Written by Richard Smith Financial Expert on 12 July 2010
Pension Income Drawdown
These plans have been available for the past 10 or so years and are not without their problems, indeed many Income Drawdown plans are not reviewed regularly and indeed little understood by many. If you have one of these Pension Drawdown (or Pension Fund Withdrawal plans) there are some concerns which I have outlined below.
The main concerns in relation to pension drawdown contracts relate to the following areas.
Investment performance, this is where the overall return from the invested funds are not as expected, or indeed sufficient to be able to provide a level of income that is selected to be withdrawn from the plan. Many Pension Income Drawdown arrangements are not invested in a correct range of funds or indeed with any range of funds.
Mortality drag, this is the effect on the income you would have had from the pension fund had you purchased an Annuity (an income for life) with the plan proceeds at your plan maturity date. There is a further detailed explanation here http://en.wikipedia.org/wiki/Mortality_drag
As you know it is possible to take a fund value within your pension scheme and convert this into an annuity, this annuity then provide you with the level of income for life. This income can also be guaranteed.
Charges.
Pension drawdown contracts tend to have the highest charging structure of all pension plans.
It is possible that you will be paying up to 3% in annual management charges. Plus an Expert fee of anything up to 2%. Plus a one off fixed cash fee of anything up to £500 per annum adjust for having a fund invested.
There is also the effective charge that is levied on the underlying fund. This could be as high as 3% per annum.
The overall effective charge is could end up decimating a fund quite substantially
Financial Experts and insurance companies are duty bound to review pension drawdown policies at least on a 3 year but 3 yearly bases but also annually and then would normally be or they could also be a charge for this ongoing review work.
As you can see from the above there is no substantial reason or reasons for not continuing with the pension drawdown contact, importantly these alone should be compelling reasons for you to review your plans immediately.
Very often these issues are not explained in full and from my experience many customers did not understand them.
Given that there are now some extremely low cost providers in the market place, you should review your pension drawdown contract as a matter of urgency.
Richard Smith
Personal Financial Planning Expert.
If you have any questions in relation your Income Drawdown Plan please document them below and I will be pleased to answer them for you.
Tags: Pension Drawdown, Pension Income Drawdown
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Written by Richard Smith Financial Expert on 04 July 2010
As most of you reading this comment will know, I have been on rant about Poor Performing Pension Plans for the past couple of years and for good reasons.
Let me take you through a couple of these now, and of course I will highlight a couple of facts about PEARL Pensions.
Firstly the level of service offered by them has fallen in recent years primarily due to the fact they PEARL is now closed to new business and no longer has any Financial Experts working for them that are able to provide the modern financial planning advice that is required .
Secondly and perhaps the primary reason to consider moving your Pension planning away from PEARL is the fact that the level of charges with most of their plans are so high ( when compared with a modern Pension contract). Now of course this is not the fault of PEARLs indeed when you first started your Pension Plan with them you would have found that the contract was fairly well positioned charge wise. Certainly in the “above average charged” plans it was at the lower end of the scale.
There are a good number of other issues surrounding PEARL Pensions and of course many other providers in the market place and some of the problems surrounding PEARL Pensions are outlined below:-
Customer Service Levels are lower than you could achieve elsewhere.
Charges are normally higher than could reasonable achieved from another more modern provider.
Investment Fund Choice is often limited and there is certainly no member of staff to provide you with the level of advice you require in order to obtain the right range of funds.
Investment Fund Performance with many providers the overall investment returns are poorer than you could expect from some of the better providers in the market place.
Retirement Options are often limited and if you take no action at Retirement you will be left with a product that is probably unsuitable. Certainly it will be lacking in some areas. Annuity Purchase is something that I have been concerned about for sometime now . By making the right decision and by moving to the right provider you will benefit from a greatly increased income for life.
Most Financial Experts are just not interested in providing you with the guidance you require if your Pension Plan Value is less than £30,000 or so which is why we have developed a service that will provide you with the guidance you require.
Please contact me using the form below, or on 0845 226 9106 for a further conversation about your Pension Planning options.
Richard Smith
Pension Advice Expert
Tags: Pearl Assurance, Pearl Pension, Pearl Pension Transfer Advice
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