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Managed Investment Service for Pensions
Phil Moore
Posted: 16 August 2017 09:12:29(UTC)
#1

Joined: 16/08/2017(UTC)
Posts: 2

I've built up a few different pension pots over the years from previous employment & I've basically just left them where they are rather than do any consolidation or moving around.

I've got 11 years until the state pension kicks in & am finally getting my arse in gear to sort out how I am going to live in retirement (and what sort of lifestyle I want).

One option I am investigating is to transfer my pension assets into a managed investment account, but obviously this comes with a price (a charge on entry and an annual service charge a % of the funds).

I have only spoken to one so far (Fisher) who charge I think 1.5% on entry and 1.5% pa to manage, but I see there are cheaper options also.

Given that I know v. little about investing and wouldn't trust myself to make investment decisions, do you think this is a good move? Any advice & opinions appreciated!
AJW
Posted: 21 August 2017 14:37:47(UTC)
#2

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Given your timeframe and lack of investment knowledge, I would seek out a quality IFA and look to pay no more than 1% p.a.

My opinion only, would welcome input from others here.
David 111
Posted: 21 August 2017 15:28:18(UTC)
#3

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It depends how much responsibility you want to accept for looking after your own investments. My inclination would be to transfer all your pensions into a SIPP on one platform such as Bestinvest or Hargreaves Lansdown (check the platform fees of different platforms to find which one would be best for your size of pot and proposed investment strategy) and put the proceeds in a small number of mainstream investment trusts or etfs. These will pretty much look after themselves as long as your initial selection is reasonable. You can then reinvest dividend income as and when. This will minimise the amount lost to management fees, which in today's low interest environment can make a significant difference to your eventual pot.

Of course you may want the apparent simplicity of handing everything to a pension manager (or an IFA) accepting the reduction in your returns due to the higher fees.

My opinion only - there are wiser, more experienced heads here than mine.
1 user thanked David 111 for this post.
AJW on 22/08/2017(UTC)
Barry Faith
Posted: 21 August 2017 16:28:23(UTC)
#4

Joined: 03/01/2012(UTC)
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Take a looksee at Cannacord Genuity or Sarasin. I looked at a range of discretionary fund managers (DFMs) and they came out at the top of the pile. However I still have not moved to a DFM.

If you intend to manage the investment yourself, then consider Alliance Trust Savings (ATS) - flat and low fees. I use ATS.

Whatever you do, steer clear of outfits that make upfront charges, which are usually accompanied by a slick selling process.

Cannacord Genuity and Sarasin both sent one of their analysts to chat to my wife and I about investing with them.
Law Man
Posted: 21 August 2017 16:31:04(UTC)
#5

Joined: 29/04/2014(UTC)
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I was in your position 6 years ago, and did as David suggests - transfer to HL and manage it myself.

Note: in all cases ensure you do not lose valuable guaranteed rights under any existing policy.

If you are not sufficiently confident for DIY, there is nothing wrong with that.

In that event I would consider:

(1) putting them in a "ROBO" managed service such as Nutmeg, or

(2) consult an IFA. In that event:

(a) find one by personal recommendation (I can give you one). Beware big names, and never go to someone who runs their own funds.

(b) ask for a fixed fee - one for set up, and another for agreed ongoing annual maintenance (which may be a SMALL %). If you explain the job content, the IFA should do this.

I do not like the sound of paying 1.5% start up plus 1.5% p.a. maintenance. This will kill your returns. Better to put it in HL and buy a spread of ETF trackers (HL annual charge £200).
3 users thanked Law Man for this post.
Guest on 21/08/2017(UTC), Tim D on 21/08/2017(UTC), john brace on 05/09/2017(UTC)
David Lines
Posted: 21 August 2017 16:37:23(UTC)
#6

Joined: 08/05/2014(UTC)
Posts: 1

I think David111 offers good advice. I'd look at Hargreaves Lansdown, the web site is good and there's plenty of info to help you choose funds. I think their charging structure favours Its in Simps? Interactive Investor is another worth looking at and I think they offer model portfolios on the web site.

