The Lemon Fool

Folks,

I've been looking at an old pension I have with Standard Life which holds three funds:

- Pension Millenium with Profits - 15% of my current fund value
- Pension with Profits - 25% of my current fund value
- Standard Life European Equity Pension Fund - 60% of my current fund value

After having read Tim Hale's book I want to diversify my investments away from a EU focus and into a Global Tracker.

It's my understanding (correct me if wrong) that 'with profits' funds are not really sold anymore and are considered quite good to keep hold of - if so I probably will want to do that.
The other information I'm trying to get hold of is if there is any ongoing charges associated with these funds - I've just mailed Standard Life and hope to hear back soon on that, my general understanding being that if the costs are < 0.5% that's good - again correct me if I'm wrong.
If anyone on here has Standard Life experience and knows what funds I should swap the European Equity Pension Fund for to get global tracker coverage, that would be useful too.

Thanks in advance for advice offered.

With profits policies used to be a good buy, but they are only as good as the company's investments that underlie the policy. That was often a mixture of property, equities and fixed interest securities.

I've had them in the past, pre-2000, and performance was variable. You possibly know what the bonuses declared have been and whether there is likely to be a terminal bonus, if so, how much. As long as the bonuses have been maintained at a reasonable level, they may be worth hanging onto.

Outside pensions, WP policies/funds ceased to be attractive when tax relief on policies was withdrawn.

You need to do your own research into what you have.

TJH

What I can say is that Standard Life used to be very good as investors and probably still are. There should not be any ongoing charges for With profits funds.

Most will tell you that such funds are very poor value, partly I suppose because although there are no obvious charges there is of course a cost within the fund (before you see the numbers) If you have held them for some years I would try and get an idea of the investment return from them and see whether it is any good. You also need to know how long to maturity. If it is only a few years (say less than 5) you might simply want to leave them where they are as they will probably benefit from a bonus at maturity. Otherwise you could get a transfer value from them and transfer the value to a SIPP and look after the investment funds yourself. I did that some years back, strangely enough transferring from Standard Life. It is more work and of course you incur charges but I wanted control of the funds myself and we then get the flexibility to withdraw or not to suit our own circumstances. You then choose the investments and can buy your global tracker.

Does that help?

Dod

Thanks for the reply, it's appreciated. I'm just starting to research what I've got so I can re-jig if necessary.

So I spoke to Standard Life this afternoon and found out a few things.

The Millenium with profits fund has no annual chargeand it's guarantee is to not lose money but looking over time it's return has steadily gotten worse .
The Pension with profits fund has no annual charge and has guaranteed +4% growth per annum.
The European Equity fund pension has a charge of 1.016% per annum and has growing reasonably well.

I am thinking of leaving the Pension with profits where it is as 4% guaranteed is reasonable in my mind.
The Millenium with profits seems to have grown the worse and could probably be better used elsewhere.
The European Equity fund charges are higher than I would like and I am considering moving that fund and the millenium find into a SIPP on a global tracker with 0.5% or better charges.

Does this sound at least moderately sensible or am I missing something?

Thanks.

moley wrote:The Millenium with profits fund has no annual charge

...


The Pension with profits fund has no annual charge

It would be more precise if they had said no explicit annual charge. They will deduct charges for expenses and charges for the guarantees from the investment returns before they add bonuses.

As you suggest a 4% guarantee may have a value to you that the 0% guarantee doesn't.

Alaric wrote:It would be more precise if they had said no explicit annual charge. They will deduct charges for expenses and charges for the guarantees from the investment returns before they add bonuses.

You are of course correct, they did explain that and I was para-phrasing for simplicity.

Horrible things. I have about £75K in a Phoenix fund, which was started in 1986 when the underlying guarantees were better than they are today. The damn thing has been through half a dozen different owners/rebrandings in that time, and its growth in the last decade has been roughly nil. It's a good job that I put the rest of my retirement pot into conventional pensions and ISAs.

The small light at the end of the tunnel has been that my provider is offering me a relatively good (6.8%) annuity when I hit 70 in two years' time. I did consider moving it out to a SIPP a couple of years ago, but they told me I couldn't do that without first paying an IFA to certify that this was a suitable move for me. (Because I was planning to abandon the "known benefits" of a fixed cash income for the uncertainty of a life on the ebb and flow of the SIPP tide.)

On balance, I will probably still move it out to a drawdown SIPP just as soon as I get round to it, because (a) I'm a decently successful investor and (b) I don't like the idea of the cash disappearing after my death. I never met a poor insurance actuary yet.

BJ

moley wrote:Does this sound at least moderately sensible or am I missing something

What you are proposing sounds to me like a sensible way forward, especially as you have the 4% guarantee (presumably tax free)

FWIW, the Phoenix, sadly for bungeejumper, was never a very good life insurer/investor with built in high charges. Standard Life has traditionally been much better and I do not see why that should change just because they have got into bed with Aberdeen.

Good luck however you go.

Dod