Many of us have a pension of some sort. We probably have a government pension and there is very little that we can do with this apart from ensuring we pay in enough to get a full pension. If we can. However, if we have Personal, work or Private pensions, we have more control over it and you may have questions about it.
Changing Pension Funds
Many pensions will offer a selection of different funds that you can invest in. Often your money will be put into the fund that is felt will perform the best at a medium risk level. However, you may be prepared to take more risk and would like the money moved to a place where it could potentially do better. On the other hand, you might want a lower risk fund or you may want to put your money into a place where it will do good, perhaps in an ethical fund. This is something that you are likely to be able to change if you contact your pensions provider. Make sure that you find out more about it first though. You will need to know a few things –
If it is a work pension, then you may have less control over where the money can be invested as you could find that the companies determine this. If you move the fund that has built up you may also find that you lose some of it, as there could be charges associated with moving. Make sure that you are completely clear on this before you make any decisions about moving. Talk to your pension provider and ask why your money is in that fund and what the costs and consequences would be of moving it. You may not even be able to move it.
Changing Pension Providers
You may decide that you want to change pension providers completely as you feel that there is someone else that will be able to better serve you than the provider that you are currently with. If you have a work pension, then your employer would have chosen the company and will be paying in with you and so it may not be possible to switch anything over. It is possible that you could withdraw some of the funds and move them, but not put new payments into a new place. This could complicate matters but it might be worth calculating the costs and consequences of this. If you move funds, they have to be sold as they tend to be held in shares and then used to buy new ones, this is likely to incur costs which may mean it is not worth it. You need to find this out and think about whether that cost will be made up over time and how long it might take.
If you have a private pension then everything is under your control and this means that if you want to move your money, then there will be nothing standing in your way. However, it could be costly and you need to be completely sure that you know what you are doing. It might be worth paying an independent financial advisor, skilled in pensions, to find out what their opinion is first. They will be able to make personal recommendations based on your circumstances and let you know whether it is a good idea to move and where you should move to. It could be expensive to pay them but it could be well worth the money.
It is very important that you think about a few things so that you can tell the advisor. Consider how much risk you are prepared to take with your money as this could determine what fund it will be put in. Think about whether you want a managed fund as they can pay out more, but the fund manager will take some of the gains as income, so you will have to pay out more. Think about whether you want an ethical fund or whether you have a preference for investing in certain types of industries or areas as it could be possible to choose this, depending on which pension provider you go with. If you are not sure, then they should be able to let you know what all of your options are and you will be able to decide which you think will suit you the best.
Staying Open Minded
It is wise to make sure that you stay open minded about change. If you have paid a financial advisor, it is likely that you will want to change your pension fund as that is what you have asked them to look into. However, they may advise you that staying where you are is the best thing that you can do. This could be hard to accept especially after the time and money that you have spent and you may feel that to get your money’s worth from the advisor, you want them to find you an alternative. However, just be reassured that your money is in the right place for you and be happy that you have not wasted money by having it with a pension that is not getting you as much money as it could potentially do so. It can be good though, to ask them whether it might be worth reviewing again in the future. Pensions are long term investments and they may feel that it would be wise for you to get them to look at your situation again in five or ten years’ time because things will change and it may then be a good time for you to make the switch in the fund.