Pension Fund Switch...Help

riccaricca

I’m self employed and have a pension with Friends Life and my monthly contribution of (£226 gross) is split with half in the “With Profit Fund (Main Series 4)” and half in “FL Managed Fund.” I’ve decided to transfer my With Profit Fund into another fund as it’s hardly grown at all. I paid in over a £1000 last year and I’ve gained all of £148 on the whole pot the other £850 is paying bonuses I suppose!! It’s been the same or worse every year. My Fault for not looking at it and doing something about it. Instead my “FL Managed Fund” with the same amount paid in has grown by £6178 on the whole pot. The With Profit Fund has no Guaranteed Annuity. I started this pension in the late 90s when it was Friends Provident and I’ve another 20 years before I’m 60, which is the retirement date. I’m only allowed to switch or buy into certain funds.

This is the dilemma I have.

Do I Switch and invest all the money into the FL Managed Fund or use the half that’s going into the With Profit Fund into a different Fund?

These are the Funds I can Invest/Switch into.
Cash
European
Fixed Interest
Index Linked
Managed
North American
Global Equity
Pacific Basin
Property
Stewardship
Stewardship Managed
UK Equity
UK Index Tracking

Any help in guiding me to the funds to look at would be gratefully appreciated.

I lurk on this forum from time to time and always find people are willing to help others.

Thank you.

bigadaj

A pension from that time may well be expensive, check the charges. You can then transfer into a more modern pension with more investment choices.

A word of caution is that pensions of that age might have guarantees which could be valuable,, again contact them and clarify, though you seem to state this isn't the case.

bigadaj

If you stick and have that choice of funds I'd go global equity, for the vast majority at least. There's presumably the option of having side funds, property maybe fixed interest as maybe 5-10%. If you can find the global equity on trustnet to see its actual breakdown then if you think Pacific basin, European, U.K., us etc might outperform then add in some of those but global equity for the majority I'd say.

tacpot12

I have to agree with bigadaj - if I were you I'd put the proceeds of selling the With profits units into Global equity. As you get closer to retirement, you may want to move a bit back into the Managed fund, but for now Global equity is the place to be.

I would do this straight away, and then research whether this pension still offers good value for money. You might need an IFA to penetrate the details of the scheme, but this could be money well spent.

riccaricca

Thanks for replies bigadaj and tacpot12.

I have phoned and double checked that there was no guarantee on the With Profit Fund and there isn’t, so I’ve transferred it into the Managed Fund as I’m still researching the other funds.

I was thinking of splitting my contribution of £275 p/m between the Managed Fund, the Global Equity and the Stewardship Fund.

Should I add UK Index Tracking?



The charges are 5% buying the funds and 0.75% Management charges.

bigadaj

It's very outdated to pay a fee, and certainly 5%, on contributions, the annual charge of 0.75% isn't great but there are worse. Pensions have changed like most other goods and purchases, would you want to buy a new car that is a 1990s model today?

You'd be better opening up a new pension, no charges on contributions and maybe 0.5% annual charges.

The website monevator has some useful suggestions, if you want to keep it simple then cavendish offer low cost funds with some of the big insurance groups.

Sipps are considered more advanced but can be as simple as buying one or two trackers or low cost managed funds, bestinvest have a low charge option, or iWeb have a flat fee option, less attractive for smaller values and more trading though.

riccaricca

Thank you bigadaj, I'm going to look at the websites and hopefully it might help me decide what to do.

It all seems so complicated!!

dunstonh

riccaricca wrote: »

Thank you bigadaj, I'm going to look at the websites and hopefully it might help me decide what to do.

It all seems so complicated!!

Its not complicated. You have a simple mutli-asset solution available to you (the managed fund)

Or you go with the more advanced option and build a portfolio using the single sector funds. This requires more knowledge, understanding and work.

The charges are 5% buying the funds and 0.75% Management charges.

Those may be the original costs but if its a workplace scheme, it may not be that any more. Also, a lot of these old FL plans had a 5% initial charge that was offset by an increased allocation to give it an effective nil initial charge.