World Earth Day
World Earth Day is celebrated on April 22nd with the aim of reminding us of the need for environmental protection. On this day, another sobering thought is for the people who lost a significant chunk of their pension fund when they invested in the New Earth fund.
It has become too familiar where customers contact us who have transferred their money into a SSAS or SIPP and then invested the proceeds into an “exciting” sounding fund. We often find that these customers are not really clear of all the parties that have been involved in their pension. When things go wrong, they struggle to know who to contact and even harder to find someone who will take responsibility for the recommendation that has led to the demise of their pension fund.
There can be as many as 7 parties involved in a SIPP; the provider, administrator, trustee, adviser, investment manager, introducer and investment vehicle. It is really important with so many parties involved in your pension that you are clear on each of the roles and responsibilities along with the fees that they are charging.
Then you have the underlying investments. The compensation if an investment goes bust is different depending on the investment wrapper. If you invest in shares of a company that goes bust, you are a creditor of the company but at the bottom of the priority list, so chances are that you will lose all your money.
An inconvenient truth in pensions is that there is no easy way to grow your pot. It needs you to put in reasonable contributions, invest in investments that match your risk profile and to ask for help so that you take the money out in the most efficient way. If this has started you thinking about your pension, give us a call and we will help you make sense of the pensions environment.