cavanman2006 said:
The current pension is Friends First (Not BOI)
Sorry - think I got confused with another recent pension post.
WP funds are notoriously complex and lacking in transparency. Check out previous discussions about them. It's often difficult to get a clear valuation given the impact of stuff like
MVAs (
Market Value Adjustments - basically charges for early encashment), how bonuses are added often at maturity, maturity versus early surrender values etc. Perhaps you could post the details from your last statement and the total of all contributions made to date?
I have spent some time talking to them about charges, etc. I don't have them here but they appeared not to be excessive in terms of the monthly and yearly charges.
You really need to be more sure than that. What charges (including
MVA) are specified in any written documentation that you received originally or since?
I think it aims to pay 4% per year.
That's not that much better than current deposit rates. And it's probably not even guaranteed. What guarantees, if any, apply? Past performance is irrelevant but perhaps you could post the past annual returns on your fund?
They have never explained the commission system.
Commission = charges so you need to factor this into the overall cost of the policy.
I did no research when I started the pension - I went with what a broker advised.
Potentially a bad move but at least you (like me!) can learn from such mistakes.
I presume a with profits is a low risk, low return which is suitable for an older person closer to retirement.
Sort of -
WP fund normally invest in a range of assets including equities, property, bonds/cash and are supposedly managed to smooth out returns by holding back profits when times are good and releasing them when times are bad. In general they would not be suitable as the main or only investment for a person with a good while to go to retirement. Having said that I still have a chunk of my total pension savings in the
Equitable Life WP fund to this day and have never bitten the bullet, taken the pain of the
MVA and transferred to something that might be more likely to give better returns in the long term including covering the cost of the
MVA.
Not sure why someone 28 years from retirement would start with it. I want to switch to a PRSA fund because it appears to be simpler to me. After lots of talk with Friends First, I don't fully understand a with profits pension and why a steady eddie would return 3.7% in 6.5 years. Deposits are better than this. I have been told by FF that I can switch it a PRSA with another company with no exit costs. Thanks for your time.
Are you sure that no
MVA applies and that you can transfer a personal pension fund to a
PRSA?
Hope this is all making sense and helping you to get a better idea of the issues/trade-offs etc. Please note that I am not a professional advisor so stick arround for additional - possibly dissenting - comments and if in doubt get independent, professional advice from a good authorised advisor or multi-agency intermediary but not a tied agent.