Pros & Cons on pension transfer

SMcGill

I have a personal pension with Standard Life with a current transfer value of about £41k. I’m wondering whether to transfer this as an AVC to my workplace pension which is with Prudential. Simplistically it seems easier to deal with one administrator rather than two but I’d appreciate views on the pros and cons.

The admin charges look a lot lower with Prudential, but my SL plan matures at 60 and 65 (half the plan in each) which may be a useful flexibility. Although I won’t actually need it until 67 I am retiring early so if I take it at those ages I’ll be able to minimise tax as I’ll be living on savings. I haven’t yet investigated if my workplace AVC would match this, I’m assuming probably not.

STANDARD LIFE
Managed Pension Fund = 1.023%
UK Equity Pension Fund = 1.008%
There is a fund discount of 0.368%
Pension Millennium With Profits Fund and Pension with Profits Fund = variable deductions

PRUDENTIAL
UK Equity Fund / Managed Fund / Global Equity 5050 Fund / Cash Fund / Over 5year Index-linked Gilts Fund = 0.049%
Global Emerging Markets Fund = 0.35%
Active Aggregate Bonds 5050 Fund = 0.225%
Property Fund = 0.55%

dunstonh

The WP fund on the SL pension has a guaranteed minimum growth rate.


The SL pension is an old version which is likely to be improved upon by a modern pension.


The Pru pension is not that good value by 2019 standards.


So, based on extremely limited info, I would probably look at a new pension that is neither of those.

SMcGill

Brilliant. Just the sort of response I was hoping for i.e. I’d have not considered that myself. Thanks

Albermarle

Are you sure that the Pru pension has no additional platform /provider charge in addition ? The fund charges being on the low side makes me think that there might be .

but my SL plan matures at 60 and 65 (half the plan in each)

I think you will find that these are just indicative ages for illustration purposes.
Normally all DC pensions are available for payment at age 55 , or you can leave them until 75, or any age inbetween .

SMcGill

I’m not completely sure about any other Pru charges although they make a feature of their low admin charges in their literature (perhaps to gloss over offering poor value as DunstonH suggests?). Thanks for the prompt though.

My SL plan has 2 maturity dates. I have no recollection why I thought that was a good idea way back when I took out the plan 15-20 years ago but it’s appealing to think that I could cash them in before my DB and SP kick in and not pay much or any tax. As I stopped paying into it 15 years ago it’s just not been something I’ve paid much attention to.

I think I’ll follow advice and look into transferring to a new provider. Royal London seems well respected I’ll seek IFA advice.

As I’m now 55, would there be any drawbacks to switching provider for a plan that that I’ll only have 12 years to let run?

Albermarle

My SL plan has 2 maturity dates

As already explained it is highly probable that these maturity dates are meaningless .

As I’m now 55, would there be any drawbacks to switching provider for a plan that that I’ll only have 12 years to let run?

Providing the plan is better than the one you currently have then no .

I think I’ll follow advice and look into transferring to a new provider

You need to check with your current employer . Most will not be happy to arrange contributions to a new provider just for one employee.

wjr4

Don’t transfer the pension with the with profits funds because of the minimum growth rates.

SMcGill

The WP part of my SL plan is under 5% (the final bonus is currently estimated at less than £300) so I’ve been dismissive of the WP benefit, thinking it’s too little to worry over. Am I being naive?