New job and new pension scheme

Legacy_user

I have just changed jobs and my new employer has a pension scheme whereby because I'm over 39 I contribute 3% and they contribute 6% and when I retire I purchase an annuity. Can anyone tell me if this is a good option as I don't know anything about pensions.

EdInvestor

This sounds like a good idea - 6% free money from the employer.

Which insurance company is running it? And do you know if it is the company's own occupational pension scheme or a "Group Personal pension" scheme (GPP)?

The next thing is to make sure it's invested in funds that perform well,so the "pot" is as big as possible when you retire.

System

It's a Group Pension Plan and apparently I can choose where the funds are to be invested or take the easier "Lifestyle" option whereby the choice of funds is made for me and the money is invested in Passively Managed Equity, Bonds and Cash Funds with the spread of the investments changing as I approach retirement ???? This is all way beyond me.

The Equities are:

Fidelity Special Situations Pensions Fund
Fidelity Emerging Markets Equity Pension Fund
Fidelity Managed International Pensions Fund
Fidelity Select Global Equity Pensions Fund
Fidelity European Equity Pensions Fund
Fidelity Uk Equity Pensions Fund
BGI UK Equity Index Fund
BGI World (ex UK) Index Fund

These last 2 are described as Passive management as are the following.

The bonds are:

BGI Over 15 Years UK Gilt Index Fund
BGI Over 5 Years Index-linked Gilt Index Fund
BGI Corporate Index Fund Over 15 Years

And the Cash is

BGI Cash Fund


I can also pay AVC'S if I wish.

dunstonh

Its a money purchase occupational scheme and not group personal pension. You cannot pay into AVCs with a group PP.

Fund selection is your choice and you should pick a range to average out to personal risk profile (and not other peoples).

EdInvestor

Pam17 wrote:

Fidelity Special Situations Pensions Fund

Many people would be very pleased to see this one in their pension fund: it is a very famous fund with a long record of high performance. Of course past performance is no guarantee.....;)

The other Fidelity funds' performance can be checked on this link (nos 1086-1111)

http://www.trustnet.com/pen/funds/perf.asp?sec=all&status=all&def=1&txtS=&txtSS=&sort=4&page=10&ss=0&columns=

These two also look quite good from a quick glance:

Fidelity Emerging Markets Equity Pension Fund
Fidelity Uk Equity Pensions Fund

BGI UK Equity Index Fund
BGI World (ex UK) Index Fund

These two are tracker funds.They will follow the index.The main advantage to them is low charges, obviously you can't expect outperformance. The bonds and the cash funds are more suitable for when you are coming up to retirement, though they are lower risk, so you could include one of them if you want to reduce the overall risk of a pension fund invested mainly in a selection of equity funds.

Porker

This is a pretty good deal, as mentioned you are getting free money – nice!

Re your question about annuities: essentially what happens with a pension is that all the money you save, and that is invested for you, is turned back into cash when you reach your retirement age. This ‘lump’ of money is then sold on in return for a monthly payment – which is what you actually receive as your pension. The annuity is the monthly income you are able to buy with your lump sum.

whiteflag_3

Can anyone tell me if this is a good option as I don't know anything about pensions.

Hi Pam17

A 6% employer contribution is a very good thing and should be taken up asap.

The debate on annuity versus drawdown is pointless at this time and I would imagine will only confuse you further as you mention you dont know anthing about pensions.

The important thing is to build up as big a fund as possible to give you as many options as possible when you get to take the benefits,which in your case will be at least 16 years away!

Dont forget you get tax relief on your 3% contribution as well

Pal

This thread has been highjacked. I have therefore split the thread into it's two subjects, removing the income drawdown/annuity purchase debate from this thread.

Please keep to the topic going forward.

Pam: Join the pension scheme. They pay 6%, you pay 3%. That is a 200% investment return that most people would be happy to receive on their investments.