Combining pensions into a low to moderate risk pension

WackieO

Following on from some posts earlier this year regarding my pension pots, I approached a financial advisor who suggested I combine them into a new pension plan. 

At the moment, I have two with Standard Life and one with Reassure and the total transfer amount would be £108K. 

My first question is whether I should keep them separate, i.e. not have all my eggs in one basket?   
My second question is with regard to the annual charges involved if I do move to the new pension plan suggested and whether if choose a low to moderate risk pension, do I need a financial advisor to help with that?   My reason for low to moderate risk is because I'll probably start drawing in the next few years and therefore don't want anything too high risk.

The ongoing charges quoted are:  

Platform Charge                              £108.12     0.10%
Fund Charges (Fund Managers)    £118.94      0.11%
DFM Charge                                    £421.70     0.39%
Ongoing Advice Charge                   £648.77     0.60%
Total                                                 £1,297.53  1.20%

At the moment, there are charges for my individual pensions and on reviewing these, they totalled just over £600 for the past year. 

Thanks in advance.

dunstonh

Combining pensions into a low to moderate risk pension

Pensions do not have risk. They are just administrative tax wrappers that contain investments.  The investments carry the investment risk.

My first question is whether I should keep them separate, i.e. not have all my eggs in one basket?   

Having them combined or separate doesn't really change risks.    If you have the same fund in two pensions then investment risk is identical.   The only real risk is if one has a software issue that causes problems but that is not common and the FCA has put measures in place to prevent repeats from happening again.

My second question is with regard to the annual charges involved if I do move to the new pension plan suggested and whether if choose a low to moderate risk pension, do I need a financial advisor to help with that?

To move to the provider/platfrom that the adviser would use would normally need an adviser.  If you want to DIY, then you would likely need to use a different provider but you can do so.

My reason for low to moderate risk is because I'll probably start drawing in the next few years and therefore don't want anything too high risk.

In which case, cash management will also come into play as well as the investments.  However, is all of the money being drawn in the next few years or will some of it be there much much longer (i.e. rest of life).   If so, risk levels need to be based on timescale of the money being drawn when it is being drawn.    That can mean averaging out risk or phasing the portfolio into time periods.

At the moment, there are charges for my individual pensions and on reviewing these, they totalled just over £600 for the past year. 

1.20% all in under advice is fine.   It would be nicer if the adviser dropped the DFM as it would avoid that charge.  Although it would increase the adviser workload and probably push the adviser charge up by a similar amount on a smaller portfolio like yours 

WackieO

dunstonh said:

Combining pensions into a low to moderate risk pension

Pensions do not have risk. They are just administrative tax wrappers that contain investments.  The investments carry the investment risk.

My first question is whether I should keep them separate, i.e. not have all my eggs in one basket?   

Having them combined or separate doesn't really change risks.    If you have the same fund in two pensions then investment risk is identical.   The only real risk is if one has a software issue that causes problems but that is not common and the FCA has put measures in place to prevent repeats from happening again.

My second question is with regard to the annual charges involved if I do move to the new pension plan suggested and whether if choose a low to moderate risk pension, do I need a financial advisor to help with that?

To move to the provider/platfrom that the adviser would use would normally need an adviser.  If you want to DIY, then you would likely need to use a different provider but you can do so.

My reason for low to moderate risk is because I'll probably start drawing in the next few years and therefore don't want anything too high risk.

In which case, cash management will also come into play as well as the investments.  However, is all of the money being drawn in the next few years or will some of it be there much much longer (i.e. rest of life).   If so, risk levels need to be based on timescale of the money being drawn when it is being drawn.    That can mean averaging out risk or phasing the portfolio into time periods.

At the moment, there are charges for my individual pensions and on reviewing these, they totalled just over £600 for the past year. 

1.20% all in under advice is fine.   It would be nicer if the adviser dropped the DFM as it would avoid that charge.  Although it would increase the adviser workload and probably push the adviser charge up by a similar amount on a smaller portfolio like yours 

Thank you for taking the time out to answer my queries 

Albermarle

To have an IFA or DIY is a never ending discussion on this forum. For example

Financial Advise draw down pension fees — MoneySavingExpert Forum
How do you find a trustworthy IFA? — MoneySavingExpert Forum
IFA or DIY — MoneySavingExpert Forum

Just to emphasise the point about risk. Supposedly low risk funds have dropped as much , or in some cases even more , than so called high risk funds, so far this year. If you drawdown the pension then you need to remain invested for many years, and going too low risk could reduce your income long term.

WackieO

Albermarle said:

To have an IFA or DIY is a never ending discussion on this forum. For example

Financial Advise draw down pension fees — MoneySavingExpert Forum
How do you find a trustworthy IFA? — MoneySavingExpert Forum
IFA or DIY — MoneySavingExpert Forum

Just to emphasise the point about risk. Supposedly low risk funds have dropped as much , or in some cases even more , than so called high risk funds, so far this year. If you drawdown the pension then you need to remain invested for many years, and going too low risk could reduce your income long term.

Thanks... obviously something to bear in mind Albemarle