Safeguard my Pension

GiJo

I am a 55 year old female and become eligible for State Pension when I'm 61. I am hoping to give up work maybe in a couple of years time.

I have a Stakeholder pension with Standard Life that my employer also contributes to. It is in a Stakeholder With Profits Fund which is classed as medium to low risk.

I also have a Pension with Scottish Equitable from a previous employer. There is a small pot (Reserved Unit Funds) in a WPE fund which also has a gmp and which SE say I can't switch (but presumably I can transfer?). There is a larger pot (Non-Reserved Unit Funds) in their Mixed Fund which is classed as average risk.

I have spoken to SL and they tell me that I ought to move the SE Mixed to a safer fund.

I do not want to be reliant on what the Stock Market does so how do I decide which fund I ought to be looking at and if I should stay with SE or transfer elsewhere. I am not financially savvy so any suggestions in language a 2 year old could understand would be greatly appreciated.

dunstonh

It is in a Stakeholder With Profits Fund which is classed as medium to low risk.

Actually, its closer to medium risk. Any WP fund that can charge an MVR is medium risk. If there is no MVR possible then it usually can be considered low/medium.

You probably have just about the worst fund available on that pension.

I have spoken to SL and they tell me that I ought to move the SE Mixed to a safer fund.

Are you sure? If Standard Life said that then they have breached FSA rules. Their call centre staff are neither authorised or regulated to give financial advice. Even if they were, they would not be authorised or regulated to give advice on the products of other companies. This is a major breach. Or perhaps, a misunderstanding of what they actually said.

The SE Mixed fund has an identical risk rating to the with profits fund. Indeed, the are not too disimmilar in their asset allocation but given the choice of just those two funds, I would pick the SE Mixed fund any day.

I do not want to be reliant on what the Stock Market does so how do I decide which fund I ought to be looking at and if I should stay with SE or transfer elsewhere.

You are not reliant on the stockmarket only with any of the funds you have. They all have part invested in the stockmarket but they also have fixed interest, cash and property as part of their overall mix.

You are right to consider moving down the risk scale if you are going to retire in 2 years time but you need to look at all the funds, not just the mixed fund. I would also get the SE pension checked out as there may be a guaranteed annuity rate on part of it. Switching out of that could see the guarnatee wiped out.

You should also get you advice from an IFA who is authorised and regulated and not some call centre individual who isnt.

GiJo

"Are you sure? If Standard Life said that then they have breached FSA rules. Their call centre staff are neither authorised or regulated to give financial advice. Even if they were, they would not be authorised or regulated to give advice on the products of other companies. This is a major breach. Or perhaps, a misunderstanding of what they actually said."

I should have said that it was the Financial services company that manages the Stakeholder pensions for the company who I spoke to, sorry for the confusion.

I have not seen any mention of a guaranteed annuity in any paperwork that I have from SE.

I know I can go to an IFA but wanted to see if I could gain a bit of knowledge myself. As previously stated, I am not a finance wizard.

EdInvestor

The guaranteed bit will probably be the GMP.

The most obvious area for adjustment is to choose better funds for the SL stakeholder.

What kind of amounts of money are we talking about?

dunstonh

I should have said that it was the Financial services company that manages the Stakeholder pensions for the company who I spoke to, sorry for the confusion.

That makes more sense. Still, their response is too simplistic. If you really considering retiring in 2 years then you should be looking at fixed interest and cash funds increasingly and not with profits or balanced managed funds.

GiJo

EdInvestor wrote: »

The guaranteed bit will probably be the GMP.

The most obvious area for adjustment is to choose better funds for the SL stakeholder.

What kind of amounts of money are we talking about?

SE "pots" are £17k WPE (Reserved Unit Funds) and £49k Mixed (Non-Reserved Unit Funds).
SL - started 3 years ago, £5k

Are you saying that the SE funds are OK?

EdInvestor

GiJo wrote: »

SE "pots" are £17k WPE (Reserved Unit Funds) and £49k Mixed (Non-Reserved Unit Funds).
SL - started 3 years ago, £5k

Are you saying that the SE funds are OK?

Actually I would consider taking the SE pension now if you are thinking of retiring in 2 years and putting it in cash until then, and investing/saving the pension money in your ISA (along with the tax free cash).With a comparatively small fund and a low retirement age, it can be beneficial to extract as many years income as possible and reinvest - there won't be much improvement in annuity rate over 2 years . Assuming there's no tax contra indication.

GiJo

Thanks for that EdInvestor.