Ask Sindie: 'My pension pots are all over the place'

Your money problems solved


Q: In my early 40s, I've changed jobs for what I hope is the last time.

The only reason for this sentiment is that my pension pots are all over the place.

Since my late 20s, I've had nearly 10 different jobs and am fed up with starting all over again with a pension.

Some of the earlier pots are final salary schemes but I was never with one employer for more than a couple of years, and so they won't pay out much when I retire. The rest are mainly company pensions where my contributions have been matched, but the last scheme was a stakeholder.

Altogether, I reckon I've put away £35,000 - including contributions from my employers - but it's haphazard. Can I do anything with this or do I have to stick with my new job to get the best pension? If I put in 6 per cent, my employer will pay 8 per cent.

ED, Norfolk

A: Full marks for tackling your retirement plans. Too many of us are failing not just to save enough but to make any sort of provision for old age.

Our inaction has led to a projected £57bn gap between what we're putting aside today and what we actually need to live comfortably in retirement.

However complex your circumstances might seem, don't panic, says Elizabeth Gibling, pensions specialist at independent financial adviser (IFA) Chase de Vere. "It looks a lot worse than it is."

As you have lots of different pension pots, your priority is to find out the current value of each fund, no matter how small, and its projected value for your retirement at 65 (assuming you want to keep working till then).

The funds will probably differ in many ways, such as structure, charges and investment type - for example, whether shares or bonds. So you need to write to each scheme's trustees to determine their value, says Ms Gibling.

One big difference will lie in the charges levied by pension managers. "The stakeholder at your last employer carries only a very low 1 per cent charge each year to manage your money," she explains. "But the other, earlier schemes will probably carry much higher annual charges." These could be as high as 6 or 7 per cent.

In your overall haul of pensions, there will also be transfer penalties to factor in and questions over each fund's investments. "For example, there will be a guaranteed income with each old final salary - no matter how small - but you have to ask yourself, 'Will the schemes still be going in 20 or so years?' "

The question will then arise whether you should leave some open and close others, or transfer all of them into your new pension, or focus purely on contributions to your new workplace scheme. To decide on this, you will need to talk to an IFA with pensions expertise.

A website run by IFA Promotion - www. unbiased.co.uk - lists hundreds of advisers in your area with details of their qualifications. To make sure you choose the right IFA, look up the definitions of advanced qualifications for pensions advisers, including G60 and APMI.

The good news is that, from next year, it will become easier to increase the size of your pension pot. From 6 April 2006, known as "A-Day", you will have more flexibility in saving for retirement. For example, you will be able to put the equivalent of your salary into your pension fund each year and qualify for tax relief.

So, say you had £7,000 in savings, you could put it all into your pension straight away, and it could grow tax-free.

Q: I keep seeing adverts for protection against identity theft, particularly from credit card lender Capital One and Royal Bank of Scotland. Do I need this?

NQ, Edinburgh

A: Identity fraud - when criminals steal your details to apply for credit cards, say - costs the UK more than £1.3bn a year, with some 50,000 reported cases in 2004.

If you fall victim - and in extreme cases, the first people hear of it is when bailiffs appear at their door - the onus will be on you to prove that it wasn't you who committed the fraud so you can clean up your credit reference or get your money refunded.

Public awareness has been raised by a number of lenders. Capital One, for example, hired the impressionist Alistair McGowan for a TV campaign advertising ID theft "insurance".

But the protection products available from different providers are a real hotchpotch. What's on offer ranges from basic advice on how to prevent theft, to recompense for expenses incurred - such as lost earnings - in trying to clean up the mess if you fall victim.

The cost of the cover also varies. It might be included for free with a credit card, or you could be charged as much as £84 a year at the Halifax.

ID theft cover has been heavily criticised by consumer groups. Which? recently rubbished it as "the most useless financial product" in a review of the services offered by banks, saying that "nobody needs" it.

Money would be much better spent on a paper shredder or on software to protect your home computer against hackers, Which? added.

If you need help from our consumer champion, write to Sindie at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS or email sindie@independent.co.uk. We cannot return documents, give personal replies or guarantee to answer letters. We accept no legal responsibility for advice given.

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