Transfer existing pots into current plan?

Jmgasparin

Hi everyone,

It’s my first post here and I was looking for some advice if possible. I’m aware I’m talking about small quantities here but any help would be appreciated.

I’m 36, been working in the UK since 2015 but only realised the importance of building your pension pot a few years ago.

I consolidated 4 pensions from several employers into Pension Bee (Tailored plan - cost is 0.7%) in Jan 22. Started with £14,600, lots of up and downs (more downs to be honest) but in the last 6 weeks it’s been performing better and it currently holds £15,500.

I have another pot with Aviva (which I have just stopped paying as I’ve moved jobs), my future growth FP plan (cost is with close to 10k and the most recent one with L&G which I have just started contributing with my employer (L&G PMC 2050 - 2055 Target Date Fund 3), currently 5% of my salary with employer doubling but after 2 years I can increase to 7.5% and my employer would double (that’s the plan).

Question is, would you transfer any of my existing pots into L&G? 

Thank you very much.

Albermarle

The pension provider is much less important than how your funds are invested within the pension(s).
If you compare Pension Bee, with L&G or Aviva for example, the differences will be relatively small. Maybe some difference in charges, maybe one has a better website, or answers the phone quicker etc They are really just administrators.
In the long run how the investments perform within the pensions, will have a much greater impact than whether you have one, two or three pensions.
Having said that there may be lower charges if you have all funds together, and you have to deal with less admin. 

Jmgasparin

Albermarle said:

The pension provider is much less important than how your funds are invested within the pension(s).
If you compare Pension Bee, with L&G or Aviva for example, the differences will be relatively small. Maybe some difference in charges, maybe one has a better website, or answers the phone quicker etc They are really just administrators.
In the long run how the investments perform within the pensions, will have a much greater impact than whether you have one, two or three pensions.
Having said that there may be lower charges if you have all funds together, and you have to deal with less admin. 

Thanks for this. I probably didn’t explain myself very clearly, apologies. I meant in terms of the investment within those plans. If L&G PMC 2050 - 2055 Target Date Fund 3 is known to perform better than the tailored plan with Pension Bee or the Aviva plan then it would make sense to transfer, but I don’t have much knowledge about investment funds I’m afraid.

MallyGirl

Hi
Investment advice is a regulated activity so I wouldn't expect anyone to comment on whether any of those options is 'best' for you. You probably need to do a bit of reading to see what each one's aims are and then see if that aligns with your goals/attitude to risk. At your age you could afford to be a bit more adventurous (higher equity percentage) than someone closer to retirement - if that is not going to keep you awake at night.

dunstonh

Question is, would you transfer any of my existing pots into L&G? 

The logo in the corner of your statement with existing or other providers doesn't tell us anything.

Pension providers often have multiple versions of plans.  Some for different distributors. Some for different employers and a whole bunch of versions going back over the years.    So, you need to be specific about the terms of the plans you are looking at.  e.g. is your L&G plan cheap at 0.3% p.a. or expensive at 0.7% p.a.?

Cost doesnt appear to have been a driver for you to date.  Pensionbee is double what you can get with other DIY options.     Cost should not be the primary driver behind a decision but it is an important one.  

Past performance is not a great guide either.    2022 and early 2023 hit plans harder if they held more in gilts and bonds.   A stockmarket crash would hit plans harder if they held more in equities.    So, looking at periods where there may have been a stockmarket decline one year or a gilts/bonds decline the next would give you differences but it doesnt mean that the one that went up the most or down the least was the better one.       

You need to look at comparable risk levels and equity/non-equity content to get a more accurate idea.   However, even then, short term periods could favour one more than the other.   e.g. in 2023 US equity has been strong and UK equity poor.  In 2022 it was the other way around.    So, a fund with higher US equity did better in 2023 but worse in 2022 and vice versa with UK equity.       

Consolidating lots of small value pensions into one avoids forgetting about them.  And you can easily save costs with alternatives to the pensionbee (unclear with aviva or L&G).    If Aviva is low cost and has the funds you are after, then that will likely be the most convenient option.

