Pension being eaten by charges

boomish

I've just realised my pension which I've paid into since 1984 is being eaten by management charges that amount to more than I'm paying in, on top of that the fund lost £600 in the last year:( 
I'm afraid I'm rather ignorant and have just been filing these pension statements away, it's only recently as the company has been resold again to a company called Phoenix Life and their charges are listed quite clearly, looking back through previous statements it only listed £12 charges but in smaller text, a £330 management admin fee was being charged.
Fund is Approx 23k and I pay in £240 a year, and plan runs till 2022, not a huge amount but it's not performed well for some time however it's not long to go, should I switch this to a lower fee fund? it will cost £88 to transfer so probably worth it as it's worth the same now as it was in 2017. 
Appreciate any advice? I quite fancy managing it myself as my share investments over the past few years although only small amounts have done much better. Though I've no idea on how SIPP works & costs.
Thank you in advance..

NottinghamKnight

Charges are on the pot so if you contributed nothing the charges would still be the same. Older pensions tend to be expensive and inflexible, though some do with valuable gurantees so worth confirming these do not apply. If not then you can transfer out to a SIPP and manage it yourself, there's basically little difference in terms of what you can invest in between a general investment account, stocks and shares ISA and a SIPP. 

dunstonh

I've just realised my pension which I've paid into since 1984 is being eaten by management charges that amount to more than I'm paying in, on top of that the fund lost £600 in the last year:( 

There is actually nothing wrong with either of those two things.

Whilst many people are back in profit again now to pre-coronavirus levels, if your funds are UK heavy then you would still be a bit lower.    

Charges are against the fund value.    If you have a fund with tiny contributions then you would expect the charges to be higher than the contributions.   Not unusual and not unexpected.  

should I switch this to a lower fee fund? 

That may put you in a worse position.   Charges are just one bit of the equation and not the primary concern.

 I quite fancy managing it myself as my share investments over the past few years although only small amounts have done much better. 

You are unlikely to be comparing like for like.  A fund from the mid 80s is likely to be cautious to medium risk.  Single company shares are very high risk.    Risk and reward can mean that the more risk you take the higher the returns can be but equally the losses can be higher too.

Also, a 1984 plan is likely to be a Section 226 retirement annuity contract and many from that era have guaranteed annuity rates or guaranteed minimum maturity values (ex Pearl for example). and the value is in the guarantees and not the returns.

Albermarle

The charges are on the higher side by todays standards and it sounds like you have a weak performing investment.
As already said it is almost certainly a function that it is an old pension and the world has moved on .
To be a bit brutal , more of an issue is that actual small size of the pot and the very low level of annual contributions. Hopefully you have other sources of retirement income ? 

Marcon

boomish said:

Appreciate any advice? I quite fancy managing it myself as my share investments over the past few years although only small amounts have done much better. Though I've no idea on how SIPP works & costs.

If you don't know what you're doing, probably better not to do it...

boomish

Albermarle said:

The charges are on the higher side by todays standards and it sounds like you have a weak performing investment.
As already said it is almost certainly a function that it is an old pension and the world has moved on .
To be a bit brutal , more of an issue is that actual small size of the pot and the very low level of annual contributions. Hopefully you have other sources of retirement income ? 

Firstly have to say thank you for all the advice that's amazing,  the plan has been passed through several firms so I guess it's a low performing investment, I've invested into 1 other pension that is now with Aviva, been paying in since I was very young but also not a huge amount, however that fund is up to 35k now, funny they don't list their charges.  We did have an endowment that matured that helped buy a second property I'm kinda hoping that and our own property will have to do for a pension of a sort when we downscale, not great but probably better than a lot of people, work has been in a slow decline for a decade so little else I could do, though I have been extremely ignorant of looking after the pension.
I expect the best plan is to leave it where it is for its remaining term of two years then?
Also, I've been meaning to phone the gov pension wise for a long time I presume that's also a good thing to go through options?

Albermarle

If you transferred it , and it was invested in a standard low cost multi asset fund , for example you would pay around 0.5% with Aj Bell or 0.6% with Fidelity ( but they would repay your transfer costs ) Or with a stakeholder pension around 0.7% .
Or with a so called robo pension probably about 0.8% but simpler to operate .
You might also find ( maybe ) it performs a bit better. Also no need to take the money at any particular age and if you could keep contributing and increase the contribution then in 10 years time it would  be worth quite a bit more.

LHW99

Also, I've been meaning to phone the gov pension wise for a long time I presume that's also a good thing to go through options?

Very worthwhile. They don't give advice, but are very good at discussing the options available to you. make sure you have all the details of your pensions with you when you speak to them, including what your state pension entitlement is

https://www.gov.uk/check-state-pension