Pension Transfers
Are You Maximising The Returns From Your Existing Pensions?
Many people have pension funds that they may have taken out a number of years ago that are no longer suitable for them. This could be down to either a change in personal objectives or alternatively because better pensions now exist with other companies that were not available at the time.
It is therefore advisable in many situations to transfer to an alternative pension that can offer lower charges and a greater range of investment options. The three main reasons for considering a switch are:
Lower Charges
It is not untypical for older pensions to have a 5% charge applied to each contribution made plus annual charges of 1.5% or even higher. It is now possible to utilise pensions that offer no charge on each contribution plus annual charges that in many cases are significantly below 1%.
A saving of just 0.5% each year on a £50,000 fund is £250 per annum. Compounding this over a number of years can save thousands of pounds in charges. The saving is even more pronounced the larger the value of the pension fund.
Wider Investment Options
A number of pensions offer access to only an extremely limited range of investment funds. In many cases this can be fewer than 10 funds. It is now possible to structure your pension so that you have access to a wide range of funds, not only from the provider of the pension wrapper, but also from a range of external fund managers. You may therefore choose to have say 5 funds, all managed by different companies i.e. Fidelity, Newton, Schroder, Invesco Perpetual etc and all within one pension umbrella. This can quite often be achieved at a lower cost than you are currently paying to access only one company’s limited range of funds.
Better Contract Terms
There are a number of things we tend to take for granted about our pension plan(s). That we can draw our benefits at a time of our choosing between the ages of 50 and 75, that if we die before drawing our pension the full value of the fund will be paid to our chosen beneficiary, that we have the right to buy or pension from whoever will offer us the highest annuity, that we will be able to draw 25% of our fund in tax free cash.
However, many older style pensions, particularly those taken out prior to 1987 through Retirement Annuity Contracts (under section 226 rules), do not offer such luxuries.
As such a transfer to a more suitable pension arrangement can restore these benefits and provide greater peace of mind in addition to the potential to reduce charges and provide a wider investment choice.
Why not fill in the form below and one of pension experts will analyse your options and provide you with a free, no obligation opinion.
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