Why should I have my pensions reviewed?

Charges

Policies established prior to 6th April 2001 typically paid commission to the sales person of a far greater amount than is generally available now. To cut a long story short, approximately 20% of every regular pension premium to these “old style” policies are lost in charges of one form or another including commission.

In a modern Stakeholder policy the only charge that can be levied by the insurance company is a charge of up to 1.5% per annum of the value of the funds in the policy, for the first ten years, reverting to 1% per annum thereafter.

Many people continue to fund old style policies unaware of the vast difference in charges and the impact those charges are having on their accruing pension benefits.

Performance

There used to be over one hundred different pension providers but we are probably going to end up with no more than six major insurance company pension players through a combination of mergers, acquisitions and pulling out of the market. As a result there are an increasing number of funds and insurance companies that are closed to new business. The age profile of the members of these funds is steadily getting older and therefore the fund manager must hold increasing amounts of monies within the fund as cash or fixed interest investments and less in equities where, over the longer term, the greatest potential for growth lies. There is ample evidence to show that closed funds under-perform over the medium to longer term so it is definitely not the case that one insurance company’s pension funds must perform roughly in line with everyone else’s. The difference in fund performance between upper quartile and lower quartile funds can be substantial and we are talking about a 30% difference, or more, in maturity values.

Unfortunately, all too often, we are meeting clients who are not only being overcharged but are in funds that are substantially under-performing. We strongly recommend that we review your existing pension arrangements.  Simply contact us here to arrange an appointment.