Where do I put my money?

paulmarks83

Hi all,


I’ve not posted to this board before so please bear with me. I’m about to leave my current employer and I’ve been given the option to transfer my pension, either to my next employer or to another provider. Below is an extract from the handbook:


If you have been a member of the Scheme for between 3 months and 2 years - you can either receive a refund of the value of your contributions less tax* (but not the contributions made by X), or you will be offered a transfer value to your new employer’s scheme or to a personal pension of your chosen provider. This transfer value will include the value of both your own and X’s contributions.


Now my problem is I’m not moving to a long term employer so I would like to move the pension to another provider, but which?? I don’t know who to use, which funds to invest the money in and who will provide the best value for money. At the moment my pension is with my employers ‘Lifestyle Option’ meaning they invest the money where they think best.


I would be very grateful for any thoughts or opinions anyone may have. (If it helps I’m a 25 year old male and hoping to retire at 60, although realistically it’s going to be 65!


Thanks in advance!!


Paul. :beer:

Henwen

I know some people on this site will disagree but I would find a pension adviser who is an Independent Financial Adviser. Some people don't like the idea that they earn commission but there are two reasons for using them:
1) pensions are a nightmare and they are experts
2) even if you pay commission the advice is free up front and they still have access to more products than you could find and assess yourself.

I would agree that it's probably better to start a personal pension if you don't intend to be with your new employer for a long time, but also consider joining the new employer's pension. The employer may only pay extra contributions to its own scheme so you will only get the extra money if you do this and a personal pension. I'm not sure if you will also have to contribute to the personal scheme or can leave it there without paying in. Another question for the adviser?

Hope that helps

Henwen

paulmarks83

Thanks for your help Henwen...

I should have made clear that when I do start with a long term employer my intention would be to contribute to their pension scheme as well as the personal pension scheme.

I think you may be right about the IFA, couldn't harm to speak to someone who's qualified to help!

Anyone else have any thoughts?

thanks all

Retired_I.F.A.

I've almost no doubt transferring it to a personal pension will be the more beneficial but the problem your faced with is finding an IFA who will conduct the business.

Firstly one has to do a TVA, a transfer value analysis which compares your options. These software produced reports were available from insurance companies and free to IFA's when I was last was in the industry or an IFA wrote his own TVA software (took me 6 months to write mine). Nowadays though I think you will find they have to be purchased from a company not in the industry (some IFA's charge £500+ for such a report)

Then putting himself in your shoes with you attitude to investments you aims and desires the IFA if he is convinced its the best option for you will conduct the business however such is the cost of recompense that could be awarded to you in future years should you later claim the advice was wrong he has to be absolutely 100% clear in his own mind that he has the paperwork to substantiate it was best advice at the time. To have that absolutely fool !!!!!! for him may not even be enough as the regulators have been known to change the goalposts.

It's quite a risk for the IFA and many now simply steer clear of doing transfers from occupational schemes. Going direct to a provider wont help you either as they all now say they wont accept transfers unless they have been "signed off " by an IFA.

dunstonh

If it helps I’m a 25 year old male and hoping to retire at 60, although realistically it’s going to be 65!

You mean 68. Your state retirement age is 3 years higher than current.

At the moment my pension is with my employers ‘Lifestyle Option’ meaning they invest the money where they think best.

That isnt what lifestyle means. It is where they leave it in their default fund typically until you get closer to retirement and then they progressively reduce the risk of the investment as you get closer to retirement. It has nothing to do with what they think best. That is your decision or your IFA. Not theirs.

There are too many variables to give you an answer. It is easier to eliminate the poor quality plans but that still leaves a decent range which you would utilise depending on how you want to invest and how often you intend to review it etc. Age comes into it as well. For example, at 25 you would find some very good personal pensions offering far cheaper terms than a stakeholder pension. (even if those stakeholders were arranged on zero commission)

Retired_I.F.A.

OOPS Just realised yours is not a defined benefit scheme. What i said above does not apply in you case sorry.

davidlee

paulmarks83 wrote: »

I’m about to leave my current employer and I’ve been given the option to transfer my pension, either to my next employer or to another provider. Below is an extract from the handbook:


Now my problem is I’m not moving to a long term employer so I would like to move the pension to another provider, but which?? I don’t know who to use, which funds to invest the money in and who will provide the best value for money. At the moment my pension is with my employers ‘Lifestyle Option’ meaning they invest the money where they think best.

As you are moving to a long term employer, then in that case you should transfer to another provider.
Again the next qiuestion is which provider you should go for?
So, I would suggest you to take a help of a financial planner who could help you in making you a wise planning.

EdInvestor

Has it got any "protected rights" money in it (arising from being contracted out of thre state second pension)?

dunstonh

So, I would suggest you to take a help of a financial planner who could help you in making you a wise planning.

The term financial planner suggests tied agent or sales rep. They should be avoided at all costs. From next year they wont even be able to hint at using any term that suggests advice and will clearly be shown as sales. The only adviser type will be IFA so if you need advice, that is the type to go for.


edit: after typing noticed you are from the US so wont have experience of UK rules, regs and options so above wont mean much to you. However, leaving the post in place for information.