Should I Combine NU and FP Pensions?

TCA

I have two pensions which I am considering combining and would be grateful for some opinions as to whether I should or not. I'm not looking for any specific recommendations for fund selection as both now offer a wide choice but I am interested in whether the choice is comparable and whether anyone has any strong opinions about either company or can point out any downsides in transferring one to the other. My pensions are as follows:

1) Norwich Union - This was initially used to contract out of SERPS (a former Commercial Union policy) but to which I have also made lump sum payments. They have just moved the investments to the new fund series 2 and the balance of £30k is now 100% in their NU Balanced Managed fund, half of which is protected rights. A variety of funds choices are now available including those of NU itself plus several NU Aberdeen, NU Fidelity, NU Invesco, NU Merrill Lynch, Nu Newton, NU Schroeder and NU SG funds. I am not sure if I am permitted to switch funds free of charge or not. I don't quite understand the charges as previously they were a straight 1% p.a. Recent correspondence stated that they have replaced previous plan charges with a single monthly plan charge which will not increase the level of charges yet the link below to fund performance indicates a 0% annual charge.

http://services.norwich-union.co.uk/consumer/Pension/ABIUKPENSION_GBR_72005371_EN.pdf

2) Friends Provident - This former works pension was recently transferred to FP New Generation Group Personal Pension and contains a combination of contributions from my employer and myself, totalling around £13k, which is 100% Balanced Index Enhanced Fund of Funds. Annual charges per my correspondence are 0.6% up from 0.5% (although the link below seems to suggest otherwise) and free switches are permitted to a variety of internal and external funds with AXA, Artemis, Baillie, BGI, Gartmore, HSBC, Invesco, Investec, Lazard, Merrill Lynch, M&G, Newton, UBS and more. The charges of these fund options vary and are higher if they are managed externally. This is the performance of my current fund:

http://factsheets.finexprestel.com/frie/_B06WLC8.pdf

My initial thinking prior to NU presenting these new fund options was that I should transfer the balance to FP given the fact that both funds appear similar (to me at least), FP originally had a wider choice of investments (albeit I haven't thought about switching yet), FP had seemingly lower charges (for my current default choice of fund) plus I can manage it online and one pension is easier to manage than two. Now given the changes, I'm not sure what to do if anything.

Any opinions? Are there any disadvantages to combining - maybe re protected rights or losing the chance to take a small pension fund entirely in cash at retirement? Are either of these medium risk funds better than the other?

I'm a complete pensions novice, so any guidance whatsoever is much appreciated. Apologies for the long post.

Thanks.

dunstonh

The NU pension is closed for new business. Unless it has a contractual reason to accept top ups, you cannot transfer into it. A new NU pension would be set up.

The FP NG pensions I believe are also closed for new business now. So, transferring into them is unlikely to be available so again, a new FP pension would be required.

Are there any disadvantages to combining - maybe re protected rights or losing the chance to take a small pension fund entirely in cash at retirement?

Both pensions are old versions. Modern alternatives are better. So, a third option maybe to combine and put into a new one.

You wont be able to take the pension entirely in cash as triviality rules apply to all your pensions not just one.

Are either of these medium risk funds better than the other?

Its lazy investing and I wouldnt put my money in either. You have a decent fund value (assuming you are in your early 30s or lower) so you should treat this as an investment. Putting into what are effectively default funds is ok if you havent built up much yet but its wasteful once you start getting over 20-25k.

TCA

dunstonh wrote: »

The FP NG pensions I believe are also closed for new business now. So, transferring into them is unlikely to be available so again, a new FP pension would be required.

Both pensions are old versions. Modern alternatives are better. So, a third option maybe to combine and put into a new one.

Its lazy investing and I wouldnt put my money in either.

Thanks very much for the reply Dustonh.

According to my latest FP NG members' booklet, the scheme will accept transfers if more than their minimum and it meets the regulations on transfers. I will check what this means but from what you're saying I may be better with a new pension altogether for combining the lot. Can you give me a brief hint as to what a "modern alternative" might be, given these two pensions seem to contain a myriad of low to high risk investment funds?

P.S. I fully accept the lazy investor tag but am hopefully now making moves to remedy the situation. I had it in mind that at least one of these policies might be of use and that I could combine them with a view to then selecting more appropriate investments within the plan. Maybe not then...

TCA

Can anyone give me a steer as to what a modern pension offers that neither of my above two do? I'm working from a position of zero pensions knowledge and thought that given the wide choice of funds available in both, that at least one of the above policies would have offered a reasonable home for my contributions?

Grateful for any guidance.

TCA

TCA wrote: »

Can anyone give me a steer as to what a modern pension offers that neither of my above two do? I'm working from a position of zero pensions knowledge and thought that given the wide choice of funds available in both, that at least one of the above policies would have offered a reasonable home for my contributions?

Grateful for any guidance.

Anybody?

I'm aware of the use of ISAs as a pension alternative but otherwise am in the dark as to what Dunstonh refers to as a modern pension and how this differs from what I currently have. Ignorance is not bliss, so I'd appreciate it if anybody can give me some pointers. I'm not looking for any recommendations, just an idea of what to look at in the first place.

Thanks.

EdInvestor

They both look like modern pensions to me.:)

dunstonh

They are newer and generally seem fine but both have been updated since with more funds (on the newer versions) and lower charges in the case of NU. Potentially options exist with lower charges and/or better fund choice but its not really possible to say which as we dont have enough details.

TCA

dunstonh wrote: »

They are newer and generally seem fine but both have been updated since with more funds (on the newer versions) and lower charges in the case of NU. Potentially options exist with lower charges and/or better fund choice but its not really possible to say which as we dont have enough details.

TCA wrote: »

1) Norwich Union - A variety of funds choices are now available including those of NU itself plus several NU Aberdeen, NU Fidelity, NU Invesco, NU Merrill Lynch, NU Newton, NU Schroeder and NU SG funds.

2) Friends Provident - free switches are permitted to a variety of internal and external funds with AXA, Artemis, Baillie, BGI, Gartmore, HSBC, Invesco, Investec, Lazard, Merrill Lynch, M&G, Newton, UBS and more.

Without naming all the funds I tried to give a few examples of the additional external funds available above and did mention that NU had just increased the options available to me, so I presume I now likely have choice equivalent to any new NU pension of this kind? The Norwich Union investment choices number close to fifty and belong to their Series 2 Pension Funds. The FP NGPP pension has close to one hundred different funds available and was only opened last year, so I presume that also is the newest version?

My thinking is now back where I started as from what you're both saying, I probably have sufficient choice in either pension to suit any purpose? That being the case, I think I'll combine for ease of management. The FP NGPP accepts transfers in over £1,000. Thanks for your input.

EdInvestor

There's no real need to do make the change.

TCA

Hi Ed

Yeah, until I received notification from NU the other week about the new fund options, I was looking at transferring FP to for a wider choice of funds, lower charges and the ability to manage it online. I think despite the new NU offerings, all of the above still applies, so am back to where I started. I just feel more comfortable with FP and the ability to monitor the investments and make switches at the click of a button. NU's annual paper statements and reams of paperwork for anything (including switches) don't inspire me. I should perhaps be looking more at the investments funds of each but I didn't get my lazy investor tag for nothing - my thinking was that I'm no funds expert (and neither are the experts), so I'd likely be choosing equivalent funds in either pension anyway, so why not lump together.

dunstonh

I just feel more comfortable with FP and the ability to monitor the investments and make switches at the click of a button.

However, the two funds you linked are jack of all trades funds. The sort you use when you dont monitor the investments. The lazy investor funds. In which case, does it matter if you have online access or not?