Scotland

Pension fund: Move it or not?

I'm Fergus Muirhead and I'm here to answer any questions you may have about any money or consumer issues.

Please drop me a line at fergus@bbc.co.uk with your questions. You can also read more on money and consumer issues on my own blog.

Q. About four years ago, my financial adviser recommended I move a £15,000 Standard Life Pension to Norwich Union Commercial Property Fund, who as you know is now Aviva. This has fallen in value since then, with the total fund value and transfer value now standing at £12,709. I am being charged a £10-plus monthly admin fee. Should I move this money or hope that the property market revives itself in the near to long term? Kate Gordon

A. It's a difficult one, not helped by the fact I know so little about you and your circumstances, so everything I say is based on the limited information you provided. As you know the commercial property sector has not had a good time and so your investment has dropped by £2,500 or so in the last four years. I'm not sure why you moved the pension in the first place, unless the Norwich Union Commercial Property Fund was doing something no other funds were doing at the time and I also don't know whether when you ask about 'moving' you mean moving to a different pension company or to a different fund within your Aviva pension.

Let's deal with the move to a different company first. The fund value and transfer value are the same which suggests that you wouldn't be penalised for moving from Aviva unless there was a specific exit penalty from the property fund. You would need to check this with Aviva. Any other pension that you move to will have annual charges and you would need to do a comparison to see how they fare against the charges you mention above. I don't think you would save much by pursuing this course of action.

You may want to look at the other funds in the Aviva range and see if there is one that matches the amount of risk you are prepared to take and that you feel might grow a bit faster to make up your deficit. But what goes up might also go further down and unless you choose wisely, you might end up losing even more money. It might be good to sit tight and hope for a recovery in the commercial property market.

Q. I have looked at numerous ways of releasing money against the value of my house, and I am not sure which way to go. The current value is £140,000. I was told that if I wanted to buy a new car, the total released would be about £40,000. What I didn't like was the terms attached to this transaction. What kind of advice can you give in a situation of this kind? James Graham

A. You don't say what it is that you don't like about the terms of the scheme you have been looking at, but on the basis that the total release you are looking at is around 30% of the property value I am assuming it is some sort of equity release scheme. These schemes allow you to 'take' money tied up in your property and use it for something else - in your case perhaps a car.

You can either pay interest on the money you have borrowed as you go along, with the £40,000 you owe paid from your estate when you die or have to sell your house, or you can 'roll-up' the interest and it can be paid on death or sale - but you will obviously owe a much larger amount of money depending on how long you live. If these schemes don't appeal to you for whatever reason then you could look at a straightforward re-mortgage - or perhaps a car loan may be a better bet. In this way the money you borrow can be cleared off over a specific period of time.

Q. I am about to retire and I am in the fortunate position of having three pensions of various amounts. Firstly my old age pension, one from the NHS from my late husband and l also will have an NHS pension. The total value I think will be around £25,000 per annum gross. How will three pensions affect the way I pay tax? Will I end up paying more because they are split into three? I am willing to pay what I am due but like everybody I don't want to pay more than my fair share. Caroline Moore

A. Your total income will be calculated and then you will pay the same amount of tax as you would if it was all coming from one place. It may be that all of the tax will be deducted from one of your pensions, but it will be the same amount that would have been deducted if all of your income came from one pension. Now what this means is that if you are looking to save any of your income, or leave it in the bank until you need to spend it, then you need to make sure that you are making investments as tax efficiently as possible. So use your ISA allowance where appropriate, and ensure that you are looking for the highest rate of interest you can find, tying your money up for six months or a year if you can to get a better rate.

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