Non/Under Performing Pensions

cpwp

Is there anyone to complain to, other than the pension company, for a non performing pension? With the government banging on about the fact that we should all be paying into pensions, if the providers don’t perform, what can we do about it?
I have a pension which I contributed in the late 1990s and stopped paying into in 2001 which has not made a penny as the pension provider takes their share and nothing gets added to my pot. We are talking thousands here. I could have put the money anywhere else and got something more.
Is this another case like bank charges and PPI that should be controlled? These companies constantly move the policies around so where do we stand legally, does the original projections/guarantees prevail. I know that times have changed and optimistic predictions were way out but one would expect some growth over 11 years otherwise why take it out in the first place. I will be checking to see what paperwork I have when I took this pension out.

dunstonh

Is there anyone to complain to, other than the pension company, for a non performing pension?

No. The FSA does not allow complaints about investment performance.

With the government banging on about the fact that we should all be paying into pensions, if the providers don’t perform, what can we do about it?

Who says they are not performing? If you dont like the investment potential of an investment then change it.

I have a pension which I contributed in the late 1990s and stopped paying into in 2001 which has not made a penny as the pension provider takes their share and nothing gets added to my pot.

If you stop paying into it then nothing is going to get added to the pot. You are left being totally reliant on investment returns. 2001 to 2012 has seen the markets go though a boom and bust and funds could be close to breakeven or double what they were in 2001.

I could have put the money anywhere else and got something more.

So, why didnt you?

Is this another case like bank charges and PPI that should be controlled?

Nothing close to being similar. You choose where you want to invest (or use an IFA if you dont want to do that). You get the investment returns that follow your choices.

These companies constantly move the policies around so where do we stand legally,

No they dont. Providers may merge and change name/logo but the terms of your contract remain the same.

does the original projections/guarantees prevail.

You mean the example illustrations that show you what you may get back if certain growth rates are achieved but remind you that you could get back more or less than those projections and that they are not guaranteed?

I know that times have changed and optimistic predictions were way out but one would expect some growth over 11 years otherwise why take it out in the first place.

Why do you think that? If you are aware of global events you would realise that we had the credit crunch and global recession and the impact that has had on investments. Are you are aware we have been in a recessionary period?

As you are not paying in monthly any more, you havent been able to take advantage of the market volatility which is a shame. Single premium values suffer in negative periods. Long term monthly premiums benefit.

Tell us what fund(s) you are invested in. Its difficult to comment on your investment performance if you dont tell us what the investment is.

cpwp

Thank you for a very detailed response. I put my hand up, bad decision on my part to go with this pension.
With regard to moving it, I was always warned that what was transferred would be less than what is in the pot so one would have to play catch up before realising any gain. That is part of the pension problem. I have lots of pensions from different employers as do my friends. I can see that in your line of work that would be good for you (I am not attacking you on this point) but I have not seen any published independent advice to consolidate various pensions accumulated over a working lifetime.
I know that now we don’t go into company schemes any more but to the older generations, companies used different providers so as you moved on, each item became paid up.
Yes, I was aware that we are still in a recession. I have not had a pay increase in 3 years. At my age, employers know in this market there are plenty of people looking for work. I am paying monthly in my current employment.

dunstonh

With regard to moving it, I was always warned that what was transferred would be less than what is in the pot so one would have to play catch up before realising any gain. That is part of the pension problem. I have lots of pensions from different employers as do my friends. I can see that in your line of work that would be good for you (I am not attacking you on this point) but I have not seen any published independent advice to consolidate various pensions accumulated over a working lifetime.

There is no problem with switching pensions. I do about 200 a year. You just need justification and most pensions dont have transfer penalties any more. Even if they do, as long as the alternative is better than it can be worth it. (e.g. lets say there is a 10% penalty but the replacement is 0.8% a year cheaper, then you only need a certain number of years to break even and then go on to be cheaper over the term). You do get the odd case that you cant justify. I had one this morning. That pension looks obsolete but had heavy initial charges but very light annual charges. So, we are stopping the regular on that one (to avoid the heavy initial charges) but leaving the fund in place but switching investment funds to something else as its currently not invested the way we want.

You say you have not seen any published independent advice to consolidate. Have you even looked? Its not exactly something that somebody with no interest in the subject goes out looking for. However, a key document would be the FSA paper published in 2002 (OP18 - to switch or not to switch - http://www.fsa.gov.uk/static/pubs/occpapers/op18.pdf) which they have periodically reviewed over the last decade which gave indications on when to switch and when not to switch? (what is good, what is bad). There are also dedicated software suppliers that provide tools for IFAs to analyse and compare pensions and give the research and justification to transfer pensions. IFAs have been transferring pensions for decades. Its FAs that tend not to as their permissions did not allow it.

cpwp

A very interesting document, 10 years old. Difficult to come to a decision on as you state it has been constantly reviewed and without that subsequent information no indication as to the current view.
The graph on page 12 is very telling. Switching 5 years in on a 25 year timescale would take 10 years just to catch up with the existing plan. Trouble is that as you have pointed out we have been in or are still in a recession so is this information reliable?
The conclusions only indicate a benefit if the decision is made early to switch and providing the provider has not reduced the annual charges which at the time of printing this document was the indication that this was now happening.
As you say, there is dedicated software out there for people like yourself to use so had I been further from retirement (not my choice but age dictates this) I could have taken advantage of this, but this a more recent development, I hope younger people do take good advice, it’s in their interests to do so. My requirements in the next couple of years is the annuity conundrum.

dunstonh

A very interesting document, 10 years old.

10 years old but updated periodically to reflect FSA reviews. The last was 2008. The point is that you said you have seen nothing. Yet here is a document from 10 years ago from the regulator saying its fine.

The graph on page 12 is very telling. Switching 5 years in on a 25 year timescale would take 10 years just to catch up with the existing plan.

An example of course which may or may not reflect yours. However, after breaking even at year 10, it will go on to be cheaper after that.

Trouble is that as you have pointed out we have been in or are still in a recession so is this information reliable?

Recession is irrelevant. Charges are constant.

As you say, there is dedicated software out there for people like yourself to use so had I been further from retirement (not my choice but age dictates this) I could have taken advantage of this, but this a more recent development, I hope younger people do take good advice, it’s in their interests to do so. My requirements in the next couple of years is the annuity conundrum.

You dont state your age but how far away are you. I have just completed research on a case that had 4 years as the breakeven point. I did one last week that was cheaper from year one.