Personal Pension Question

TooCautious

Good Morning All

I have a company pension, which I contribute to via salary sacrifice. This is the default fund and is doing okay, if not exceptionally.

I have another pot, which I have invested on the Nucleus platform through a local IFA. This has higher fees than my company pension but I figured it would be worth it for ongoing advice and what I hoped would be improved performance.

However, this small IFA company have been taken over by a larger Wealth Management company called True Potential - I hope I haven't broken any rules by naming them?

Their combined fees have increased and would be 1.66 percent, which I think is very high. This has prompted me to look at the performance of my low fee company pension, compare with the various standard funds available from True Potential and from another low cost fund, the Vanguard LifeStrategy 80% Equity.

Comparing the last five years the Vanguard fund has outperformed all of the True Potential funds (and my company pension) for much lower 0.22% fees.

I appreciate that that I would forgo ongoing advice, but I'm seriously thinking about moving this pension pot to the Vanguard fund or something similar.

Is this rash; do I just need to seek better advice from a different IFA?

For context, I'm 57 and looking to retire in hopefully no more than 5 years.

Thanks.

Brie

Would you be able to shift the PP into your work one?  To get the lower fee?  It does sound like you need to move somewhere and talking to a different IFA would be a good first step.

dunstonh

True Potential offer ex-IFAs 8% of the value of the investments moved from the IFA offering to TP.     Unfortunately, some IFAs sell their soul when retiring as 8% is a lot of money.

Comparing the last five years the Vanguard fund has outperformed all of the True Potential funds (and my company pension) for much lower 0.22% fees.

Remember that VLS is an unbundled fund. So, you need to add on your platform charges to that figure.

Is this rash; do I just need to seek better advice from a different IFA?

DIY or IFA.  its your choice.  Just avoid the FA/salesforces.

TooCautious

Thanks for the replies.

dunstonh - Could I transfer the pot into my company pension and use it to invest in this, or a similar fund?

xylophone

If you are considering a transfer to your existing workplace pension, check with the providers of that pension whether a transfer would be accepted.

If it would, you will need to ask them to arrange it.

TooCautious

Thanks xylophone, I will make enquiries with Aegon.

I have noticed that my Aegon work pension is a LIfestyling type, and starts de-risking six years before retirement.  If I don't want to buy an annuity, should I be avoiding this by moving the retirement date out?

xylophone

I have noticed that my Aegon work pension is a LIfestyling type, and starts de-risking six years before retirement.  If I don't want to buy an annuity, should I be avoiding this by moving the retirement date out?

Have you seen this?

https://www.aegon.co.uk/customer/investment-choices/lifestyle-funds

TooCautious

xylophone - I haven't seen this so thanks, very kind.

I'll have a read.

Albermarle

Their combined fees have increased and would be 1.66 percent, which I think is very high. This has prompted me to look at the performance of my low fee company pension, compare with the various standard funds available from True Potential and from another low cost fund, the Vanguard LifeStrategy 80% Equity.
Comparing the last five years the Vanguard fund has outperformed all of the True Potential funds (and my company pension) for much lower 0.22% fees.

Couple of points.

Most likely you are not comparing like with like. The VLS fund is 80% equity. Do the TP and workplace funds contain 80% equity? Equity has done quite well compared to other asset classes recently, so the higher the equity the better the performance generally.

Second point is that in a market crash a high equity fund will drop more than a lower equity one, and could be quite a gut wrenching drop especially if it happened just a year or two before retiring. 

Risk ( high equity) brings rewards but also volatility. Hence why the lifestyle funds derisk as you approach retirement, although often they overdo it .