firm changing pension schemes yet again

tightrs

the firm i work for are changing the pension scheme again, this seems to happen every 9 years and the funds in one cannot be transferred to the other because we would lose money.
the company employ a private firm to look at our investment and have negoited a reduce rate for the annual management charge but we have to swop to another plan.
i will now be left with 2 frozen pensions some of my colleagues have 3 how is this good for us swopping schemes all the time instead of building a bigger single pot ?
i am sure the many learned people on this forum will give advice

LongTermLurker

Multiple pensions can be a good thing - they give instant diversity by virtue that your money is split between multiple companies. I have about 7 pensions, I think. They can be harder to manage, but most people don't manage them anyway, they just pay and pray!

When you come to retire, you have the option of combining them into one annuity or leaving them separate, allowing you to take annuities at different times.

Pensions are just wrappers, so assuming each of your pensions is invested as well as the others, they will all grow independently in the same way they would if they were combined. If you have £100k in one pension, or split between 3, it makes no difference in terms of growth potential.

the company employ a private firm to look at our investment and have negoited a reduce rate for the annual management charge ... how is this good for us swopping schemes all the time instead of building a bigger single pot?

Well, the next 9 years worth of investments will grow more because less fees will be taken - would you prefer to have continued paying higher fees in return for less piles of paper?

It's not like savings accounts where you might get better rates for larger sums of money.

Cautious_Investor_3

LongTermLurker wrote: »

Multiple pensions can be a good thing - they give instant diversity by virtue that your money is split between multiple companies.

I have to (very politely) take issue with this.

What if all the pensions are invested in say UK Equities, that doesn't promote diversity.

As we all know diversity is achieved by investing in non correlated asset classes.

The Cautious Investor

LongTermLurker

Cautious_Investor wrote: »

I have to (very politely) take issue with this.

What if all the pensions are invested in say UK Equities, that doesn't promote diversity.

As we all know diversity is achieved by investing in non correlated asset classes.

The Cautious Investor

I'll bow to your career experience, but as I've said in other posts, not every manager invests equally, even in the same sector. Equally, not all managers are as good as the next. There's a lot of sides to the diverse coin IMO - multiple asset classes are necessary, of course, but how that's applied by the manager can be equally important, especially if you're just choosing the default "balanced managed" or "cautious managed" funds.

yelf

there's no issue as cheaper charges are cheaper charges. Surprised everyone hasa penalty on transfer: i would question the commission structure when these schemes are being set up.

dunstonh

the firm i work for are changing the pension scheme again, this seems to happen every 9 years and the funds in one cannot be transferred to the other because we would lose money.

That isnt that surprising.

In 2001 stakeholder pensions came in and charges came down and for years stakeholders were seen as the cheap option. Today however, it is no longer the cheap option and personal pensions (including group schemes) can come in cheaper.

In most cases like this you wouldnt expect transfer penalties as most group money purchase schemes dont have them. However, even if there are, if the ongoing charges are lower then there will be a breakeven point where it is better to transfer.