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Questions to ask your workplace pension provider when saving for retirement overseas
| Published: | 2 May at 6 PM |
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Tagged: Pension Transfer
If you’re saving as part of a plan to retire overseas as an expat, you need to ask your pension provider four important questions.
The British government’s introduction of auto-enrolment schemes for work-related pensions has meant a record high in the numbers of older workers now saving regularly for retirement. However, a recent warning from Minister for Pensions Guy Opperman states savers may now be aware they’re paying fees to save their own cash. Recent new laws force pension schemes to inform all participants exactly what they’re getting for the fees they’re being charged.
Opperman admits pensions can seem perplexing to many savers, advising those with queries to talk directly with their pension provider. He offers four questions which should be asked by savers regarding payment of fees. Firstly, charges are taken to cover the costs of paying into a pension scheme, and costs are incurred when the assets making up a pension pot are bought or sold. Investment managers are now legally obliged to disclose these to pension scheme managers, who must pass them on to savers. High charges or costs occasionally give better results, but in general they don’t.
Secondly, totals of charges and costs at one per cent sound small, but actually add up to 1.5 per cent of the total amount saved over a year. As savings grow over time, so does the actual value of the 1.5 per cent as well as the loss of its returns. Thirdly, it’s worthwhile asking your scheme provider about returns and comparing them with other funds, keeping in mind that an unsatisfactory comparison can result in a transfer to another pension scheme. Fourthly, should you decided to transfer, checking with your employer as to whether you’re allowed to transfer out of your workplace pension to another scheme is advised, as most workplace schemes don’t allow this.
The British government’s introduction of auto-enrolment schemes for work-related pensions has meant a record high in the numbers of older workers now saving regularly for retirement. However, a recent warning from Minister for Pensions Guy Opperman states savers may now be aware they’re paying fees to save their own cash. Recent new laws force pension schemes to inform all participants exactly what they’re getting for the fees they’re being charged.
Opperman admits pensions can seem perplexing to many savers, advising those with queries to talk directly with their pension provider. He offers four questions which should be asked by savers regarding payment of fees. Firstly, charges are taken to cover the costs of paying into a pension scheme, and costs are incurred when the assets making up a pension pot are bought or sold. Investment managers are now legally obliged to disclose these to pension scheme managers, who must pass them on to savers. High charges or costs occasionally give better results, but in general they don’t.
Secondly, totals of charges and costs at one per cent sound small, but actually add up to 1.5 per cent of the total amount saved over a year. As savings grow over time, so does the actual value of the 1.5 per cent as well as the loss of its returns. Thirdly, it’s worthwhile asking your scheme provider about returns and comparing them with other funds, keeping in mind that an unsatisfactory comparison can result in a transfer to another pension scheme. Fourthly, should you decided to transfer, checking with your employer as to whether you’re allowed to transfer out of your workplace pension to another scheme is advised, as most workplace schemes don’t allow this.
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