Accepting that pension funds have taken quite a hammering, with many funds barely breaking even over the last 10 year period, is there anything you can do between now and retirement? I’m talking about personal and company defined contribution (a.k.a money purchase) schemes.
Of course you can pay in more money – How much will be enough?
You can look at the funds in which your money is invested and consider what options are available – Who will give you independent advice?
You can get information via the trustee or the life assurance company re the management and other admin charges. This is the area of my focus today. Do you know whether a management charge of 1.25% p.a. is high or low? Does your fund have a 5% bid-offer charge and do you know what this means? What percentage of your contributions actually goes into your fund (net allocation rate)? We are all looking closely at costs generally to see that we are getting good value for our money. Your pension is no exception to the principle of Good Financial Housekeeping. There is a lot of industry jargon, so perhaps consult a PIBA registered broker for specialist help. He/she will be glad to have a new client and may agree to only a nominal fee to get you the information you need and outline your options.
What have you got to lose? – Actually you can’t answer that question as you first need to know your pension costs!
Good Financial Housekeeping – All day every day