Pension advice / suggestions please

floss2

I've currently got 2 frozen pensions (1 company, 1 SERPS opt-out) + a Norwich Union personal pension which I pay £150 a month (after tax) into, along with my employer's Local Government pension.

The 2 frozen pensions add up to a transfer value of approximately £9,500.

I have an offer of "advice" from an IFA about what to do with these at a fee of £1,500 (:eek: ) which I have not as yet taken up.

What I would like your thoughts on is:

a) Should I put them into my N/U pension pot? or
b) Should I tranfer them into my Local Government pension pot? or
c) Should I leave them where they are?

I know that I should do something with them, but I begrudge paying over 15% of the value for the advice! Do I have any alternative?

Thanks,
Floss x

Andy_L

I suspect the IFA has quoted you that much becase they don't want to get involved with it so it's just to make you go away.

If you're a member of the appropriate local gov union they generally provide free financial advice.

If the company pension is a final salary scheme then NU probably won't accept a transfer unless you get an IFA to sign off the deal.
The LGPS will prob accept it, but only within 12 months of joining. You need to get the old scheme to provide a transfer value & the LGPS will make you an offer.

dunstonh

I have an offer of "advice" from an IFA about what to do with these at a fee of £1,500 (:eek: ) which I have not as yet taken up.

Thats a high fee for a small amount.

I suspect the IFA has quoted you that much becase they don't want to get involved with it so it's just to make you go away.

Yes. That would be a good guess. Sometimes you get asked to do things you dont want to do so you price yourself a bit higher to put the person off. Typically higher risk transactions tend to be more expensive as well due to the risk and this is a higher risk transaction that is being proposed.

floss2

dunstonh wrote: »

Typically higher risk transactions tend to be more expensive as well due to the risk and this is a higher risk transaction that is being proposed.

The fee is a flat rate for transactions under £30k. After that it goes on a percentage.

Why would it be high risk? The total amount of both frozen "pots" is under £10k....?

EdInvestor

floss2 wrote: »

Why would it be high risk?

There's a high risk you could lose out by transferring a f/s company pension if the transfer value is low.

The total amount of both frozen "pots" is under £10k....?

The amount is not relevant.

dunstonh

Why would it be high risk? The total amount of both frozen "pots" is under £10k....?

It requires a more qualified adviser and the cost of getting it wrong is far higher than the actual worth of placing the business. Most final salary schemes are best left where they are.

floss2

So for a deferred pension of £589.45, you suggest I leave it where it is?

Can I ask, what is te general feeling about the other which is Serps?

EdInvestor

The deferred pension will rise by inflation or 5% every year until retirement.

Re the SERPS pension, often company schemes will not accept this money.If you are happy with your NU pension, you could transfer it into that.If it's in a With profits fund, check it has no valuable guarantees first.

While I know it feels very untidy having lots of small pensions littered about, it's often better to leave them alone than try to amalgamate them.

Retired_I.F.A.

Ed.... There's a high risk you could lose out by transferring a f/s company pension if the transfer value is low.

The size of the transfer value has very little relevence and the risk of not transfering it and leaving it to grow at rpi with a 5% cap is definately a risk if inflation is higher as it devalues. People with only small "preseved" pension provision ought to IMO transfer it and go for a risky/potentially higher reward as it'll never amount to much otherwise. they have little to lose.

Dunstonh..."It requires a more qualified adviser and the cost of getting it wrong is far higher than the actual worth of placing the business.

True nowadays sadly but,

Most final salary schemes are best left where they are.

is not true. Tell that to a client and the regulators will hold you responsible if the client later discovers he/she could have had far better death benefits. and or actual pension.

The OP's IFA without him stating any opinion played safe in merely pricing himself so high they wont go back to him. For your sake I trust you'd do the same.

dunstonh

but,

Quote:
Most final salary schemes are best left where they are.
is not true. Tell that to a client and the regulators will hold you responsible if the client later discovers he/she could have had far better death benefits. and or actual pension.

Statistically, the odds are that its best left where it is. Thats all I am saying based on the fact we know no facts. Of course, once the facts are known then an occ scheme transfer could be the thing to do. Plus, if some of the proposals go ahead, such as reducing or even removing indexation, then transfers could become more common.

The OP's IFA without him stating any opinion played safe in merely pricing himself so high they wont go back to him. For your sake I trust you'd do the same.

Yeah, I do the same. I stick a fee on it and then pass it to a third party if they agree to it. The extra cost on PI and network charges for doing it yourself isnt worth it unless you are doing lots of them.

EdInvestor

floss2 wrote: »

So for a deferred pension of £589.45, you suggest I leave it where it is?

If this deferred pension went up by 5% annually to retirement (say 35 years) it would be worth 3,251 p.a. when you come to take it.Does it have a spouse pension attached, if so how much? Is it indexed for inflation after you retire, at what rate? How much is the transfer value being offered?

If you tell us the answers, we can give a rough idea of what size of pension pot would be needed after 35 years to replace the pension.

Then it's a question of working out the rate at which the transfer value needs to grow in order to get to that size.If the rate is high (as it often is) you would need to use high risk investments to achieve the same result.This higher risk brings the possibility of loss. This is why the size of the transer value can be important.