Tuesday, 12 October 2010

QROPS, QNUPS & UK Pensions

The question of where you invest your pension funds is often overlooked. Yet in most cases it’s key to your future income!
  • Understand your attitude to risk

  • Check where your funds are invested

  • Unhappy? Change your adviser

Whether you live in Spain, the UK or even if you live in both countries, I hope this page will be food for thought about pension planning.

Do you know where your funds are invested? Do you know the asset classes of the investment in your pension fund? What is your attitude to investment risk?

Are you surprised I have asked these questions about your pension funds?

Let me explain. I was watching an item on the BBC which, in my view, was both misleading and alarmist. With many employers closing their Schemes, the BBC presenter then explained the difference between

  • Final Salary Schemes where there may or may not be an employee contribution but where the employer is taking all the risk to base the future pension on the final salary

Good so far

  • Money Purchase schemes where there could be both employee and employer  contributions but the future pension is based on Stockmarket returns

Sorry BBC that is misleading

You don’t have to invest in stockmarket funds at all, or you may wish to limit equity investments. There are other asset classes where you may prefer to invest. If there is a particular asset class that worries you as pension plan holder tell your adviser and switch the investment. Asset Class did you ask? If your adviser never discussed asset classes get a new adviser! The most common asset classes are equities, property, gilts, bonds and cash. It is always a good time to review the asset classes in which you invest, but none more so than at a time of turbulent markets.

The last time you talked to your adviser did you discuss ‘attitude to investment risk’? If you didn’t, again I say get a new adviser! I am always prepared to recommend good professional advisers, who are fully authorised and regulated. Email if you want a referral.

It is my personal view that pension plans, including QROPS and QNUPS should be reviewed regularly. Be sure you get regular reviews from your adviser.

The closer you get to retirement the more the need to consider the form in which you will receive your income.  The initial investment of your QROPS or QNUPS funds should equally be reviewed regularly.

If you need to get a new adviser please email me.

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You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email I’m very keen to get your feedback