Should I transfer? Advice please!

Heidelburg

Hello pension experts!
I have a limited understanding of this area and hope you can help me?
Investment details:
Standard Life pension 
Pension With Profits One Fund 50%
Standard Life Managed Pension Fund 50%
Regular employee payments of £40 per month since taken out in 2002
Current fund value is 16K
Current transfer value of 20K.
Thank you in advance (and Layman's terms please!)

Heidelburg

I should say that I aim to start saving for retirement more seriously from now on and aim to pay in 7K per annum. Im just not sure whether my current arrangement is a good one to stick to? 

TVAS

Why do you want to transfer?
What is the maturity date?
I assume the transfer value has an element of final bonus from 2002 to date?
Age?
Plan charges?
Fund charges?

Heidelburg

Thanks for your reply!  
Reasons: As Im thinking of paying more in I want to be sure it is a good plan before I add so much more money to into it. Option 1 would be to add all future contributions to this pension
Option 2 would be to keep this and open a new pension with advice
Option 3 would be to open an new pension with advice and combine the 2.
Maturity Date: 2041
My Age: 47yrs
Transfer Value: Made up of bonuses since 2002
Plan charges: 1% I think as this year it was about £200 (see more details below)

Heidelburg

Also Im worried that With Profits may be a bad thing but don't really know why - do they have a bad reputation?

Marcon

Heidelburg said:

Hello pension experts!
I have a limited understanding of this area and hope you can help me?
Investment details:
Standard Life pension 
Pension With Profits One Fund 50%
Standard Life Managed Pension Fund 50%
Regular employee payments of £40 per month since taken out in 2002
Current fund value is 16K
Current transfer value of 20K.
Thank you in advance (and Layman's terms please!)

You say that 'regular employee payments' have been made since taken out in 2002.

Are you still an employee (as opposed to self employed/unemployed)? If you are still an employee, have you joined your employer's pension scheme?

Heidelburg

I have always been freelance. The £40 includes gov contributions.
I am now the director of my own company and aim to pay through that. 

OldMusicGuy

You need to understand a bit more before you do this. I suggest you read "DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning" by John Edwards. You will need to set up a SIPP to transfer this pension to, and once you have done this you will need to choose the funds you invest in within the SIPP. I suspect you don't fully appreciate that yet, please read that book and it will give you the basic understanding you need to take this further.

The with profits thing isn't necessarily bad, right now it's worth £5,800 over what the base investment is giving you. The idea with them was to smooth out some of the ups and downs of investing, see here: https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/choosing-investment-funds/with-profits

You need to understand why you want to transfer this. Key reasons might be that you will get a wider range of fund choices depending on the SIPP provider, and also you will have access to things like drawdown when you retire, which SL may not offer. But until you understand why you want those things, you should hold off transferring.

I transferred a Standard Life with profits pension to my SIPP. It's easy and cost me nothing. However, you can also get an independent financial adviser (IFA) to do it for you if you don't want to. But this will likely cost you hundreds or even thousands of pounds that you do not need to pay out. 

Heidelburg

Thank you OldMusicGuy. I will definitely take a look at the book you recommend. I dont have a head for this stuff and it sounds like a good place to start. 

dunstonh

The SL WP fund you have possibly has a guaranteed growth rate applied to it (it changed around 2001 IIRC and the new one , without the guarantee, was called the SL millennium WP fund. 

So, you have part of the fund in a possibly secure fund with a guaranteed minimum rate of return and part of the fund in a middle of the road investment aimed at inexperienced and low knowledge investors.  It won't be the best. It won't be the worst.  It will do exactly what it sets out to do.

With the small value it is there is no point in reading books on possible investment strategies as that will just confuse you and would be totally unnecessary.   The product you have is out of date compared to modern options but that doesn't mean you should change it.  Yes, you can get cheaper but you cant get guaranteed funds.  So, you need to decide what is best for you.   If you do decide to transfer you would almost certainly be best using simple options just as you are now.

TVAS

No offence but £40 including tax relief is a pathetic contribution. 

You have been asking the wrong questions. Firstly With Profits, in dem olden days late 80s early 90s used to pay a huge final bonus, the amount has reduced over the years and you may have heard that they are bad because a with profit endowment was the vehicle to support an interest only mortgage and they no longer repay the mortgage debt like they used to in dem olden days. 

Nothing wrong the plan you have however a little on the high side in charges so if you do transfer you need to get a total cost of less than 1% p.a.   

You disclosed in passing that you now have a limited company this should have been said at outset. Your limited company can make contributions on your behalf they would pay a provider the gross amount and the contribution would be treated as a business expense. 

Consider a cheap SIPP which is drawdown ready check out Vanguard/Nutmeg and look at their funds. Managed Funds are medium in risk, ideal for inexperienced investors looking for capital growth over the long term 15-20 years. 
Can you continue paying £40 per month can you increase that sum to £100 gross and shove 7k or more if the business is doing well into a new plan?