Simon11

Lots of great points here which answer your question.

Great to see your light bulb moment in 2022, taking an interest in pensions but you need to push yourself a bit more.

Based on the numbers above, you are going to struggle to retire well or retire early. At the moment putting in a combined 10% of salary into your pension is quite low and if possible, you should look to increase this if possible to meet your retirement goals.

Over the Christmas period, well worth spending a quiet moment opening up a spreadsheet and running some calculations! Yourself will thank you in 15-20 years time!

Jmgasparin

Simon11 said:

Lots of great points here which answer your question.

Great to see your light bulb moment in 2022, taking an interest in pensions but you need to push yourself a bit more.

Based on the numbers above, you are going to struggle to retire well or retire early. At the moment putting in a combined 10% of salary into your pension is quite low and if possible, you should look to increase this if possible to meet your retirement goals.

Over the Christmas period, well worth spending a quiet moment opening up a spreadsheet and running some calculations! Yourself will thank you in 15-20 years time!

At the moment is 15% combined, around £800/month, will go to 22.5% after 2 years, £1200 roughly (without taking into account any salary increases).

I like a spreadsheet so I’ll take on your advice thanks!

Simon11

Especially worth looking at how much of your salary (around 60-65k?) gets taxed at 40% once deductions such as pensions are taken away. In a perfect world, most of us would wish to get this down to 50k to save on tax.

If you have children, you can also save even more by being eligible to claim child benefits if you put more into the pension pot.

QrizB

Jmgasparin said:

Simon11 said:

Lots of great points here which answer your question.
Great to see your light bulb moment in 2022, taking an interest in pensions but you need to push yourself a bit more.
Based on the numbers above, you are going to struggle to retire well or retire early. At the moment putting in a combined 10% of salary into your pension is quite low and if possible, you should look to increase this if possible to meet your retirement goals.
Over the Christmas period, well worth spending a quiet moment opening up a spreadsheet and running some calculations! Yourself will thank you in 15-20 years time!

At the moment is 15% combined, around £800/month, will go to 22.5% after 2 years, £1200 roughly (without taking into account any salary increases).
I like a spreadsheet so I’ll take on your advice thanks!

A (very) rough guide is that, if you're just starting to save for retirement, you should aim to be saving "half your age" in %.

As you're 36, that would suggest 18%. 15% now might be a little low, but increasing to 22.5% in 2 years (and continuing until you're 68) should be sufficient.

Jmgasparin

Simon11 said:

Especially worth looking at how much of your salary (around 60-65k?) gets taxed at 40% once deductions such as pensions are taken away. In a perfect world, most of us would wish to get this down to 50k to save on tax.

If you have children, you can also save even more by being eligible to claim child benefits if you put more into the pension pot.

Yes, £63000 so at the moment £3600 get taxed at 40% and I do have children so losing on £2100 per year. Pension is salary sacrifice and I could get an EV on salary sacrifice too (but I have a pcp for another 2 and half years which is quite frustrating)

Jmgasparin

QrizB said:

Jmgasparin said:

Simon11 said:

Lots of great points here which answer your question.
Great to see your light bulb moment in 2022, taking an interest in pensions but you need to push yourself a bit more.
Based on the numbers above, you are going to struggle to retire well or retire early. At the moment putting in a combined 10% of salary into your pension is quite low and if possible, you should look to increase this if possible to meet your retirement goals.
Over the Christmas period, well worth spending a quiet moment opening up a spreadsheet and running some calculations! Yourself will thank you in 15-20 years time!

At the moment is 15% combined, around £800/month, will go to 22.5% after 2 years, £1200 roughly (without taking into account any salary increases).
I like a spreadsheet so I’ll take on your advice thanks!

A (very) rough guide is that, if you're just starting to save for retirement, you should aim to be saving "half your age" in %.

As you're 36, that would suggest 18%. 15% now might be a little low, but increasing to 22.5% in 2 years (and continuing until you're 68) should be sufficient.

That’s very useful, thanks. By continuing until I’m 68, do you mean continue to increase to be saving half my age, so around 30% when I’m 60?