Pension advice advice…

I’ve got a few pensions in different places, adding up to a sum that could benefit from some more active management. Somewhere between 250k / 500k I’d suspect.

Given I’m mid 40’s it makes sense to play this carefully. Could push down the mortgage. Could stuff money into the pension and pull it out in 10yrs.

What am I asking of an advisor? How do I select a good one?

You can’t withdraw any from a pension until 55. I had an advisor to look into two schemes about combining them, and it wasn’t worth it after charges (got the advice free as my wife worked for a wealth management firm). I’ve two final salary schemes, with about 27 years in them so far, and two other schemes with a ‘pot’. I need to look into re-allocating them in 18 months when I get to 55.

Only thing I’d say is “eggs in a basket”, as in don’t put them all into the same one with the same risks.

I am not an adviser. Free advice is worth the cost etc. Final salary schemes are rarely worth coming out of. My previous job had a good one. At one point a Financial Advice firm was touting for people to withdraw and promising the moon.  Few people did.  Our union strongly advised not to.  As I am now receiving that pension and getting inflation matching increases it was good advice.

See also the British Steel pensioners who came out and are now in dispute about mis-selling.

Assuming your schemes are not final salary ……………….

https://www.moneysavingexpert.com/savings/best-financial-advisers/

Advisor not always required.

Firstly – you are likely to have a pensions access date of 57, given your age.

Secondly – you need to work out what you have at the moment.

• defined benefit schemes. Find out what you are entitled to. It’s virtually impossible to transfer out to a DC scheme, as there are no advisors willing to advise (given the risks) and no schemes willing to accept a transfer in from a DB scheme.
• Defined contribution schemes. Find out what you have. You should be able to identify each of the pots you have from previous employers, then what are the ongoing costs and fees, what are they invested in etc.
• It’s normally sensible to consolidate into something like a SIPP with lowest ongoing fee structure, so it’s key to find out what your costs are and how these compare to best in market.  Costs are insidious and to be minimised at all costs!
• work out what your attitude to risk is. Given 10+ years from earliest access, I would expect that you would be willing to take a fair bit of investment volatility for longer term better returns.
• (for reference, i have a low cost ETF global tracker, which gives a “whole of world” return. Vanguard do some great products with varying proportions of bonds and equities, to match your risk tolerance)
• work out what your employer will contribute, including ers NI if under salary sacrifice, and maximise this (at least) for your ongoing contributions
• work out what your marginal tax rate is – ie whether you’re paying 40% / 20% tax etc.
• If a higher / additional rate taxpayer, then it’s a no brainer to pay as much as you can into pension
• your 25% tax free cash can be earmarked to pay off the mortgage, rather than overpaying now.

There’s lots more nuance about other savings, marginal tax rates, likely tax rates in retirement etc.

The costs can quickly mount up, and are not apparent as you’re not paying them in cash, and can take a considerable amount of your investment returns if you are not careful. I chose to educate myself on these things, and make my own decisions, as my interests are fully aligned with my choices (unlike the advisors)