Why it is important to have your pensions reviewed

Jul 25, 2018 | Pension, Tony Byrne's View


I recently presented a pension review report to a long-standing client. He had been a member of his company’s money purchase pension scheme for over 10 years. As he had a senior position and was well paid, both he and his employer had paid a lot of money into the pension over the years. He left the job 6 months ago to work for a new employer and of course joined the new pension scheme. The pension he left behind was worth nearly a quarter of a million pounds!

Our research revealed the following;

There was no penalty to transfer his pension away.
There was no loss of benefits or guarantees on transfer apart from a protected tax free cash lump sum which offered a marginally higher tax free cash lump sum than 25%.
His existing pension was invested in a lifestyle option meaning he was under-invested in shares which was hampering performance.
His existing company pension had slightly higher charges than our recommended alternative pension scheme.
Past performance of his company pension was poor with an average return of 5% a year compared to our preferred provider whose average return was 9% a year!
Our alternative was higher charging by 0.92% a year when taking into account our adviser fee which is 1% p.a.
His pension only offers 23 funds whereas our one offers 8,000 funds!

Our client decided to proceed with my recommendation to transfer it because it was so clear cut an advantage to him to do so. He is a highly intelligent IT specialist but by his own admission he doesn’t have the time, inclination or skill to manage the pension himself.

His company pension scheme offered low charges but nothing else. He was unable to take advice because employers do not offer advice to their staff due to the constraints of financial services legislation.

So the key question is “Do you have a pension/s from previous jobs and, if so, do you know how well your preserved pension/s are performing?” If the answer is “Yes” to the first question and “No” to the second one then you need to have your pension/s reviewed because then you can make an informed decision what to do about it once you receive the report.

So if you fit the criteria what are you waiting for? Contact us and ask to have your preserved pension/s reviewed. You know it makes sense.

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