New pension uestion

weemee

Hello there,

My employer has just launched a new pension scheme with AXA. Apparently my employer will match my contributions up to 5%. The financial advisor (an AXA rep) has said that the risk catagory I put it into can be decided by me.

I earn around £27k per year and am almost 23yrs old.

Any suggestions or points on this? Is 5% any good?

I dont currently have any other type of pension.

Thanks

Regards


Edit: Doh, sorry about the title, it should say 'question'.

EdInvestor

It's generally though to be sensible to take free money from employers even if it is locked up in a pension.

What funds are on offer?

weemee

He didn't specify. He said I could go onto a scheme where the risk starts high and, as I get older, the risk level is lowered.

He said it can be fully managed by someone or I can decide. The charge is 1% flat rate, apparently this does not change.

dunstonh

Tied reps arent allowed to recommend investment portfolios. They are only allowed to present funds within your risk profile for you to pick. Even where tied reps have bent the rules to pick funds you will see it documented as "you chose".

You tend to find tied reps will focus on the product or pick a top performer and highlight that as making the product good. I have an ex AXA tied rep working for me and his investment knowledge is non-existent. I also have 3 AXA tied reps who introduce business and they have no investment knowledge either. One didnt even know what a sector was.

He didn't specify. He said I could go onto a scheme where the risk starts high and, as I get older, the risk level is lowered.

Sounds like their lifestyling fund. At 23 I wouldnt go near it. Bog standard insurance company managed funds rarely perform well.

weemee

Hi,

Thanks for the reply.

I'm unsure what I should now do. I didn't like the product very much and I would rather have someone take a good look at what I really need.

Do I have to pay to see an IFA? Would this be the right way to go?

What other sort of pension is there if it is not run by an insurance company?

Thanks in advance.

Regards

EdInvestor

You could ask your employer if he would pay the 5% into your SIPP - this is a type of pension where you invest it yourself.Usually the best quality funds are available, plus shares, investemnt trusts etc. Much better.

dunstonh

Do I have to pay to see an IFA? Would this be the right way to go?

DIY or IFA. Tied agents are just no use in this area.

What other sort of pension is there if it is not run by an insurance company?

Fund supermarket pensions and SIPPs. However, its not the pension but the funds that tend to be of lower quality (of course, always exceptions. Usually at the low risk end).