Is it worth consolidating my pension funds?

ILoveSittingDown

Hi

I currently have 2 DC pension funds. One from a previous employer that is held by L&G, for about £31k and the other is with my current employer and is held by Royal London. 

Is it worth the effort of moving the L&G fund into the Royal London fund? I expect the only benefit is less admin and a fewer management charges?

Thanks

Brie

Check to see what the relative charges are.  Is your employer paying the charges for your current arrangement?

The reason not to consolidate is so that you can claim on your earlier DC at a different time than your current one.  But check also if you move it to RL as AVCs if you could take those separately to the balance of the fund in which case along with  lower fees may well be the deciding factor.

ILoveSittingDown

Thanks for your reply. I am paying management charge on both old and new pensions. I’m not sure how the charges are calculated, I assume a percentage of the fund values but I’ll need to try and find out.

In the second part of your post, what do you mean by AVCs?

Albermarle

 I’m not sure how the charges are calculated, I assume a percentage of the fund values but I’ll need to try and find out.

Yes, you need to find out and you need to check carefully. Almost for sure all charges will be % based.

Some pensions have a charge for the pension itself, also called a management charge or platform charge PLUS a charge for the investments within the pension.

Some have just have one charge .

Often there will be a discount as the fund size rises. Often with a workplace pension there may be an extra discount negotiated by the employer.

It is important to say that the pension provider, is much less important than the investments within the pension(s) that your money is actually invested in . So having one or two pension providers is not going to make a huge difference, but being in the wrong investments can make a difference.

ILoveSittingDown

It sounds to me like the charges from each provider are likely to be similar (similar order of magnitude at least) and also that L&G and RL will have similar funds available for investment. So less admin is probably the sole benefit.

Would that be fair to say or am I way off?

Brie

AVCs = Additional Voluntary Contributions

Normally these are paid by the individual above the monthly payroll amount.  So you might sling in an extra £50 or £300 or whatever suits you and your tax allowance.  But some will include transfers in and essentially ring fence them so that they can be dealt with separately. 

Albermarle

ILoveSittingDown said:

It sounds to me like the charges from each provider are likely to be similar (similar order of magnitude at least) and also that L&G and RL will have similar funds available for investment. So less admin is probably the sole benefit.

Would that be fair to say or am I way off?

The charges could maybe vary between 0.5% and 1 % ( just guessing). An older pension will tend to have higher charges , and less functionality/flexibility.
Having two pensions is not a big issue . If you have ten it can become a problem !

noclaf

Hi OP,
I recently went through a similar process as had 3 different pensions including my current employer, one of the old pensions was with Capita offering Scottish Widows funds. The choice of funds was poor and the platform felt very old skool, not easy to use, would logout randomly etc I transferred that pension to Fidelity and am very happy with the platform and fees.
I may also be moving jobs soon however am thinking to keep my current employer pension with Standard Life as their platform is (IMO) pretty good for a mainstream provider, user friendly/clear interface and overall fee's quite low.....not as low as using ETF's on Fidelity but not unreasonable etc As the SL pension is my largest by value I'd rather not tinker with it too much for now but will continue to monitor/review periodically.

At some point later down the line and closer to retirement, I will decide where to consolidate my pensions.

Albermarle

noclaf said:

Hi OP,
I recently went through a similar process as had 3 different pensions including my current employer, one of the old pensions was with Capita offering Scottish Widows funds. The choice of funds was poor and the platform felt very old skool, not easy to use, would logout randomly etc I transferred that pension to Fidelity and am very happy with the platform and fees.
I may also be moving jobs soon however am thinking to keep my current employer pension with Standard Life as their platform is (IMO) pretty good for a mainstream provider, user friendly/clear interface and overall fee's quite low.....not as low as using ETF's on Fidelity but not unreasonable etc As the SL pension is my largest by value I'd rather not tinker with it too much for now but will continue to monitor/review periodically.

At some point later down the line and closer to retirement, I will decide where to consolidate my pensions.

I also have a Fidelity and a SL pension and I am quite happy with both as well. My only gripe with SL is that the standard funds, such as pension plus passive etc  do not seem to perform very well ( too high in UK for one thing) and anything more specialised , like property etc bumps the cost up considerably. It is easier to have a more varied and balanced portfolio with Fidelity as there is a wider choice. However prefer not to have all my eggs in one basket.

noclaf

Albermarle said:

noclaf said:

Hi OP,
I recently went through a similar process as had 3 different pensions including my current employer, one of the old pensions was with Capita offering Scottish Widows funds. The choice of funds was poor and the platform felt very old skool, not easy to use, would logout randomly etc I transferred that pension to Fidelity and am very happy with the platform and fees.
I may also be moving jobs soon however am thinking to keep my current employer pension with Standard Life as their platform is (IMO) pretty good for a mainstream provider, user friendly/clear interface and overall fee's quite low.....not as low as using ETF's on Fidelity but not unreasonable etc As the SL pension is my largest by value I'd rather not tinker with it too much for now but will continue to monitor/review periodically.

At some point later down the line and closer to retirement, I will decide where to consolidate my pensions.

I also have a Fidelity and a SL pension and I am quite happy with both as well. My only gripe with SL is that the standard funds, such as pension plus passive etc  do not seem to perform very well ( too high in UK for one thing) and anything more specialised , like property etc bumps the cost up considerably. It is easier to have a more varied and balanced portfolio with Fidelity as there is a wider choice. However prefer not to have all my eggs in one basket.

My SL pension introduced Vanguard passive funds a couple of years back, the fees are reasonable and receive a decent fee discount (Currently worth £800 per/yr) that I assume my employer negotiated with SL.
In total I am paying 0.178% in fees, using 3 passive Vanguard funds (2 global, 1 UK), a property fund and a bond fund. I don't think think that's too bad overall but agree the specialist funds do hike up costs a fair bit. 

Some of the SL offerings are rather strange though e.g: a fund that invests 50% in the UK and 50% Bonds using a combination of 2 Vanguard funds.....as much as I would prefer the UK market currently that's pushing the boat out a bit!

Albermarle

In total I am paying 0.178% in fees, using 3 passive Vanguard funds (2 global, 1 UK), a property fund and a bond fund

That would be very low, but are you sure there is not a platform/management charge on top of the fund charges ?