Everything I read says charges are key - high charges can make serious dent in your returns but I'd also want a reliable platform, easy to use with good info - so its a balance.
william barnes
Posted: 21 August 2017 17:52:50(UTC)
#7

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I personally think ( through experience ) that David 111 has given you excellent advice .
Redundant (Old Timer?)
Posted: 21 August 2017 21:23:47(UTC)
#8

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Both David 111 and Law Man have given you some good advice. However before you go further and consult an IFA, personally I would do some research of your own on your existing pension pots thus:

1. Establish if each pension is DB (Final Salary based) or DC (based on how the funds you picked out of all those offered by your employer have performed).

2. For the DB ones, write to each Pension Administrator and ask for a Statement of your Future Benefits showing what your potential pension would be at Normal Retirement Date (NRD). Also ask if you can defer the pension to accrue more benefits beyond NRD.

Other questions to ask are is your pot being increased since you left the company and if so at what rate. Some DB schemes increase the pot by RPI or CPI even though the employee has left, others by a fixed %age rate.

Finally if you have a partner check whether the pension will pay her a spouses' pension, and at what rate, after your death, .

3. For the DC ones, find out what funds you are invested in, what the risk level of them is and how they have performed to date. Also check whether or not you can switch funds within that pension scheme and what are the charges (usually a bid/sell spread) for doing so.

Once you have all this information, you can decide which of all the schemes you may want to move elsewhere, those which you want to change funds within, and those you want to keep.

I did this exercise 7 years ago in similar circumstances, but with a slightly smaller number of different pots. I concluded that for me keeping the DB ones and consolidating the DC ones into a single SIPP with Hargreaves Lansdowne gave me the optimum result. But the optimum for you is likely to be different.

Good luck
3 users thanked Redundant (Old Timer?) for this post.
David 111 on 21/08/2017(UTC), Jon Snow on 21/08/2017(UTC), Jim S on 22/08/2017(UTC)
Jon Snow
Posted: 22 August 2017 00:03:52(UTC)
#9

Joined: 02/03/2014(UTC)
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Simplifying to make the point.

Over the long term investors in equities can expect between 7% and 9% -

https://www.blackrock.co...rns-one-pager-va-us.pdf

Also we can expect some major market corrections too, lets say 40%, but at the time it could feel like 90% to you.

So assuming the average rate of return from equities is 8% do you want to give a stranger 1.5% just for saying hello and then 1.5% each year thereafter to send you a letter every quarter to tell you what you already know.

That's 3% or 40% of your average return if you invest regularly given to someone else who takes no risk.

I'd suggest you do get some really independent advice and explore diversification in your holdings.

I have most of my pensions apart from an old DB scheme with Hargreaves Lansdown they are consolidated into a SIPP and I choose where they are invested.

Yes, it takes some time to understand the investing jargon and no one can spot the winners forever, Yet there are decent homes for your money if you are prepared to do the work, if not others will be happy to take your money.

Maybe take a look at the Vanguard funds, say Lifestrategy 40 to get you going.

FWIW I'm about 25% equities (most non UK), 30% bonds (short duration), 30% cash, 15% other stuff.






1 user thanked Jon Snow for this post.
Jim S on 22/08/2017(UTC)
AngryfromManchester
Posted: 22 August 2017 08:43:31(UTC)
#10

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Some good advice here.

I think an assumption of between 7% and 9% returns on equities over the long-term is a bit optimistic given the low-yield environment we find ourselves in. Much of the FTSE is priced at around 20x earnings which might suggest that 5% is more realistic.

I think realistically you can invest your pension money at no upfront cost, 0.5% p.a. ongoing charges (via a platform fee + passively managed funds) and some IFA advice at outset and at retirement paid for on a time cost basis.

Rule #1. Don't go anywhere near St James' Place.
Barry Faith
Posted: 22 August 2017 08:59:14(UTC)
#11

Joined: 03/01/2012(UTC)
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In relation to returns on equities, for several years I have planned for between 2% and 4% over the long term, net of inflation. i.e. true growth.

A recent (30 June) article in Investors Chronicle, by Chris Dillow, 'Long-term risks. Equities are a riskier long-term investment than generally realised' poses the question, “Should we therefore prepare for decades of low returns on equities, with a big risk of falls even over long periods?”

Chris suggests several things, with one being mainstream theory initiated in 1986, by Ralnish Mehra and Ed Prescott, that equities shouldn't outperform cash by very much, by no more than around 1 per cent per year, even including dividends. And that since then theory has been pretty much correct.
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