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Don't be Complacent about your Existing Pensions - Review Them!

 Pensions that were marketed before April 2001 usually contained a specific retirement date at the outset as part of the contract.  Retiring earlier than this, transferring accumulated contributions to another provider or stopping regular contributions before the chosen retirement date, usually incur a high charge to pay.  

Charges inherent in individual pensions taken out prior to April 2001 were often high.  They were stated clearly (if incomprehensibly to most consumers) for unit linked plans but not so for with profits policies, where charging structures were almost entirely opaque.  Early encashment penalties can be severe, the harshest usually reserved for those transferring money to another provider.  The reason for this is that contract terms included the price or cost over the whole period with high set up charges.  As the original provider loses the accumulated savings and also future contributions too, the pension company's view is that they need to get back what they would have made had you completed the contract period!! - hence the charge. 

A further complication can arise when markets are poor as a fund charge could be levied and included within the overall plan charges if monies are moved to another provider or if the fund is transferred internally to a different fund.  This, on top of the plan penalties, tends to tie one in to the current provider, which often is not appropriate or conducive to ensuring your money is working as hard as it should due, largely, to the charges and under investment performance. 

There are a number of pension companies who no longer trade and so look after their existing book.  These companies usually have the highest charges and also below average investment performance as there is not necessarily a requirement to outperform competitors.  

The first thing that stands out about the older policies is that, in most cases, there is a distinct difference between the paid up and transfer values quoted.  This confirms the aforementioned issues regarding a charge or penalty for taking your funds elsewhere.  So what can you do to ensure your money is working as hard as it should?  

The first thing is to review your existing pensions in order for a comparison to be made against the new products.  Quite often, it is possible to get a cheaper charged product which, of course, will enhance returns.  However, going forward, price is not always the issue as flexibility and choice is key to long term financial planning.  Therefore, consideration should be given to some of the pension "Supermarkets", "Wraps" or Self Invested Personal Pension products (SIPPs) available which will give you such a wide choice of investment funds and options.  As you are more than likely to remain fully invested throughout your life, this is often the best way to go.  

When considering a transfer to another provider, it is important to compare how much fund is being lost in penalties with how much might be gained in the future from the transfer. 

With most companies now offering much lower charges on their pension plans, a switch may seem attractive.  Before such a move is taken, it is important to check whether there are such benefits as guaranteed annuities (such benefits can be irreplaceable in today's market) and, conversely, what are the death benefits.  On this latter point, very often on the older type plans, the death benefits are lower than current products, which could well be a distinct advantage in moving as it will give your nearest and dearest greater protection.  These are some of the factors which need to be reviewed carefully by an expert.  

Considering the monies that you hold in your pension, it is madness not to review things to ensure that what you have purchased is doing the best for you.  If not, it is often in your interest to move.  Plus, you will need on going investment and financial planning advice to ensure that your monies are working in the best way.  This will pay great benefits to your finances in the longer term.  

PAS Financial Planning will provide a review of your existing pension plans using a Charging Analysis Actuarial Review.  This Review will take into account your existing plan benefits, comparing to the new product available.  In this way, we will know whether you will benefit from better terms and, possibly, better investment performance. 

Make contact now for fuller details of a review.