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IFAs Commission on a Pension Transfer (re-pensioning etc)
robpitt
Posts: 86 Forumite
My new employers IFA asked if I wanted to transfer the fund from an existing personal pension to the companies new scheme as the new scheme had lower annual management charges. It seems like a good idea but I was stunned to read in the small print that the IFA would get 3% commission in the process (yes I understand this doesn't come out of my fund value).
However the 3% got me thinking if there was anyway to get a slice of the commission for myself. I've read Martins "re-pensioning" article and consulted Cavendish Online but it seems [correct me if I'm wrong] that this is currently about discounting the annual management charge and not the rebating of any one-off commission on the transfer itself.
Is that right?
Is there anyway to get a slice of the one-off commission for a transfer?
Thanks
Rob
However the 3% got me thinking if there was anyway to get a slice of the commission for myself. I've read Martins "re-pensioning" article and consulted Cavendish Online but it seems [correct me if I'm wrong] that this is currently about discounting the annual management charge and not the rebating of any one-off commission on the transfer itself.
Is that right?
Is there anyway to get a slice of the one-off commission for a transfer?
Thanks
Rob
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Comments
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It seems like a good idea but I was stunned to read in the small print that the IFA would get 3% commission in the process (yes I understand this doesn't come out of my fund value).
Why are you stunned that the adviser is getting paid for doing the work and carrying the liability?Is there anyway to get a slice of the one-off commission for a transfer?
No. It would breach HMRC rules.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
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Also, just re-read it and it occured to me its a group scheme so in that case the employer owns the scheme, not the individual so you cannot do anything about it. 3% is quite low. Some go as high as 7.5% so there is already some discounting going on.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Having dug into it more I suspect that the 3% figure quoted is actually the sum of the IFAs commission that would be paid over the lifetime of the investment *IF* I allowed it to run its course to retirement.
The companies AMC is only a fraction of a percent more than the figure quoted by Cavendish Online, so I guess the IFA is already discounting some and so in summary its not that bad at all.0 -
In that case the commission is very very low. Lower than any i've ever heard of. It's not all good news though as you need to ask who is going to advise you when this perticular IFA is made bankrupt this time next year?0
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Scrap what I said earlier. The 3% commission is paid in one lump sum at the start. Quote from the transfer illustration I received:"We will pay commission to XXX out of the charges we take. For the transfer the commission will be £1231 when your plan starts"The charges are 0% on the transfer and then an AMC of 0.8%. So it does beg the question of how the provider can instantly pay the 3% to the IFA ... they must be sitting on a huge loss!0
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Now your getting there. Keep on reading and look for the allocation rate and the bid offer spread. then post them here.0
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The charges are 0% on the transfer and then an AMC of 0.8%. So it does beg the question of how the provider can instantly pay the 3% to the IFA ... they must be sitting on a huge loss!
Its takes about 15 years to break even and 20 years to start seeing a sensible gain. Many insurers are closing pension business or running it purely to get market share or changing to factory gate pricing which is probably how it will be as standard within a few years anyway.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Dinstonh are you saying that new style plans are giving an 100% allocation rate and have done away with bid offer spread then?0
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Retired_I.F.A. wrote: »Dinstonh are you saying that new style plans are giving an 100% allocation rate and have done away with bid offer spread then?
Bid/offer spreads were abolished on most new business plans after 2001.
A few still exist and of course SIPPs and fund supermarket pensions utilising Unit Trusts can still have them.
A recent trend from providers is factory gate price the annual management charge and have the advice charge deducted from the premiums over a set period. Whilst this appears more expensive in the early years, the lower amc over the long term can make it far cheaper. i.e. amc could be as low as 0.4% p.a. this way.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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