Should I continue paying multiple AMCs?

supq

Hi!

I have an ex-workplace personal pension (which I'm no longer paying into) that I recently realised I am paying £50 annual management charge on - which I thought was a lot until I realised I am paying £150 AMC for my current workplace pension!

Are there any options for transferring my ex-workplace pension out to somewhere where I won't pay an AMC? Or if not can I transfer in to my current workplace pension pot so that at the least I'm only paying one AMC?

I'm 30 so any arrangements I make will be in place for a little while.

I've had a look around the site for articles on this but I couldn't find anything so please let me know if I've missed anything. Thanks!

JoeCrystal

To be honest, it is the percentage of the fund as AMC you should be worrying about. I mean £150 AMC doesn't mean anything. It could be 1% on £15,000 Fund or 0.1% on £150,000 Fund. So what are the percentage you are paying at the moment on these pension plans? I believe (I might be wrong) that there isn't any pension plan that do not charge AMC (How else the pension plan providers can make money after all!).

AnotherJoe

I wouldn't only focus on the AMC. What about the underlying investments? Is there a better choice in one rather than the other ? Are there other benefits in the previous scheme worth keeping ? Will your employers scheme allow a transfer in and if so what is the charge for that? Even if there isn't a charge might you have to sell the underlying investments to make the transfer so that the loss of that outweighs the AMC?
Also there may be a benefit to diversification. Not all your eggs in one basket, and you may take a loss on a transfer and then a further loss when you transfer again next time you move jobs.maybe another strategy is each time you move, transfer into a SIPP so you never have more than current employer plus one SIPP.

I'm not saying don't do it, but bottom line it's not just as simple as only having one AMC means it's better because it's cheaper.

dunstonh

Are there any options for transferring my ex-workplace pension out to somewhere where I won't pay an AMC

Nobody is going to offer you a pension out of love (i.e. free). Do you work for your employer for free?

I recently realised I am paying £50 annual management charge on - which I thought was a lot until I realised I am paying £150 AMC for my current workplace pension!

You are converting the percentage into monetary terms. However, how are they relative to the amounts invested. Is the £150 pension value three times higher than the £50 one.

Or if not can I transfer in to my current workplace pension pot so that at the least I'm only paying one AMC?

AMCs are percentage based. So, if you have 10 plans at 0.75% or one plan at 0.75% the charges are the same.

edinburgher

Maybe another strategy is each time you move, transfer into a SIPP so you never have more than current employer plus one SIPP.

That is pretty much what I have done. First 'real' pension was transferred into one of the Civil Service schemes for a decent uplift, current pension will be transferred into SIPP as and when I leave as my fees would be lower.

sandsy

You can merge the funds so you pay one charge but the likelihood is that it will be around £200 once the pots are added together. The AMC is normally as % of the pot so a bigger pot attracts a larger charge in £ terms. Sometimes, you can get discounts as the pot increases.

supq

Wow, lots of things to think about! Thanks for all your comments, I will look into the AMC % and see what's going on.

In terms of SIPPs, what's the first thing to do if I want to look into this? How do I decide who to go with if I do take out a SIPP?

bigadaj

supq wrote: »

Wow, lots of things to think about! Thanks for all your comments, I will look into the AMC % and see what's going on.

In terms of SIPPs, what's the first thing to do if I want to look into this? How do I decide who to go with if I do take out a SIPP?

For costs in a sipp have a look at monevator and comparefundsplatforms.com, also outperform very own snowman has a spreadsheet on google docs that you can find by googling.

This doesn't allow for service quality of course, there's a long thread on these forums complaining about iii for example, so that's worth researching as much as you can as well, though that element also suffers from personal opinion of course.

dunstonh

In terms of SIPPs, what's the first thing to do if I want to look into this?

SIPPs are the experienced investor product for people who are looking for more advanced investment options. Whereas personal pensions, stakeholder pensions and workplace pensions carry out a level of due diligence on the investments, there is none carried out with SIPPs as that is your job. The SI in SIPP is self invested.

Workplace pensions have a charges cap of 0.75% p.a. on internal/default funds. Many are a lot cheaper than that. Even retail individual personal pensions can be 0.4%. SIPPs are generically the most expensive option (caveats apply).

SIPPs also have lower FSCS protection. Not really an issue if you stick to mainstream investments but go away from those and you could lose the lot. As many people have found in recent years. Which is why the FCA treat SIPPs as a higher risk product.

So, back to your question; "in terms of SIPPs, what's the first thing to do if I want to look into this? "... I would say that knowledge is the first you need. There are no safeguards on SIPPs. So, it is important to know what you are doing. Getting it wrong can lead to total loss of your money. Would you call yourself an experienced investor looking for more advanced investment options that frequently cost more than a stakeholder pension, personal pension or workplace pension?

zagfles

The trouble with most personal pensions is that they either insist you use an adviser or they charge you more if you don't. I don't think you can get a pension at 0.4% direct from the provider.

Cavendish may be a good option as they get around this by acting as the intermediary and just charge a flat fee for seeting up the pension. Though they don't have a vast chioce. See http://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/