New Job Pension Dilemma

LAPORTS1

I have just changed jobs and currently have around 250k in a SIPP with Aegon, in the Aegon GrowthTkrFlexTgtPn ARC fund

My new workplace pension is again with Aegon in a 'TargetPlan' account in a 50/50 split between Aegon BlackRock MSCI World Index (BLK) and AGN LGIM Diversified (BLK). I don't have much of a say in this. 

I would like to retire in 10-12 years and (obvious) maximise the returns from my pension.

My dilemma is whether to leave the pension from my old job where it is, consolidate with my new work pension or move to another pension provider. 

The Aegon funds have an annual charge of 0.45%. Vanguard Lifestrategy 80/20 looks to perform relatively well and has an annual charge of 0.22%

Just look for some thought/opinions.

Thanks

Albermarle

My new workplace pension is again with Aegon in a 'TargetPlan' account in a 50/50 split between Aegon BlackRock MSCI World Index (BLK) and AGN LGIM Diversified (BLK). I don't have much of a say in this. 

Usually there is some facility to change funds if you want ?

My dilemma is whether to leave the pension from my old job where it is, consolidate with my new work pension or move to another pension provider. 

Normally it is not a game changer either way. You will almost certainly have to keep your current workplace pension going. Employers will usually not make their contribution to a different pension.

The Aegon funds have an annual charge of 0.45%. Vanguard Lifestrategy 80/20 looks to perform relatively well and has an annual charge of 0.22%

Probably the Aegon charge is 'all in' whilst if you invested in VLS 80/20 vis a SIPP, there would be an additional platform charge ( between 0.15% and 0.45% depending on the provider ) .

Brie

I'd be comparing the fee costs - likely to be less if it's an employer run scheme even if it is in fact a group personal pension.  Also how much would it cost to transfer.  This might make you paying slightly higher fees affordable if you lose too much in the transfer.

And the obvious thing is that if you keep them separate you can get separate payouts, different times etc. 

Linton

What would concern me is that both pensions appear to be "Target" ones.  This usually means that they switch some or all of the investments to bonds/cash as you approach retirement.  This is excellent if you are planning to take an annuity but not such a good idea for drawdown since you will need to remain significantly  invested in equities for perhaps 30 years or more.  So I suggest you find out the terms of the targeting.

Factors like these are far more important than 0.225% (possibly illusory as Albermarle says) difference in charges.

My second concern is that you say you want to maximise the returns from your pension which you plan to take in the medium term future.  I think this could be a poor objective since the higher the returns you chase the more likely it is that you won't achieve them.  A better way of looking at things IMHO is to work out how much you will need in 10-12 years and confirgure your portfolio to achieving that result at lowest possible risk. 

Another different point: I have just checked the asset allocation of your £250K pension - it is fairly close to 80% equity so not very different in that respect to VLS80.  On the other hand its UK % seems even higher than VLS80's which has a sufficiently high UK% to worry some people

Albermarle

Brie said:

I'd be comparing the fee costs - likely to be less if it's an employer run scheme even if it is in fact a group personal pension.  Also how much would it cost to transfer.  This might make you paying slightly higher fees affordable if you lose too much in the transfer.

And the obvious thing is that if you keep them separate you can get separate payouts, different times etc. 

Normally there are no costs to transfer a standard DC pension nowadays . Sometimes there are even cashback offers !

LAPORTS1

Thanks everyone for the responses - much appreciated - some things to follow up on with the work pension representative there. 

Regarding the targeted aspect of the pension, both of them start to 'de-risk' 5 years before my intended retirement date. I will definitely need to move out of these funds prior to that as I like the flexibility of drawdown rather than an annuity 

Brie

LAPORTS1 said:

Regarding the targeted aspect of the pension, both of them start to 'de-risk' 5 years before my intended retirement date. I will definitely need to move out of these funds prior to that as I like the flexibility of drawdown rather than an annuity 

Ask them if that needs to happen.  One of my DC pensions had alternatives which included staying fully invested to a specific date, which could be NRA or beyond.

Brie

LAPORTS1 said:

Regarding the targeted aspect of the pension, both of them start to 'de-risk' 5 years before my intended retirement date. I will definitely need to move out of these funds prior to that as I like the flexibility of drawdown rather than an annuity 

Ask them if that needs to happen.  One of my DC pensions had alternatives which included staying fully invested to a specific date, which could be NRA or beyond.

Albermarle

some things to follow up on with the work pension representative there. 

Normally you should have on line access yourself and be able to see what other funds are available, current value of your pension and switch funds . Have you got a username/password?

Regarding the targeted aspect of the pension, both of them start to 'de-risk' 5 years before my intended retirement date. I will definitely need to move out of these funds prior to that as I like the flexibility of drawdown rather than an annuity 

Derisking ( from current 80% equities) would be pretty normal for most people approaching retirement. The problem is some ( not all ) of these lifestyle funds derisk too far. A typical % equity in drawdown would be around 50% to 60%.

A quick/temporary fix can be to change the anticipated retirement date until later . Again usually easily done via their website.

Clive_Woody

LAPORTS1 said:

Thanks everyone for the responses - much appreciated - some things to follow up on with the work pension representative there. 

Regarding the targeted aspect of the pension, both of them start to 'de-risk' 5 years before my intended retirement date. I will definitely need to move out of these funds prior to that as I like the flexibility of drawdown rather than an annuity 

Some targeted funds allow you to choose a de-risking strategy based on either plans for annuity or drawdown. Obviously the annuity option de risks quicker to allow you to cash in, while drawdown focuses on longer term continued growth. Might be worth checking if this is an option