Here is my confession. I made a huge mistake managing my pension in the past. Why?

In the course of the years I changed jobs frequently – sometimes it was my choice, thrice I was made redundant – and every single employer I had, was with a different pension provider. One even changed the provider while I worked there. The result was that I had about a number individual pensions with different providers.

I knew which providers, but I didn’t know how much I had, nor how it was invested or what the charges were. 

I thought I’d combine them all into one place… at some point.

This was a hugely expensive mistake, and here is why.

How are pension fees structured?

What I didn’t know for a long time is how pension fees are structured. In a nutshell fees are a percentage of the value of your pension pot, and the percentage goes down the more your pot increases.

If I had consolidated all my various pots of varying sizes, I’d had achieved a lower percentage quicker.

This is how PensionBee explain their fee structure:

You’ll pay one fair annual fee between 0.50% and 0.95%, depending on the plan you choose. We’ll automatically deduct a portion of your annual fee from your pension on a daily basis. If your pension pot size is larger than £100,000 we’ll halve the fee on the portion of your savings over this amount. See below to find out how much you’ll pay…

A few examples from the PensionBee website to understand how typical pension fees are structured (you don’t need to be a client).

How does PensionBee compare to other providers?

PensionBee has a clear and easy-to-user website and mobile app. I can easily see what my pension’s value is, how much it has increased in value compared to the money I contributed and it shows an easy statement of transactions.

The pension calculator is also very useful to see how much you’d have at retirement age, with levers that you can move around to see the difference it would make. I check it regularly.

They also have a simple and clear fee structure – one fee only that covers everything.

In comparison other pension providers have countless fees, so many I would feel I’d need to not touch it, not manage it, so as not to make a mistake and incur additional fees. Typical fees are: 

  • Set up fees
  • Annual management charges
  • Administration fees
  • Platform fees 
  • Cost to transfer old pensions in
  • Exit fees (to transfer it to a different provider, if you wish to do so)
  • Cost of buying and selling funds (if you pay in monthly, you’d incur this fee 12 times a year)
  • Investment fund cost
  • Inactivity fees
  • Fees to switch fund (e.g. if you realise your current fund’s fees are super high)
  • Fees in drawdown (when you want to access your pension)
  • I’m sure some providers’ list of fees continues beyond this…

I feel dizzy just to read through this list… I much prefer to have one and only one fee, so I know where I’m at. 

Not to mention that the reason I put off consolidating my various small pensions for years is that those providers’ platform where very difficult to navigate, from a different era.

I’ve written about PensionBee before and remain that they are the best provider in the UK. 

When I merged all my old pensions into one with them, it was so easy and quick to do. They do all the work, you just have to tell them where they can find your old pensions. And if you don’t remember they’ll help you out anyway.

If you want to consolidate your old pensions into one account – easily and for free – use this link to sign up for a PensionBee account and you’ll get a £50 welcome bonus (I will get the same).

Categories: InvestingPension

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