Do I need an IFA? If so why? What is the alternative?

slaney

I have the common problem of having worked for 30-plus years in many companies, leading to pensions all over the place and lots of lost pensions.  I have not been very active in managing these or keeping them current.  I need to sort it out.  

I contacted an IFA, and they want over £3k to combine all my pensions and advise on what to invest in.  Then, they charge an ongoing fee to manage the portfolio.  My pension savings are not huge, so their fees seem significant.  

I just want all of my pensions traced, the pensions in one pot so that it is visible and to be able to pay into that pot from my self-employed income.  I am not into investing such as picking stocks.  So I would just like to just like to operate like a bank account with interest.  

I looked at PensionBee and Wealthyfy and also I have an Aviva company pension so I can use their pension tracing service.  They are a lot cheaper than £3k but of course do not give you any advice. 

Do I really need this IFA?  Are these fees steep?  Why would you pay an IFA to do this?

dunstonh

I contacted an IFA, and they want over £3k to combine all my pensions and advise on what to invest in.  Then, they charge an ongoing fee to manage the portfolio.  My pension savings are not huge, so their fees seem significant.  

a)  the ongoing fee is optional.  You do not need to employ them with ongoing servicing if you do not want to.  However, you should let the adviser know in advance as they will alter the investment recommendation to reflect your knowledge and understanding and the fact there is no ongoing servicing.
b) the fees could be less or similar to what you are paying already.     For example, a stakeholder pension circa 2001 onwards costing 1% per annum vs a modern IFA arranged plan costing 0.30% p.a. all in if transactional or 0.80% if ongoing.

I just want all of my pensions traced, the pensions in one pot so that it is visible and to be able to pay into that pot from my self-employed income.  I am not into investing such as picking stocks.  So I would just like to just like to operate like a bank account with interest.  

Operating a pension like a bank account would be a truly awful idea.    Nobody is expecting you to pick stocks.  The vast majority of UK consumers don't do it and no reason why you should.

Are you self employed as a sole trader or limited company structure? (it makes a difference)

I looked at PensionBee and Wealthyfy and also I have an Aviva company pension so I can use their pension tracing service.  They are a lot cheaper than £3k but of course do not give you any advice. 

All three of those will be more expensive than an IFA on an ongoing basis if you do not select ongoing servicing with the IFA.        The £3k is the advice fee. Hence why it doesnt exist with non-advised.

Do I really need this IFA?  Are these fees steep?  Why would you pay an IFA to do this?

No, you do not need the IFA.    You can DIY.        If you DIY well and get it right then you can save money (although your three examples may not save you money).   If you DIY badly it can be a costly mistake.  Your ideas of running it in cash like a bank account would be extremely costly to you.   

The fee is in the ballpark.  The fee can be paid via the pension and gain tax relief on the contribution.  e.g. a £3k fee paid via a pension with basic rate relief would get £600 tax relief and be £2,400 net.    Higher rate relief would see £1,200 offset.    A limited company can pay the fee and get corporation tax reduction.

You say you are self employed.  Why does anyone use you? 

Phossy

Find pension contact details - GOV.UK (www.gov.uk) may be of use to you.

I have just started a personal pension with Penfold and note that they offer help to find and combine any other pensions I have. I see no charges for that service Workplace Auto-Enrolment Pensions Made Easy | Penfold (getpenfold.com) 

JohnWinder

You might read 'Lots of tiny pensions' currently getting attention on your page https://forums.moneysavingexpert.com/discussion/6486998/lots-of-tiny-pensions#latest

Linton

The fees will depend on the pot size - so how much is "not huge"? £3K on £50K is the IFA telling you to go away.

As to whether you need an IFA - do you want impartial and regulated advice, possibly looking at all your pension/retirement plans?  If so the only person allowed to provide it is an IFA.

Generally you cant easily operate a pension like a bank account with interest:

 - You would need to pick a fund that would pay interest at a similar level as a good savings account, there are such funds available.  Some pensions do pay a moderate amount of interest on cash but not as high as you can get elsewhere. 

