Spreading of risk and transferring 'with profits' pensions

Mithas

A newbie to this excellent forum, which I've been reading frequently over the last few weeks. Recently retired and now looking at consolidating my pensions to reduce fees and make life easier etc. I have a couple of questions where I'd really appreciate some guidance:
1 - I have one former big company pension which is still open to accept transfers and appears to have very competitive rates (0.15% plus 0.05% est.trans). I am tempted to transfer everything into that pot but hesitant to load all my eggs in one basket. Would it be better to split in two and pay an extra 0.10% on the other 50% to give me extra security? Goes against the grain as it's a fairly good sized (>£500K) pension so would have a significant impact, but I've read all the posts about the govt's £85K limit on bank account compensation which makes me slightly nervous etc. Any thoughts on the risks around this would be most helpful.
2 - In the mix, I have a £35K pension which I've had for over 15 years and was recently converted to with profits by RL in 2016, which I thought was generous at the time. However, now I've come to realise that they are charging me a full 1% on the pension (0.95% after bonus applied) and I am supposed to employ a financial advisor if I want to move it (which makes me a little suspicious on why they chose to 'convert' it in the first place but perhaps just me being an old cynic in my 60's). I realise the government introduced these rules for good reason but in my situation, do I really have to hire and a pay a financial advisor to bless this transfer before I can move it anywhere else?
I also have a £100K SERPS with profits pension with SW, also at 1%, so that is also on my radar.....although it has a more generous 2.5% annual bonus and includes a £40K final bonus currently, so perhaps not so clear cut.
Thanks in advance for any thoughts on the above. 

dunstonh

. Would it be better to split in two and pay an extra 0.10% on the other 50% to give me extra security? 

Depends on the type of investment fund being used and where you are investing.

For example, putting aside that 100% into a FTSE tracker would be bad, if you had one pension with 100% in a FTSE100 tracker or 10 pensions in a FTSE100 tracker, then you have added no real security as they will go up and down the same way.
If you are referring to FSCS protection then you have to be pretty paranoid to be worrying about that if you are using mainstream investments.

2 - In the mix, I have a £35K pension which I've had for over 15 years and was recently converted to with profits by RL in 2016, which I thought was generous at the time. However, now I've come to realise that they are charging me a full 1% on the pension (0.95% after bonus applied) and I am supposed to employ a financial advisor if I want to move it (which makes me a little suspicious on why they chose to 'convert' it in the first place but perhaps just me being an old cynic in my 60's). I realise the government introduced these rules for good reason but in my situation, do I really have to hire and a pay a financial advisor to bless this transfer before I can move it anywhere else?

Are you sure you have that right?  It would be strange to switch to a with-profits fund in 2016 if you were not already in a with-profits fund.  I am not aware of any forced actions from RL on that front.  Although you cannot know everything a provider does.   

Have you verified the RL charge?   RL's modern pensions have a 1% default charge but fund based discounts on that.  Usually kicking in around the £20k mark and bringing it down to around 0.45%. Plus, the mutual bonus which is around 0.15% p.a.
RL only require an adviser if you have safeguarded benefits on the pension (its not really RL requiring it but the rules applying to all pensions).  No adviser is required if there are no safeguarded benefits.  Unless it is an old CIS plan, the RL GARs are usually valuable and worth keeping.

Mithas

dunstonh said:

. Would it be better to split in two and pay an extra 0.10% on the other 50% to give me extra security? 

Depends on the type of investment fund being used and where you are investing.
If you are referring to FSCS protection then you have to be pretty paranoid to be worrying about that if you are using mainstream investments.

OK thanks - I had thought the risk of any FSCS intervention was probably low but good to have a second opinion - and yes, it has a few funds available which I can pick and choose, but due to my age, the main fund is currently a diversified growth tracker fund so fairly low risk/lower returns and hence the low fee.

dunstonh said:

2 - In the mix, I have a £35K pension which I've had for over 15 years and was recently converted to with profits by RL in 2016, 

Are you sure you have that right?  It would be strange to switch to a with-profits fund in 2016 if you were not already in a with-profits fund.  I am not aware of any forced actions from RL on that front.  
Have you verified the RL charge?    Unless it is an old CIS plan, the RL GARs are usually valuable and worth keeping.

Pretty sure I have it right - they wrote to me in April 2016 (10 years after pension commenced) and said 'we are delighted to announce that from 1st Jan 2016, we'll aim to boost your retirement savings by adding a share of our profits to your plan each year'. Checking back, I see some of the older statements were from Scottish Life (part of RL), so perhaps the profit share kicked in after they moved it across to RL itself. The last 3 statements said I'd paid fees the equivalent of 0.86% of the plan value but I note that it is a GPP 'managed fund' so guess I need to go back over the history and check the performance vs a tracker.

dunstonh

Pretty sure I have it right - they wrote to me in April 2016 (10 years after pension commenced) and said 'we are delighted to announce that from 1st Jan 2016, we'll aim to boost your retirement savings by adding a share of our profits to your plan each year'.

That is the mutual bonus.  It has nothing to do with With Profits.  All the unit linked funds get the exact same amount.

Checking back, I see some of the older statements were from Scottish Life (part of RL), so perhaps the profit share kicked in after they moved it across to RL itself. 

Royal London owned Scottish Life for decades.   Until a few years back, RL used to operate different parts of their business under other brands.  You couldn't actually buy a Royal London pension after they closed their salesforce.   Scottish Life was their pension brand. Bright Grey was their life assurance brand.   Then they decided to rebrand it all under Royal London.  

 but I note that it is a GPP 'managed fund' 

The GPP was not necessarily as good value as their individual plan unless the employer got better terms.   So, whilst the individual plan would be about half that, the GPP could well be at the level you say it is.   It is probably around 0.75%.   Reduction in yield due to charges adds around 0.1% at that level.

Albermarle

 but I've read all the posts about the govt's £85K limit on bank account compensation which makes me slightly nervous etc. Any thoughts on the risks around this would be most helpful.

FCSC cover of £85K in case a failed bank is not relevant in this case . There is separate FCSC cover for platforms and funds going bust , but if you stick to mainstream providers the chance of this happening is very small.

If you keep reading the forum regularly you will see this question asked and answered numerous times, so I will not go over all the detail again.

Having said that with a £500K pot probably many people would split it over a couple of providers , just in case.

Mithas

Thanks to both responders above - very helpful and much appreciated.