10 Tips To DIY Review Your Own Pension Scheme
Published / Last Updated on 23/02/2023
If you had a car worth £20,000 on your drive, you would polish it every week, take it for an annual service, put water, petrol, oil in and check tyre pressures to ensure it was working well in addition to insuring it and yearly MOTs. Yet a car is a depreciating asset that will eventually be scrapped.
Pension Wealth
Many people have lots of small pension pots lying around and do not know what to do with them. If you ask a financial adviser to review them or consolidate them, they will charge and we suggest it would not be economically viable for you to pay for a review of a pension scheme with a fund value of less than £10,000-£20,000. Once above these levels, an adviser will likely to be able to offer value for money in reviewing your scheme for scheme. It is a difficult one to balance.
Explicit Charges
- Initial/entry charges %s or £ - ideally, schemes should have none, only older schemes or minimal set up fee of say £150 if a SIPP or Flexible Drawdown.
- Final/exit/transfer out charges or early retirement penalties %s or £ - ideally, schemes should have none, only older schemes.
- Annual Fees % or £ - ideally schemes should have none but if your scheme is platform with huge range of funds, expect a platform fee of say 0.3%, anything higher is expensive.
- Monthly policy fee £ - ideally schemes should not have them, only older schemes.
Funds
- List of funds available – many schemes have hundreds of different funds – if yours only offer 5 funds then there is little choice.
- Annual Fund Management Charges (AMC) % usually for each fund – 0.5% and below is competitive, 0.75% okay but over 1% pa is expensive.
- TER – or combined = the total expense ratio (TER) is a measure of the total costs associated with managing and operating an investment fund. No more than 1.25% maximum based upon the above.
- Fund performance factsheets. Look for consistent growth over 5 years periods against market average, in a one-year period, individual funds can go down as well as up so do not look short term.
At Retirement Options:
- Annuity – own annuity, outsourced annuity or you must find your own i.e., open market option only.
- Flexible drawdown – available in contract or not. If not, internal transfer to another plan or external transfer. Beneficiary drawdown on your death?
A similar set of the above questions will work if you are reviewing your investments too.
We offer investments and pension review services as well as a full pre-retirement review including cash flow modelling.
Initial Review Retiring Review
Or if you prefer, simply contact us to discuss your position:
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