Our client asked us to review a number of pension schemes from old employers, with one of the schemes run by a well-known Scottish insurer dating back to the 1980’s.

As part of our review of any pension scheme we write for detailed information on the scheme, and we look at the charges on the contract. In this case alarm bells immediately began to ring, as the fund only had a small value which was surprising given it had been invested for over 30 years. On checking the charges we discovered that there were a number of ‘set’ fees, rather than percentage charges. There were a number of these, such as a set monthly plan charge and also a fee as contributions were no longer being paid. Fortunately such charges are extremely rare nowadays.

When the charges over the year were added up they came to over 10% of the plan value a year, so it is not surprising the value was not great, as it will have been falling year upon year for many years. The projected final values at retirement were nil for every projection, excepting if the higher rate of return were achieved in which case the whole fund could be used to buy about 4 cups of coffee – not a great outcome.

Fortunately having identified this we were able to move the plan to a new contract with a much more attractive charging structure, and whilst the final value of this plan is still not projected to be massive, at least you wouldn’t be able to spend it with 3 friends in one afternoon trip for a coffee.

This shows the benefit of checking pensions, as you don’t know what might be in the background if you don’t know what to look for, or the questions to ask. If you would like us to check out your pension for you please contact us on 01543 410 512 or email enquiries@acuityfinancial.co.uk and we will get back to you, we will even let you have a coffee for free!

 

 

 

Our client had several older style pension plans with guaranteed annuity rates and asked us to look at these, to obtain the best income available for him.

We obtained quotations from the provider, and these showed an annuity rate of only 7.07%. This was less than we expected from our knowledge of this type of scheme.

We therefore queried this with the provider, who confirmed there has been an error, and we finally managed to secure him a rate of 12.75%, which the original should have been.

Our client would not have been aware that the initial rate was incorrect, and if he had not come to us for advice he may have accepted the original quotations.

This error is unlikely to have been picked up by the provider, as data provided by them was incorrect on two occasions when we queried it, and only after a number of telephone conversations and persistence by us that they had made a mistake did we manage to obtain the correct rates.

Finally our client has ended up £700 per year better off, as a result of taking advice.

Our client was very happy and said “Thank you very much for your detailed letter and for all that you have done to secure the best possible rates for me. It was certainly worth my while consulting you!”

If you have any pension plans which you do not know a lot about (or even some that you do!) that you would like us to take a look at, give us a call on 01543 440 300 or email us at enquiries@acuityfinancial.co.uk.