OLD ALLIED DUNBAR PENSION PLAN

[foreversummer]

Hi all

Hubby has just reached his selected retirement age of 60 but will continue working. Total value is just under £25000. I wrote to them asking what the fees were on hubby's plan. I am trying to compare it to a transfer to a Hargreaves Lansdown SIPP where there is simply a platform charge and a fund fee.

Sorry if this is long-winded but I am confused by the charges which have been provided by Zurich:

Capital/accumulation units: 3.5% per year of the value of the capital units. (Sounds high to me).

Bid to offer spread: 5% of all payments (although he is not planning to putting any new money into this pension so presumably we can ignore this).

Annual Management Charge: 3/4 % per year of capital unit fund (I don't understand what they mean by capital unit fund. There are some capital units but from what I've read previously I thought the capital units were converted to accumulation units at SRA).

Expense deduction: £6.97 monthly.

If anyone can clarify the above, I would much appreciate it.

The covering letter says "Please note that if the fund is transferred now, there will be a reduction in the capital unit holding. This is reflected in the transfer value figure quoted on the Current Value Statement". However, on the Current Value Statement the current total fund value is £19328.04 and the transfer value is £19315.36. The other former protected rights says the current transfer value of the former portected rights fund is always the same as the current fund value (£5362.22).

It says guarantees, bonuses, guaranteed minimum pension, safeguarding, life styling, block/bulk transfers, market value reduction, protected or enhance tax free case do not apply to this plan. There is no GAR or life cover.

At present, it is all invested in the Zurich Managed AP fund.

Any thoughts most gratefully appreciated over whether to leave it alone or transfer to a SIPP. Eventually, he will have to transfer it as there is no drawdown or flexibility with this old pension.

Foreversummer

[Alaric]

Annual Management Charge: 3/4 % per year of capital unit fund (I don't understand what they mean by capital unit fund. There are some capital units but from what I've read previously I thought the capital units were converted to accumulation units at SRA).

Expense deduction: £6.97 monthly.

There would have been two classes of units. The Capital class was be high charging but are about to mature (as witnessed by the near equivalence of transfer value to fund value). You can therefore ignore them and concentrate on the charges that are actually being levied, namely 3/4% yearly charge and £ 6.97 per month. As with many funds, the 3/4% just deflates the price performance, whilst the £ 6.97 is nibbling away at the number of units.

There's probably not so much in it now with charges compared to a SIPP, but with a SIPP you get everything in one place and a wider choice of shares or funds to invest in. Allied Dunbar would have taken all their charges up front many years ago.

[foreversummer]

Thank you very much for your reply.

It appears the HL platform charge if 0.45% plus fund charge so he should make a saving. He will retire at 66, so with six years to go we don't want to go too cautious, nor do we want to miss out on growth. I quite like the idea of the Vanguard Lifestyle funds, thinking LS 40 but concerned this might be too cautious.

We had though about getting financial advice but from what I've read with such a small pot it's going to be difficult/expensive. I'll keep reading around the board in the meantime.

Thank you again.

[xxd09]

Hi foreversummer
Tha Monevator site is also very good for information/learning
xxd09

[foreversummer]

Thank you, I will check it out.

Did a lot of reading last night. I keep coming back to the Vanguard Lifestrategy funds on so many sites. They sound almost too good to be true and that bothers me a bit.

I looked at the Blackrock Concensus 35 but that seems not to have done so well as the LS 40.

Does it make sense to have all your money in the an LS fund or should you split it with another multi-asset fund?

I need something fairly simple!

[swill453]

You may get more information if you post on a more appropriate board, now your pension question seems to have been answered.

Maybe Investment Strategies, or Investment and Unit Trusts.

Scott.

[xxd09]

Hi foreversummer
If you are in reading mode-Vanguards John Bogle ,s latest book
The Little Book of Common Sense Investing-10th edition -gives you the heads up on the Vanguard way of Investing
xxd09

[dspp]

And Vanguard reading stuff might usefully include Bogleheads (he founded Vanguard):

https://www.bogleheads.org/wiki/Main_Page
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/forum/index.php

Regards, dspp