Pension withdrawal

Nibbles1234

Hi everyone, I am 29 and have paid into 1-2 pensions via private companies. There isn't a lot of money in there and by the time I get to retirement age the fees would have wiped out the money I invested into the pension however the companies will not let me withdraw the money. I now work for the Government who wont let me bring over my private pensions, can anyone offer advise on what  to do please? At this rate, hundreds of pounds I have paid will just end up being for nothing. 
Thank you in advance. 

Dazed_and_C0nfused

Nibbles1234 said:

Hi everyone, I am 29 and have paid into 1-2 pensions via private companies. There isn't a lot of money in there and by the time I get to retirement age the fees would have wiped out the money I invested into the pension however the companies will not let me withdraw the money. I now work for the Government who wont let me bring over my private pensions, can anyone offer advise on what  to do please? At this rate, hundreds of pounds I have paid will just end up being for nothing. 
Thank you in advance. 

Choose better investments and/or move to a pension scheme which has lower charges.

Ending up with nothing would be entirely your own fault from inertia.

dunstonh

There isn't a lot of money in there and by the time I get to retirement age the fees would have wiped out the money I invested into the pension 

No they wouldn't.  That is not technically possible for you

however the companies will not let me withdraw the money. 

Of course not.  They cannot break the law.

I now work for the Government who wont let me bring over my private pensions, can anyone offer advise on what  to do please?

Most Government backed schemes allow you to transfer in.  Although some have a 12 month period and then don't allow it.   Which government scheme are you in, and are you within 12 months?

At this rate, hundreds of pounds I have paid will just end up being for nothing. 

No it wouldnt.      

LHW99

Nibbles1234 said:

Hi everyone, I am 29 and have paid into 1-2 pensions via private companies. There isn't a lot of money in there and by the time I get to retirement age the fees would have wiped out the money I invested into the pension however the companies will not let me withdraw the money. I now work for the Government who wont let me bring over my private pensions, can anyone offer advise on what  to do please? At this rate, hundreds of pounds I have paid will just end up being for nothing. 
Thank you in advance. 

1) You are not legally allowed to take money from a pension until 55 (for you it will be 57) If anyone tries to convince you to do it they are scammers who will go off with the money and leave you to pay a large fine to HMRC.

2) What sort of pensions are they? If they are DC (pot of money) type, you could gather them together in a SIPP or personal pension with lower charges if you want. If DB, do you know what they would pay you as of date of leaving - that will have increased by some specified amount by the time you get to the NRA.

3) Why do you think the fees will wipe out all the money? What is/are the company(ies), and what are the fees? If your money is invested in the pensions as its likely to be, they should grow over the next 25-30 years.

4) It's often possible to use previous pensions in some way, provided you joined your Government scheme within the last 12 months (you're out of time most likely if it's longer than that). What exactly were you told?

ali_bear

Move both into a single pension with a provider/platform that has low fees. This is important because your money will be invested for a long time, and the annual fee will eat into any investment gains. And you could do worse than actually save into the pension from your take-home pay. If you paid in £80 each month, the inland revenue will top it up to £100, and by retirement age this could have built into quite a fund. Obvs if you save more you will have more later. 

If you are saving a regular amount each month over a 30+ year period then actually it makes sense to invest in a higher risk fund - but that would come under the heading of investment advice, not pensions. 

SVaz

Then just open a cheap Sipp and transfer the two pensions.  Choose your own investments and see if you can do better.

Albermarle

A typical pension fund investment will over the long term increase by 5% a year ( can be more or less)
A typical fee would be less than 1 % nowadays. So over the years you should see it slowly increasing, not decreasing.

Silvertabby

Many LGPS employers, for example, have exercised their employer discretion not to accept transfers in from non club schemes.

Aretnap

Nibbles1234 said:

...by the time I get to retirement age the fees would have wiped out the money I invested into the pension ... 

That's not going to happen. For a modern workplace pension the annual fees will be a percentage of the money that's in there - no more than 0.75% for the default fund.

So even if the investments never made any money, the fees could never force the value to zero because as the value of the fund fell, the fees would fall as well.

And in fact, over the long term any pension fund will increase by a lot more than 0.75% a year on average (barring a nuclear war or a complete collapse of the capitalist system as we know it, in which case you will have bigger problems to worry about than a few hundred pounds in an old pension) so in practice the fees act as a slight drag on growth, not as something that drives down the value of your fund.

FIREDreamer

dunstonh said:

There isn't a lot of money in there and by the time I get to retirement age the fees would have wiped out the money I invested into the pension 

No they wouldn't.  That is not technically possible for you

I beg to differ here, speaking from experience.

Some old Phoenix unit linked pension policies (the so-called CEB book of business originally administered by Capita) had a monthly policy fee of over £8 increasing with inflation.

Many of these were paid up with fund values under £1,000.

When we produced SMPI projections for these, the fund value at retirement is zero.

Thd policyholders were then recommended to transfer elsewhere, but obviously the onus was on the policyholder to actually do it.

Aretnap

FIREDreamer said:

dunstonh said:

There isn't a lot of money in there and by the time I get to retirement age the fees would have wiped out the money I invested into the pension 

No they wouldn't.  That is not technically possible for you

I beg to differ here, speaking from experience.

Some old Phoenix unit linked pension policies (the so-called CEB book of business originally administered by Capita) had a monthly policy fee of over £8 increasing with inflation.

Many of these were paid up with fund values under £1,000.

When we produced SMPI projections for these, the fund value at retirement is zero.

Thd policyholders were then recommended to transfer elsewhere, but obviously the onus was on the policyholder to actually do it.

That's as maybe, but as the OP is 29 he clearly does not have an old Phoenix unit linked policy.

Any workplace pension taken out in at least the last decade will have fees expressed as a small percentage of the fund value every year, so it is impossible for the fees to drive the fund value to zero.

(The fund itself could theoretically fall to zero if the value of all it's investments falls to zero, but for a standard diversified pension fund that could only happen in the context of a total economic catastrophe which would also leave his public sector pension, worthless or near worthless.)

Added: I suppose it's possible that it's not a workplace pension, and there's are some SIPPs that charge a flat monthly fee rather than a percentage. If he's done that then he needs to transfer to a provider that charges a percentage instead. But I'd hope that someone with the nous to open a SIPP would understand the fee structure, and I read it as a reference to a standard workplace pension.