  - Unlike a bank account, you cannot quickly and easily move money in and out of a pension.   I assume you are older than 55, or nearly so, as otherwise you wont be able to withdraw anything from a pension.  Withdrawals from a pension every few weeks as needed could be a hassle involving filling in forms each time and possibly waiting up to 6 weeks to get your money.

 - If you and/or your employer are still contributing  to a pension then taking any taxable money out of your pension would result in the maximum annual total pension contribution from all sources being limited to £10K.

So, all things considered  best not to see a pension as a bank account.

I would have thought that using an IFA solely to trace pensions is a waste of their time and your money.  It is something you may well be able to do yourself if you are confident in dealing with financial matters and are reasonably well organised.  The idea of using your company scheme provider pension tracing service may be very sensible.  May you wish to consider transferring into your company pension?

Anbother option to consider is that if your pensions are very small you can withdraw the money under the "small pots rule".  This allows access to up to 3 pension pots with a total value of up to £30K.  The withdrawals would have 25% tax free and the rest taxed as income.  Using the small pots rule avoids the annual £10K limit on future contributions.

LHW99

.... also I have an Aviva company pension

Once you trace the pensions, why not ask Aviva if they would consolidate them into your company pension. AFAIK the Aviva one is likely to be DC, so is likely to accept other DC pensions. You could then just put the money into whatever default fund the company pension is in.

Marcon

Why can't you trace your own pensions?

wjr4

You will have to trace the pensions yourself, hopefully you have paperwork. 

xylophone

I have the common problem of having worked for 30-plus years in many companies, leading to pensions all over the place and lots of lost pensions. 

Presumably you can remember where you worked and for approximately how long?

Make a list. Collect together any information /paperwork you have.

Try https://www.gov.uk/find-pension-contact-details

Get hold of a State Pension Forecast.

https://www.gov.uk/check-state-pension

Is a COPE shown?

If so, at some point you have been in a contracted out pension scheme.

slaney

All useful advice.  

I'm an IT contractor who provides services through an umbrella company and is inside the IR35 legislation. I make several hundred daily but am not paid for sick or holidays.  So, I am neither a limited company nor a sole trader.  I am an employee of the umbrella company.  I make more than £150k gross a year paid in dribs and drabs depending on how much I have worked that week.  

I currently pay about 52% tax on my earnings - including paying employers' NI and employees' NI - and want to change that situation to offset tax into my pension.  

Peers keep telling me I need a SIPP and to put as much as possible into a pension pot. Umbrella company started a pension with some company and puts some into that.  I would rather they didn't. 

  

I have bits of pensions everywhere going back to the 1980s when I started working at 16. I don't know how much they are worth.  I need to get a sense of where I am at.  I have put something into a pension for years but change jobs often. I can't remember all of the jobs I have done over the years, to be honest. I used to work in all sorts of jobs, from factory work to estate agent.  

The idea of my pension being like a bank account is that I want to see it all in one place and see the interest I am getting each year.  I would like to see exactly where I am at.  I would like to earn a bit of interest on the money in the pension but I would not want it to get less. 

I am 54.  I have no plans to retire and want to carry on working until at least 70 (I love working, and I love what I do).  I will stop working when I can't do what I do because I am dead or ill.  But sometimes, when I am older, I will work for half the year and then travel for the other half of the year or be a digital nomad.  Hopefully, I won't have to rely on savings until I am at least 75. 

I didn't ask for investment advice or someone to invest a portfolio.  I just asked on that unbiased website for someone to help me find all of my pensions and combine them so I can see where I am at because I am a pretty busy person, and I would like to handle the problem of filling out the paperwork for all of the pension stuff to someone else.  Then, I want the umbrella company to pay into that pension.  

Still not sure if I want to pay £3k for someone to combine pensions. 

slaney

Oh, and I have done that state pension thing, and it said that I get a tiny amount per month. 

Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year

£203.85 is the most you can get

You cannot improve your forecast any more.

If you’re working you may still need to pay National Insurance contributions until 2036 as they fund other state benefits and the NHS.