Personal pension - not great?

moneysaverz83

Hello


Recently had my annual pension statement and a bit worried actually.



I'm self employed, mid 30s, and have had a Scottish Widows pension for 7 or 8 years since self employment. This is through an IFA at a firm, someone through a family connection. Initially started at 250 per month, then 275 and now 300.


The readings are, I have about 40k in pot, only about 1k value increase since last year (maybe slightly coinciding with the 275 to 300 increase?), and a 3k overall value decrease including accounting for fees.



So I'm a bit worried really. The pot could only be about 160k at 68.


I'm waiting to hear from the IFA.



But these figures don't fill me with confidence.



What can I do? I could possibly stretch to 325 a month, is it worth it with a slow increasing or devaluing pot even after accounting for compounding.



Is changing a product wrapper best through ifa?



Go alone via a sipp? Where do I start? Is there a go to sipp structure to use for whole of market exposure to get a decent return?



Or bad year or two, stick with it?

dunstonh

The readings are, I have about 40k in pot, only about 1k value increase since last year (maybe slightly coinciding with the 275 to 300 increase?), and a 3k overall value decrease including accounting for fees.

That sounds about right.

I'm a bit worried really. The pot could only be about 160k at 68.

It should be more that with your contribution and investment returns but its not a great amount.

Is changing a product wrapper best through ifa?

How would changing the wrapper improve things?

Go alone via a sipp? Where do I start? Is there a go to sipp structure to use for whole of market exposure to get a decent return?

And what would you do that improve the situation?

moneysaverz83

Well, that's what I am asking re SIPP?

JoeCrystal

To be fair, I plugged your monthly contribution over the last eight years, and it came out as an annualized return of 10% which sound rather good. You have to bear in mind that projection on the statement now errs on a pessimistic side. It may be worth a review by an IFA to see if you can get a cheaper provider, I used to be with Scottish Widows but the product is no longer competitive, so I was transferred by my IFA over to Royal London instead.

Remember, you still got three decades left, plus a state pension and more than enough time to plan ahead.

moneysaverz83

Just to add the confusion.



Seems my IFA moved to another firm about 2 years ago. I assumed he'd taken me with him, but appears I misunderstood.



So I'm trying to ascertain if I was still left with old firm and no IFA or another IFA, or just left with the provider SW on my own?



He said he's not taking on more clients at his new place but has another IFA with him who is able to.



He said the deal he arranged with SW is unlikely to be beaten but agreed investment elements in it may need looking at.



Like me, couldn't understand a value decrease and increase, but pointed out the markets dropping last year.

moneysaverz83

I'm awaiting his clarification to see if I was switched to another IFA at the time or not because seems my plan has not been looked at to improve performance, and to see if I was paying someone as my IFA or not in the last two years.



Yes ibe got 32 years til retirement but I feel on my own after having this sorted when I started.

JoeCrystal

moneysaverz83 wrote: »

I'm awaiting his clarification to see if I was switched to another IFA at the time or not because seems my plan has not been looked at to improve performance, and to see if I was paying someone as my IFA or not in the last two years.



Yes ibe got 32 years til retirement but I feel on my own after having this sorted when I started.

Your annual statement may be saying who was your financial adviser and if any commission or charges was paid out to them. Might be worth having another glance over the paperwork.

dunstonh

moneysaverz83 wrote: »

Well, that's what I am asking re SIPP?

What SIPP?
What investments?

As we are reading it now, you seem to be concerned about your pension but have told us nothing about your pension. You are asking us about SIPPs but that can mean anything. You havent told us what is wrong with your pension or what it is about SIPPs you are interested in.

It's a bit like asking for a solution without knowing if there is a problem to solve.

Seems my IFA moved to another firm about 2 years ago. I assumed he'd taken me with him, but appears I misunderstood.

If you employed the IFA on a transactional basis then its a one off or ad-hoc advice event. If you employed them on an ongoing basis then someone should be doing the ongoing servicing.

He said the deal he arranged with SW is unlikely to be beaten but agreed investment elements in it may need looking at.

Is he still an IFA? SW products are largely old fashioned and easily beaten in cost by modern products. Although some workplace SW pensions can be good value.

I'm awaiting his clarification to see if I was switched to another IFA at the time or not because seems my plan has not been looked at to improve performance, and to see if I was paying someone as my IFA or not in the last two years.

As higher up, have you employed them on an ongoing basis?

jonnygee2

The readings are, I have about 40k in pot, only about 1k value increase since last year (maybe slightly coinciding with the 275 to 300 increase?), and a 3k overall value decrease including accounting for fees.



So I'm a bit worried really. The pot could only be about 160k at 68.

I think you've calculated this incorrectly. Your pension pot is more likely to be in the £300,000 - £600,000 range at your current contribution levels (3% - 6% interest over 32 years).

Dox

moneysaverz83 wrote: »

Like me, couldn't understand a value decrease and increase, but pointed out the markets dropping last year.

If he couldn't understand that, probably best if you aren't still his client! Huge market drops especially in Q4 2018.

tacpot12

At your current rate of saving, and with an average rate of return (after charges) of 5% pa, when you are 68 your pot should be worth over £500,000. This sounds like a lot, but due to inflation, it's not going to feel like much. You need to make sure that you take enough (but not too much) risk with your investments and minimise charges. The compound effect of charges is one of the greatest risks to your wealth in old age.