PruFund Pension Cautious
John_30033
Posts: 8 Forumite
Hello,
I have had a meeting with an IFA regarding the possible transfer of my final salary pension. I am now awaiting a CETV from my former employer. They have told me that it will be "in the region of £320,000".
The FA has said that IF the transfer were to take place and I was to ask them to manage it, their intention would be to put it into the PruFund Cautious Pension fund. From googling around I can see that that fund currently has an "Expected Growth Rate" of 5.5%.
My question (borne out of great ignorance in this area) is; Am I correct in thinking that I would get 5.5% minus the FA management fee (0.5% I believe), or are there fees to be paid to Prudential as well?
I understand about the effects of inflation and that the EGR changes of course, but as a starting point for trying to put figures into a spreadsheet can I assume that whilst the EGR stays at 5.5% my money will grow at 5% year on year?
Thanks a lot,
John.
I have had a meeting with an IFA regarding the possible transfer of my final salary pension. I am now awaiting a CETV from my former employer. They have told me that it will be "in the region of £320,000".
The FA has said that IF the transfer were to take place and I was to ask them to manage it, their intention would be to put it into the PruFund Cautious Pension fund. From googling around I can see that that fund currently has an "Expected Growth Rate" of 5.5%.
My question (borne out of great ignorance in this area) is; Am I correct in thinking that I would get 5.5% minus the FA management fee (0.5% I believe), or are there fees to be paid to Prudential as well?
I understand about the effects of inflation and that the EGR changes of course, but as a starting point for trying to put figures into a spreadsheet can I assume that whilst the EGR stays at 5.5% my money will grow at 5% year on year?
Thanks a lot,
John.
0
Comments
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John_30033 wrote: »can I assume that whilst the EGR stays at 5.5% my money will grow at 5% year on year?
No. As the investment returns are not guaranteed. Far better to be more cautious then anything above is a bonus.0 -
Thanks for taking the time to reply. I must admit I'm confused though. What calculation should I be using? Again, as I said, I understand that the % can vary, but IF it were to stay at 5.5% throughout a year, would there be any other deductions besides the FA's fee that I would have to factor in?0
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The FA has said that IF the transfer were to take place and I was to ask them to manage it, their intention would be to put it into the PruFund Cautious Pension fund.
its a niche fund aimed at extremely cautious investors. Typically not the sort of investor that pulls out of a defined benefit scheme.My question (borne out of great ignorance in this area) is; Am I correct in thinking that I would get 5.5% minus the FA management fee (0.5% I believe), or are there fees to be paid to Prudential as well?
Returns are normally quoted net of charges. Pru has charges. They dont do it out of love.I understand about the effects of inflation and that the EGR changes of course, but as a starting point for trying to put figures into a spreadsheet can I assume that whilst the EGR stays at 5.5% my money will grow at 5% year on year?
Personally, I would not project that fund on 5.5% p.a. basis. With interest rates expected to rise, that will hit the returns on the high fixed interest sector investments held within it (nearly 60% fixed interest sector). Long term maybe but short/medium term is likely to be lower (as much as ones crystal ball allows). The last 8 years have been good for it. Investments like this always do better when interest rates are falling and remain low. They suffer when interest rates rise.
under project and get more is better than over project and get less.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
"Returns are normally quoted net of charges"
Cool. That's all I was after. LOL, but thanks for all that other stuff!0 -
John_30033 wrote: »"Returns are normally quoted net of charges"
Cool. That's all I was after. LOL, but thanks for all that other stuff!
Maybe you should take note of the comment above: its a niche fund aimed at extremely cautious investors. Typically not the sort of investor that pulls out of a defined benefit scheme.0 -
okay. cheers.0
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Maybe you should take note of the comment above: its a niche fund aimed at extremely cautious investors. Typically not the sort of investor that pulls out of a defined benefit scheme.
Surely it depends why you came out of the defined benefit scheme ?
I came out of my scheme when I realised that as I had 9 years until my DB pension age if anything had happened to me, hubby would not have got a pension only my contributions returned as I am no longer a member of the scheme. As a really cautious person my IFA recommended the pru cautious fund.0 -
Surely it depends why you came out of the defined benefit scheme ?
I came out of my scheme when I realised that as I had 9 years until my DB pension age if anything had happened to me, hubby would not have got a pension only my contributions returned as I am no longer a member of the scheme. As a really cautious person my IFA recommended the pru cautious fund.
Absolutely correct. I really do appreciate people taking the time to respond to my question, but I can't help but be a little irritated by slightly condescending and unnecessary comments such as "Pru has charges. They dont do it out of love." plus absolutely no thought given to the possibility that there might be more reasoning for considering a transfer than simply getting a better return at retirement time.0 -
Surely it depends why you came out of the defined benefit scheme ?
I came out of my scheme when I realised that as I had 9 years until my DB pension age if anything had happened to me, hubby would not have got a pension only my contributions returned as I am no longer a member of the scheme. As a really cautious person my IFA recommended the pru cautious fund.
Was term assurance life cover for nine years considered?
In general I am sceptical of any recommendation to transfer out of a scheme offering real guarantees (defined benefit pension) and into a scheme offering pretend guarantees (With Profits).
Transferring out of a defined benefit scheme is a very high risk transaction which the regulator considers unsuitable nine times out of ten. This means that if the investor is "really cautious", other options - such as life cover - should be considered first.
That said if life cover was impractically expensive and the spouse's pension was an important part of your husband's retirement income needs, it wouldn't have been very cautious to risk losing it, so I'm not saying it was a bad idea.0 -
Malthusian wrote: »Was term assurance life cover for nine years considered?
In general I am sceptical of any recommendation to transfer out of a scheme offering real guarantees (defined benefit pension) and into a scheme offering pretend guarantees (With Profits).
Transferring out of a defined benefit scheme is a very high risk transaction which the regulator considers unsuitable nine times out of ten. This means that if the investor is "really cautious", other options - such as life cover - should be considered first.
That said if life cover was impractically expensive and the spouse's pension was an important part of your husband's retirement income needs, it wouldn't have been very cautious to risk losing it, so I'm not saying it was a bad idea.
No we never considered term life assurance as to be honest in the grand scheme of things my pension is not important. We can afford to live off hubbys pension and we also have savings.
Also for me the scheme was in defecit which was another worry so I have transferred out to the Pru and am very happy with my decision.0
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