transfer values

Scot Eq said I'd get a 100% transfer value if I stay with them and just change the pension type. I assume that I'll have less fund choice if I move to their stakeholder version ?

Almost certainly not given the current situation. See recent threads on this topic.

As I already have two other pension funds it would seem wise to contract back in to spread the risk. Should I contact Standard Life to do this or is their a Government Office ?

dunstonh

Scot Eq said I'd get a 100% transfer value if I stay with them and just change the pension type. I assume that I'll have less fund choice if I move to their stakeholder version ?

100% transfer value is fine but are ongoing charges lower than a stakeholder?
Also, if with profits, there may be a market value reduction which is not treated as a transfer penalty but another type of charge.

The providers do generally offer less funds on their stakeholder range than their personal pension range. However, you could always pick a personal pension which has stakeholder charging to get access to those funds (although some funds may take you about stakeholder charge). Or pick a stakeholder plan with a wide enough range of funds.

As I already have two other pension funds it would seem wise to contract back in to spread the risk. Should I contact Standard Life to do this or is their a Government Office ?

Yes, either standard life or the IFA whose agency the pension is on (or another IFA if you are planning to do the transfer business through them).

Timo_3

Yes, either standard life or the IFA whose agency the pension is on (or another IFA if you are planning to do the transfer business through them).

The company I used to have as an IFA are now execution only, hence me looking to this board for help. Would one of the online companies, which charge a fixed fee, be able to contract back me back in ?

dunstonh

any third party doing the work for contracting you in would charge unless they were in receipt of new business. In this case, knocking up a quick letter to Standard Life saying you want to contract in would suffice and shouldnt take you a few minutes.

You should be aware that the transactions you are discussing are considered higher risk from a compliance point of view and an IFA dealing with these would ask a lot of information on the plans to check for various things, such as retained benefits, future loyalty bonuses, increased allocation rates, pre-royal assent contracting out, guaranteed annuity rates or guaranteed minimum fund values (to name just a few). These can all be things that can make it better to stay where you are. Now if you are comfortable doing all this yourself then great but with this sort of business you may be better looking at an IFA to make sure you dont lose a valuable benefit.

I have transferred over £4 million so far this tax year and have another £1.8 million on the go at the moment and i would estimate the ratio of personal plans where its not good advice to transfer is 1 in 5. So it certainly is not guaranteed to be better on stakeholder.

Timo_3

Thanks for the help Dunstonh I've found it most useful.

Will write to Standard Life saying I want to contract back in.

As you suggest I should perhaps seek further advice before altering my other pensions; think I'll just stick to changing funds for now ! I have tried two different IFA's but both just wanted to sell me critical illness cover which made me loose confindence in their advice.

dunstonh

When seeing an IFA, you have to make sure you are dealing with one that can discuss pension transfers. I know a number of IFA firms that place the first meeting with their protection advisor to get the initial information and that person can only sell protection and isn't an IFA.