Work pensions - how do they work etc

village_life

Hi there

I am not quite sure what I want out of this post, but basically i've been working since September 2001, aged 21 (after finishing uni) and pretty much since then ive been paying into employer pensions, but without fully understanding what i am paying, where its invested and what it will give me in the future (now 26 btw)....

thus far i've had two employers (and so pensions), and the details run something like this.

Employer A
September 2001 to October 2005
Pension schem - Money Pension - Employer Matches my contribution
My contribution was 6% of my base salary (which varied between £19k and £30k in the period I was employed there)... Originally I thought that I paid 6% of my salary and the company matched this, but alas it appears that i contributed 3% and they matched to a total of 6% - so a bit gutted about learning that now. Over time it appears I up'd this contribution to 8% (4% each, but not sure exactly when!)

Regardless, my pension contributions were as follows:
FY 01/02 - £475 (5 months @ £95 per month)
FY 02/03 - £1174.20
FY 03/04 - £1258.05
FY 04/05 - £1513.21
FY 05/06 - £1268.88 (up to Oct 05)

According to my "benefits statement" dated December 05 My fund value @ 1st July 05 was £6671.28 invested into Legal and General Consensus Index funds (3073 units) -and I tended to go for the medium to low risks - I have more details but I dont really know what is relevent or not!

Anyway i left this company in October 05, and my pension there continues to be doing its thing - I have the option to "transfer the cash equivalent of your benefits to an alternative pension provider" but as yet havent pursued that option not knowing whether it was the best thing to do

I then received a statement "Preserved benefits certificate" which says my total fund/transfer value is £8359.36, my total contributions made are £6583.56
=======

Employer B
October 2005 - Present
Pension schem - Money Pension - Employer pays double my contribution up to a total of 15% salary (i.e. I pay up to 5%, employer pays up to 10%
My payments into the pension scheme started in December 2005, and I paid the maximum 5% in (£166.67) and my employer contributes £333.33 to a total of £500 per month it seems. This has continued to date at the same rate of payment and will continue ongoing.

My current pension is managed by Fidelity it seems, and I pay 50% to two funds - "Fidelity Global Equity 60:40" and "fidelity BGI long Term fund class 1" which from the documentation seemed to be the best option for me given my age.

In the past week I received my 2006 Pension Statement from Employer B (hence this post) and the value of my account as at 31/3/06 was £2060.62 - £666.68 from my contributions, £1333.32 from employer and £60.62 investment returns!) - so I guess that covers the payments I made in FY05/06 where I paid from Dec-Mar - so 4*£166.67 = £666.68

...they also have an online portal where I can check on my investments - but I dont even wanna go there as I dont understand it!

Obviously people arent going to bestow professional advice/guidance, but based on the above i just wanted to canvass views on a couple of issues.

1. Pension from Employer A - should I leave it where it is or seek movement into my current fund (if possible) - ive heard stories that my current pension may get eaten up over time with fees and admin. charges - so obvs I dont want that!

2. How am I standing from an overall pensions point of view - obviously recognising the big noises being made over pensions and saving for retirement etc- i assume my payments currently are good and theres no reason why they will change - but is there any rough and ready calculators to the value of it when i retire - do i need to do anything more etc?

Just to set the scene i am 26, recently married to my 23 year old wife - both non smokers etc, we have just taken a mortgage (Apr 06) on a house (25 year mortgage etc) -

so what do people think?

ReportInvestor

Congratulations on getting your act together from such an early age, v_l . You are doing very well with those 15% contributions on pension B at this stage of your career.

You need to find out the charges on pension A and pension B (ask for both the fund management charges and any additional pension administration charges).

Nowadays there is really no need to be paying more than 1% , so consolidation is one option, but not necessarily the only one.

village_life

but is keeping the two funds seperate a viable option!? - I'd have thought it'd be better to have one big pot rather than one or two small ones running in parallel.... i have no idea what to do with them, and have only just got my head around how it works and what ive been paying, particularly in the case of Pension A!

village_life

any other views on this?????

dunstonh

RI has covered the main points.

I would just say that the fund choice on the L&G pension is poor. The newer pension is not as poor but I wouldnt just have those two.

You are doing well by contributing to your retirement but you must remember that this is an investment. Its only as good as where you invest and I think you can improve upon that. Although it depends on what funds you have available within your scheme.

EdInvestor

What funds are available in the latest pension for you to invest in?

It may be worth transferring the old one into the new one if the investment choice is better.

village_life

how do i find out what funds are available?

how do i find out what a good or bad fund is?

village_life

just been on my "pensions portal" and the options for funds i have are:

(prices shown are daily prices!?)
Fidelity BGI Consensus Fund Class 1 371.30p
Fidelity BGI Long Term Fund Class 1 271.90p
Fidelity BGI UK Equity Index Fd Class 1 539.70p
Fidelity BGI World (Ex UK) Fund Class 1 319.50p
Fidelity Cash Pensions Fund 146.10p
Fidelity Emerging Markets Equity 239.50p
Fidelity European Equity Pensions Fund 156.30p
Fidelity F&C Balanced SRI Fund Class 1 148.60p
Fidelity Global Equity 60:40 110.70p
Fidelity Index Linked Bond Pension Fund 143.00p
Fidelity International Equity 148.80p
Fidelity Japanese Equity Pensions Fund 191.90p
Fidelity Long Term Growth Pensions Fund 150.20p
Fidelity North American Equity 114.80p
Fidelity Pacific Equity Pensions Fund 293.10p
Fidelity Pension Annuity Fund 166.90p
Fidelity UK Corporate Bond Pension Fund 138.90p
Fidelity UK Equity Pensions Fund 136.60p


i have written to my former pensions administrator with a view to transferring that across

any thoughts?

dunstonh

The Fidelity range isnt great but that is not unexpected with employer schemes. Its better than many others though. I would put it above average. You will be able to select enough from that list to give you a decent portfolio spread though.

The L&G pension shouldnt be automatically transferred. There will probably be some fund options on that one which are not present on this one and between the two, you could fill missing gaps on the other.

village_life

... what am i looking for though

i need some basic education on what i need to have in a portfolio for it to be effective.... where can i find out such info??

Dodgybloke

I've recently tried to get my numerous pensions in order. I have half a dozen different schemes because each employer refuses to pay in to an existing plan I have. So, I got into action and tried to find an easier way to work out fund performance so I can reduce my pensions to one or two.

I've discovered http://http://www.citywire.co.uk/Funds/Home.aspx and Standards and poors (URl not working, will edit this post when I find it).

With Citywire, select ABI funds. Then go through each sector and look for your funds. There be some sort of rating which will hopefully help you out.

It is based on past performance, so it may not match future performance hence it "maybe" worth checking out the Fund Manager information.

Hope that helps