With-profits terminology

slider09

Hi,
I currently have two active pensions which I contribute to.  First is a Sal sac scheme from my employer, second is one taken out in 1996 ish (standard life with profits). 

I’ve been debating transferring the SLWP pension to my employers and upping the contribution using Sal sac. 

Looking at the SLWP details, it says:

- With profits fund: No explicit charges and a 4% guaranteed unit price growth. 
- Millenium with profits fund: no explicit charges and a guarantee of 0% meaning it won’t drop. 

- A discount applied to my plan of 0.419%

So, if there are no “explicit charges”, what is the discount referring to?

Ideally I would like to transfer the SLWP pension to my employer scheme. I’ve checked and there are no fees on both sides, both pensions only allow 25% tax free to be taken at retirement. 

I’ve just got this old school mentality that things nowadays aren’t as good as they were 25 years ago. 😀

Am I foolish transferring away from a with profits pension?

Thank you. 

Linton

The 4% guarantee your SLWP/WP pension offers is very valuable as it enables you to take higher risk with your other investments.  It reduces and possibly removes any need to derisk as you approach retirement. So from the minimal information you have provided I would not transfer the WP fund into your current pension.  It's effectively a savings account paying 4%!

 The Millenium zero drop guarantee is also useful in that regard, though obviously much less generous.  Can you still contribute to the 4% fund?

The discount may be against the purchase price when you buy extra units.

Albermarle

There is always a charge for running investment funds . With Profits funds are quite opaque in the way they are run, and the charge will be embedded in the fund calculations somewhere as far as I understand, but could be wrong.
However more importantly as said above, a guaranteed 4% return is not to be sniffed, especially in this period of low interest rates.
I’ve been debating transferring the SLWP pension to my employers and upping the contribution using Sal sac. 
The latter part sounds much more like a good idea , even better still if you happen to be a higher rate taxpayer.
Also do not forget to keep an eye on how your money is invested within your workplace pension. The default fund is not always the best depending on personal circumstances , age etc.

LHW99

And keeping them separate could mean you can draw from them at different times (after correct age) if necessary

slider09

Linton said:

 The Millenium zero drop guarantee is also useful in that regard, though obviously much less generous.  Can you still contribute to the 4% fund?
The discount may be against the purchase price when you buy extra units.

I've asked the question how my monthly contribution is distributed between the two elements (with-profits and Millennium with-profits).  Answer I got was 100% towards the millennium fund (0% minimum growth).  When I look at my plan details the value of the entire fund is roughly 50:50 (WP vs Millennium WP); so not sure how contributions are only attributed to one of them (as I would have expected this one to be much greater)?