Do I REALLY need a financial adviser before I consolidate my pension?

toom

Do I really need financial advice to make this decision, or is AEGON being stupid?

I have two personal pensions (left over from different jobs I have since left). I want to consolidate them - transfer the value of one into the other. This will reduce admin charges, mean less paperwork, make it easier to keep track of what I'm paying, what I have etc.

When I spoke to the pension provider I want to move the money into (AEGON) they told me I can only do this via an independent adviser. This seems just crazy to me - surely it is a straightforward decision. I have two pensions with £X and £Y, I want one pension with £X+£Y.

But then it got me worried. Are there other other considerations that I haven't thought of that I need an adviser to explain to me? What sort of things should I be considering?

Or was I right first time and AEGON are just being stupid. Do I really need an adviser?

Any advice much appreciated!

dunstonh

Do I really need financial advice to make this decision, or is AEGON being stupid?

Providers that only retail via an intermediary require you to use an intermediary.

When I spoke to the pension provider I want to move the money into (AEGON) they told me I can only do this via an independent adviser. This seems just crazy to me - surely it is a straightforward decision. I have two pensions with £X and £Y, I want one pension with £X+£Y.

Do you buy your beans from Heinz or via a supermarket? Heinz dont retail their beans directly. So, you have to use a supermarket. Aegon are the same. Their products are retailed via intermediaries.

But then it got me worried. Are there other other considerations that I haven't thought of that I need an adviser to explain to me? What sort of things should I be considering?

Charges (older plans are often more expensive but not always - moving the whole lot to a new version plan can be cheaper)
guarantees - these would be lost on transfer
Fund selection - modern options tend to have better investment selections.

Or was I right first time and AEGON are just being stupid. Do I really need an adviser?

You dont need an adviser if you want to DIY. However, you need to use an intermediary to transact the business through (if the provider does not retail direct to public) or you should use a DIY provider that does retail direct to public.

No, Aegon are not being stupid.

toom

No as I suspected - me being stupid!

Thanks for the really helpful (as ever) advice dunstonh. I think I'll just keep the two pensions for the time being, then!

MEM62

I have exactly the same situation with AEGON right now.

My company pension is with them and I wanted to transfer funds from two other previous pensions into the current pension plan. One is valued at £3,000 and another at £18,500 so not huge sums but I wanted them all in the one pot rather than having small amounts dotted around. (The annual charges on the company scheme are also lower) AEGON initially wanted this done via and IFA and I understand the reasons for this in terms of their wish that I am properly advised. However, the IFA that administers the scheme for us wanted £1,300 pounds to handle the transfer. To be frank, as I had done all the research on valuations, transfers and charges etc and all they had to do was process the paperwork I was not prepared to be ripped off to the tune of £1,300 quid!

I went back to AEGON and explained my situation and even they were shocked at the amount the FA was asking. They have agreed to accept the funds on an Execution Only basis - which means the funds will be transferred without my going through the financial advisor.

If you are happy to go ahead without taking financial advice AEGON have an Execution Only team that you can speak to. If they are happy with your situation they will accept transfer without an IFA being involved.

dunstonh

I went back to AEGON and explained my situation and even they were shocked at the amount the FA was asking.

The person you spoke to at aegon isnt in a position to give that opinion. If the IFA for the scheme found out the person said that then the person would be in trouble with management. The charge is actually quite reasonable.

MEM62

dunstonh wrote: »

The person you spoke to at aegon isnt in a position to give that opinion. If the IFA for the scheme found out the person said that then the person would be in trouble with management. The charge is actually quite reasonable.

The customer services agent at AEGON did not make any statement in respect of the charges and, having been nothing but professional in their dealings with me, I would not have expected them to do so. However, it was obvious that the person I was speaking to taken back by the figure and from that point of the conversation forward any reluctance to deal with me directly disappeared.

You may consider that a reasonable charge but in my opinion it is shocking.

dunstonh

You may consider that a reasonable charge but in my opinion it is shocking.

Although you dont know the costs of such a transaction to the adviser and the liability and risk involved.

MEM62

dunstonh wrote: »

Although you dont know the costs of such a transaction to the adviser and the liability and risk involved.

Enlighten me.

toom

Interesting MEM62, thank you.

I have no idea about the costs involved in in making such a transaction, but from my very ignorant position it does seem like a massive amount.

When I decided to make consolidate my pensions, I had naively imagined that the process would be something like consolidating the money from two bank accounts - i.e. I tell one bank account I want to move the money, they move it to the other account who is very happy to accept it (more business for them after all) - job done. The bank might charge me a transaction fee to transfer the money of course, but we'd be talking tens of pounds not thousands. I realise that transferring a pension is more complicated because the money is invested, but I still don't really see why an advisor needs to get involved at all, surely the pension provider can calculate what a pension is worth at any period in time and arrange the transfer of this amount to another provider?

FatherAbraham

toom wrote: »

Interesting MEM62, thank you.

I have no idea about the costs involved in in making such a transaction, but from my very ignorant position it does seem like a massive amount.

When I decided to make consolidate my pensions, I had naively imagined that the process would be something like consolidating the money from two bank accounts - i.e. I tell one bank account I want to move the money, they move it to the other account who is very happy to accept it (more business for them after all) - job done. The bank might charge me a transaction fee to transfer the money of course, but we'd be talking tens of pounds not thousands. I realise that transferring a pension is more complicated because the money is invested, but I still don't really see why an advisor needs to get involved at all, surely the pension provider can calculate what a pension is worth at any period in time and arrange the transfer of this amount to another provider?

You're oversimplifying things.

Pension-transfer mismanagement has serious consequences for the beneficiary, and therefore for any professionals involved, who can be punished by the regulator, and required to pay large sums of compensation.

Evaluating pensions is specialist business (large risks, expert knowledge needed, due dilligence etc), which is why providers like AEGON keep away from the high costs of dealing directly with the public.

To put it another way: you thought it would be akin to transferring a simple bank account, but it wasn't. Doesn't that tell you that it probably isn't as simple as you thought?

Warmest regards.
FA

toom

yup - I'm beginning to realise!