Should I Transfer My Pension?

Frankie_Carroll

I am hoping somebody can give me some help?

The company I work for have just switched our company pension scheme to a salary sacrifice scheme. The old providor was Scottish Windows and the new provider is Legal & General.

I have been given the option to transfer my fund from the old provider Scottish Widows into the new scheme, but I am not sure if I should do this or not.

If I do not transfer the fund obviously no more money will be paid into this by either me or my employer. I am worried that as no money is being paid in and I will still be receiving charges is this effectively going to eat away at the fund and mean by the time I retire there will not be much left in the pot?

Also, I am unclear if the new provider will be any better than the previous provider? The new Legal & General plan is described as a Stakeholder plan, I don't know that much about pensions but I was under the impression Stakeholder pensions give a very limited choice of investments etc..

Also, the charges are confusing me somewhat. The old provider had an AMC of 1% and also had a plan charge of £1.50 per month. The new provider has charges of 0.5% for a fund value of up to £50,000 and a further 0.3% on £50,000 and over (which I think means I would be paying 0.8% when my fund goes over the £50,000 mark)

So I am not sure if leaving my fund with Scottish Widows with no further funds going in would be the wrong thing to do and also is it just a matter of looking at which one is charging me less and going with them (ie Legal & General) or is there other things I need to consider?

Any advise would be greatly appreciated,

Thanks in advance

dunstonh

I am worried that as no money is being paid in and I will still be receiving charges is this effectively going to eat away at the fund and mean by the time I retire there will not be much left in the pot?

What has given you that worry?
Are the charges of the plan such that they would erode the pension? (most don't)

Also, I am unclear if the new provider will be any better than the previous provider? The new Legal & General plan is described as a Stakeholder plan, I don't know that much about pensions but I was under the impression Stakeholder pensions give a very limited choice of investments etc..

stakeholder plans are basic plans with limited investment options but a defined charging method.

Also, the charges are confusing me somewhat. The old provider had an AMC of 1% and also had a plan charge of £1.50 per month. The new provider has charges of 0.5% for a fund value of up to £50,000 and a further 0.3% on £50,000 and over (which I think means I would be paying 0.8% when my fund goes over the £50,000 mark)

it either means it drops to 0.3% over 50k or reduces by 0.3% over 50k. It wont increase it.

The new plan is clearly cheaper than the old one. So, unless there is any reason you wish to remain invested in the old one (such as fund choice) then there is no reason not to move it based solely on what you have said.

Loughton_Monkey

It would appear that your company could have done more to inform you of the changes and its implications. Seems to me they have done two things. Firstly changed the provider for 'new' money and that new provder seems to have lower charges. Secondly, they are changing to salary sacrifice. That also is usually considered 'positive' since you save on NI. Sometimes the employer puts more in also to reflect their own NI savings.

But your old pension pot would not dwindle away - but continue to grow (stock markets allowing, of course, in the longer term). So all other things being equal it would not necessarily make sense to move it. However, since the charges seem to be lower in the new scheme - particularly for a large fund - then it seems fairly straighforward to transfer your old one into the new one.

For your own benefit I would point out something else. [Sorry if you are totally aware of this, but many hundreds of posters on here are totally oblivious to this]. The new scheme with L&G provides you with a (seemingly) low charging pension 'wrapper'. All the contributions will go into a range of 'funds' selected by you. It is your selection of funds that will 'drive' the ultimate amount of your pension. It is not a scheme in which someone at L&G is busily managing all your money and investing it wisely to produce maximum returns.

So do take an interest in which funds you choose, and keep regular updates of value movements relative to other funds.