Pension options

Stargunner

I am a mid 50s guy and as well as paying into my company pension I have an old Wesleyan private pension that I still pay £100 a month into.
There is around £125000 in it but I notice from my statements that I am paying around £1400 a year in charges.
I have around £25000 in Wesleyan pension deposit fund series 3 which is rated as risk average.
I have around £55000 in Wesleyan pension managed fund series 3 which is rated as moderate high risk reward.
I have around £45000 in Pension managed fund series 1 which is rated as moderate high risk reward.
I have no mortgage now and am in a financially comfortable position so I am looking to increase my contributions but wondering whether I would be better to transfer it to another provider with much lower fees.
Any suggestions would be appreciated.

lisyloo

Does your company match your contributions?
If so it would make sense to make whatever contributions you need to get theirs.
Anything unmatched is a different matter.

Also do you get salary sacrifice?
If you get employees NI relief that’s also a benefit that you won’t get through your own pension.

Stargunner

My company just pay in the 3% minimum and I pay in 5% on a salary of around £45k. I dont have the option of a salary sacrifice scheme.
I have around £100k in cash isa’s/fixed rate savings earning between 2,2 and 2.75% and will shortly inherit around £150k

Brynsam

Stargunner wrote: »

I have an old Wesleyan private pension that I still pay £100 a month into.
There is around £125000 in it but I notice from my statements that I am paying around £1400 a year in charges.

Does the pension have any guarantees such as a guaranteed annuity rate?

Stargunner

It doesn’t have any guarantees.
It says if I buy an annuity the cost will be at an interest rate of 2% below the rate of inflation each year and that the annuity will increase in line with inflation.

Albermarle

There is around £125000 in it but I notice from my statements that I am paying around £1400 a year in charges.

With many pensions there are two charges . One for managing the pension ( often called the platform charge) and then a charge for each fund. The fund charges are often not visible as they are taken directly out of the funds .
Other pensions just have one all in charge . If your pension is like that then the charges are not excessively high for managed funds , but you can probably get cheaper.
If this £1400 is only the platform charge then its very expensive.
Have another look at the paperwork and maybe give them a call to get 100% clarity on the charges.

Stargunner

I am fairly sure that it is a all in charge for managing the fund but I have booked a review meeting for tomorrow with one of their advisors and I will check with them when they come round.

Albermarle

Is your workplace pension a standard DC/money purchase scheme? and do you know your workplace pension charges ? If you do transfer the Wesleyan one , then it could be an option to transfer to. Often employers will have negotiated a good discount , better than you can get yourself.

It says if I buy an annuity the cost will be at an interest rate of 2% below the rate of inflation each year and that the annuity will increase in line with inflation.

Buying an annuity is not the usual way to go nowadays , although still the best option for a few .
Normally some kind of drawdown ( where the pension remains invested and you take money from it slowly) is the main method. However many old pensions do not support this ( IT issues) and you may have to transfer the pension anyway due to this . Something else to ask the advisor !

Stargunner

The workplace pension is with NEST and I have copied this info from their website about their charges.
We have the same low charges for all members. This stays the same whether a member is contributing or not, whatever fund they’re contributing to, and no matter how much is in their retirement pot.
These charges are made up of two parts:
a contribution charge of 1.8 per cent on each new contribution into a member’s retirement pot
an annual management charge (AMC) of 0.3 per cent on the total value of a member’s fund each year
So if a member paid £1,000 into their pot over the year, the contribution charge would be £18. If their pot was then worth £10,000, they’d pay an AMC of £30.
The total charge would come to £48. That’s just under 0.5 per cent of the total value of their retirement pot.

I don’t have to buy an annuity with Wesleyan and I probably wouldn’t anyway with the interest rates so low.

lisyloo

Stargunner wrote: »

My company just pay in the 3% minimum and I pay in 5% on a salary of around £45k. I dont have the option of a salary sacrifice scheme.
I have around £100k in cash isa’s/fixed rate savings earning between 2,2 and 2.75% and will shortly inherit around £150k

Ok.
My point was that it’s worth having their 3% and at least doing the minimum you need to do to get that.

Additional money can go somewhere else if there is no advantage to this scheme over say a SIPP.

Stargunner

Had my meeting with the Wesleyan representative. I will probably top up my pension with a lump sum of around £60k over this and next tax year. Wesleyan take charge 3% of all contributions and then charge between 0.5 and 1% annual charge. So I think that I need to look for another provider. I don’t have enough knowledge to be buying and selling shares so will probably just settle on a fund like Vanguard lifestyle 60 or 40. I am aware that Vanguard will be introducing their own sipp shortly but I can also invest into these funds from other pension providers. Fidelity are offering £500 cash back if you transfer your pension to them for my size pot. Can anyone suggest any other good pension providers and possible funds that I should be considering.