Recommendations for private pension?

izzeyizzey

Hi,

I have jsut got a new job and it doesn't have a pension. I'm 25 and the job pays about £27K. Should I get a pension or consider other options? What are good pension schemes and what investment should I make?

Thanks.

seancollier

Hi!

I have a personal pension with Virgin Money and all is well with them. Flexible and lump sums can be paid. I've taken payment breaks when I've needed them too. Best to check out a number of options, or speak to a financial advisor!

Sean

dunstonh

I have a personal pension with Virgin Money and all is well with them.

Sorry to break the news to you. Virgin pensions are one of the worst "current" pensions you can buy. Its almost done on full charge and has just 3 funds. Its very poor value for money as Virgin are keeping the commission an adviser would have got and not discounting much for it. Plus, more importantly, the investment side is rubbish and that is the most important thing as far as pensions go.

What are good pension schemes and what investment should I make?

There is no one best option or provider. Depending on where you want to invest, how you want to invest, what your current situation is, what your future situation is, will all impact on what you should do and how you should do it. A low risk investor will have a different choice to make than a high risk investor. An experienced investor will want options that an inexperienced investor will never use. Certain options will only be available if you pay in a certain amount. It may be worth waiting until the NPSS in 2012 where the employer will be forced to offer a pension with you utilising an ISA in the interim.

seancollier

Really? At the time I opened the pension, it was good!

Where should I be heading from Virgin? I don't have much in the pension, and I'm assuming I can transfer it somewhere else?

Sean

dunstonh

Really? At the time I opened the pension, it was good!

It's never been good. It relies on the Virgin brand and an expectation that they offer good value.

Where should I be heading from Virgin? I don't have much in the pension, and I'm assuming I can transfer it somewhere else?

You can transfer without charge to any other pension. Which one will depend on what you are looking for with your investments.

djbd1973

dunstonh wrote: »

You can transfer without charge to any other pension. Which one will depend on what you are looking for with your investments.

If you transfer, I am under the impression that you would lose a part of the fund you have grown. Is there an industry wide percentage that is lost or is it dependant on the pension provider as I have often thought about transferring a pension (albeit not a very big amount accumulated) but was put off by the transfer figure which was a lot less than the fund value itself?

(Although if you do transfer from a bad pension provider to a better one the benefits would outweigh the losses I would have thought as it should recoup at a faster rate)

dunstonh

If you transfer, I am under the impression that you would lose a part of the fund you have grown.

Not with stakeholder pensions and most modern personal pensions or SIPPs. Some legacy pensions or retirement annuity contracts can have transfer penalties so you do need to check first.

but was put off by the transfer figure which was a lot less than the fund value itself?

I did a transfer last week for someone with just over £10k transfer penalty. My largest penalty I can recall was over £30,000.

Size has little to do with it (oh er missus ). If the provider you are with is going to penalise you say 15%, then how likely is the new provider going to recover that 15% and put you in profit before you get to retirement.

For example, Pearl are in their 6th year of zero bonus. They are giving out projections at 6% but havent paid that level of bonus out in over a decade and are never likely to again. So, if you suffer a 15% penalty to get away from them and put it into a pension that can average say 7% a year and you have 15 years to go, then you will be better off taking that step backwards to allow you to go forwards.

I recently did a pension transfer where there one of the providers reduced a fund value of about £3400 to £1100. However, it was still justifiable to do it as there was an annually increasing policy charge which was eating it up. The projections showed a pension income lower than the a current annuity rate on the transfer value. So, you have to look at the facts of your policy and make an informed decision. Sometimes staying put is best. Sometimes moving it is.

djbd1973

dunstonh wrote: »

Size has little to do with it (oh er missus ). If the provider you are with is going to penalise you say 15%, then how likely is the new provider going to recover that 15% and put you in profit before you get to retirement.

For example, Pearl are in their 6th year of zero bonus. They are giving out projections at 6% but havent paid that level of bonus out in over a decade and are never likely to again. So, if you suffer a 15% penalty to get away from them and put it into a pension that can average say 7% a year and you have 15 years to go, then you will be better off taking that step backwards to allow you to go forwards.

Oops - the wheels have just fallen off!

I am with Pearl.

I think I had better book a day off work and see an IFA about some help.

You can see why I am sceptical about pensions especially with the little amount of knowledge about how these funds things fully work.

Thanks

jamesd

Do be sure that the person you speak with uses the full title "Independent Financial Adviser". Just Financial Adviser comes without the quality of advice requirements that an IFA has to deliver. Places to avoid include banks and similar high street big names because they don't offer IFA services and only sell limited products at high cost.

djbd1973

jamesd wrote: »

Do be sure that the person you speak with uses the full title "Independent Financial Adviser". Just Financial Adviser comes without the quality of advice requirements that an IFA has to deliver. Places to avoid include banks and similar high street big names because they don't offer IFA services and only sell limited products at high cost.

Thanks James. I would always now go to a 'proper' IFA and definitely not a high street bank as you say. The only reason I originally started a Pearl pension when I was 18 was because my uncle was a Pearl rep at the time, and like everyone in the family we went with him. He left them in the end and is retired now.