Cheap "guaranteed" pension

oceanblue_3

Here we are......"Persons who are in any doubt about an investment or potential investment in a security should take professional advice."

Given your evident lack of knowledge I should imagine that doubt is rife!

EdInvestor

To get back on topic, of course I agree with other posters who point out the problems of structured products, this pension won't compare with the best options available.

But that's not what it's trying to do. We should be comparing it with ordinary bog standard personal pensions of the 1.5% (at least) charged variety, invested in managed or WP type funds. The new product claims it presents lower risk and much lower charges.

How do we think it measures up ?

oceanblue_3

EdInvestor wrote:

To get back on topic, of course I agree with other posters who point out the problems of structured products, this pension won't compare with the best options available.

But that's not what it's trying to do. We should be comparing it with ordinary bog standard personal pensions of the 1.5% (at least) charged variety, invested in managed or WP type funds. The new product claims it presents lower risk and much lower charges.

How do we think it measures up ?

As far as I'm concerned, whenever you comment, these are the topics:

1) you always try to undermine the posts made by qualified advisers

2) you make inaccurate comments about products

3) you assume an authoritative voice that neither your qualifications nor your knowledge can justify.

In this instance, if you had concerns about structured products, why didn't you mention these in your original post? What you don't seem to realise is that the subject of retirement planning is of immense importance to everyone; it requires careful thought, accurate information, and sympathetic guidance. It is not served well by insinuation, equivocation, and jaded negativity.

If you'd really been following this thread, there should have been no need to ask the question about how this product measures up.

whiteflag_3

EdInvestor wrote:

To get back on topic, of course I agree with other posters who point out the problems of structured products, this pension won't compare with the best options available.

But that's not what it's trying to do. We should be comparing it with ordinary bog standard personal pensions of the 1.5% (at least) charged variety, invested in managed or WP type funds. The new product claims it presents lower risk and much lower charges.

How do we think it measures up ?

Never mind getting back to the original point, this is a chat forum so do Oceanblue and the rest of us courtesy of answering the question> Where are these free Sipps ? All the links you post are to Sipp providers that charge, so where can I get a a SIPP provider for my cash fund that is free?

ReportInvestor

This probably won't do for your cash fund, but Killik stockbrokers are advertising a SIPP with no start up charges and no annual charge.

Isn't it great for everyone that SIPPs are heading the same way as ISAs re charges?

A generation of people has been put off pensions by a deadly combination of poor performance and high charges / commission for what is just an investment wrapper.

dunstonh

A generation of people has been put off pensions by a deadly combination of poor performance and high charges / commission for what is just an investment wrapper.

Personally, I am really looking forward to the insured/hybrid SIPP which does that. I still dont see the full blown SIPP being the mainstream product. What is a shame is that people are assuming that SIPPs are cheaper than personal pension/stakeholders when that will not always be the case.

The way i see it panning out over time is that stakeholder pensions will be the budget product with limited funds but at low cost. Insured/Hybrid SIPPs will take the place of the current personal pensions by offering unit trust funds in a free insured SIPP wrapper and full SIPPs will be used by those that want external investments. I expect low cost SIPP providers to move to the hybird/insured version as that will fit their model better. However, how many will last long term, I don't know. Once Selestia, Cofunds and Fidelity start their offering, they have the potential to squeeze the smaller ones out over time.

oceanblue_3

ReportInvestor wrote:

Isn't it great for everyone that SIPPs are heading the same way as ISAs re charges?

A generation of people has been put off pensions by a deadly combination of poor performance and high charges / commission for what is just an investment wrapper.

Experience has taught me that, for most peolpe, a pension is unlikely ever to be simply a "wrapper": the pension investment itself is always going to become something else and, as a result, requires additional "maintenance" from someone. This additional input could be provided by the pension plan holder him/herself but, in my opinion, most people will need some professional assistance to decide how to use the fund; for example:

1) what type of annuity to purchase

2) if not an annuity, then how to invest the pre-retirement funds in drawdown

3) to identify the point in time at which mortality drag starts to make drawdown less tenable

4) to assist in the decision-making process when a 74-year-old person considers Alternatively-Secured Pension versus annuity purchase.

Pension funds are enormously important assets for most of us and, despite the promised simplification scheduled for April 2006, continue to be surrounded by complex regulations. In addition, their operation in payment requires a continuing decision-making process that is based not so much on quantifiable fact, but on more tenuous criteria such as attitude to investment risk, anticipated interest rates, life expectancy, need for income over the following 12 months, etc.

An ISA, on the other hand, is usually a home for an individual's discretionary savings, and tends to be an end in itself: it doesn't "go" anywhere, if you like.

I'm all for lower product charges; however, to suggest that SIPP's and ISA's are both simply "wrappers" and, therefore, should be charged at the same rate, betrays a gross misunderstanding of how these products interact with real people.

EdInvestor

An ISA, on the other hand, is usually a home for an individual's discretionary savings, and tends to be an end in itself: it doesn't "go" anywhere, if you like.

Quite so. And if you don't want your money going anywhere (such as into an insurance company or adviser's pocket) then an ISA perhaps should be on your list.

I must say that oceanblue and whiteflag are becoming quite good contrarian indicators in their own right: perhaps Moneysavers should take a note whenever they appear on the scene in "slag-off mode".

So far they don't like:

SIPPs, especially ones with low charges
Income drawdown with low charges for ordinary people rather than the very well off
Guaranteed pensions with low charges
Execution only IFAs with low charges

It's easy to spot the general theme

ReportInvestor

oceanblue wrote:

Experience has taught me that, for most peolpe, a pension is unlikely ever to be simply a "wrapper": the pension investment itself is always going to become something else and, as a result, requires additional "maintenance" from someone.

Unfortunately that maintenance is sometimes neglected by the IFAs themselves [no aspersions against any of our own MSE IFAs].

Mail Report - Pension fund duds

".....The most popular pension pots are in Balanced Managed funds [with insurers], which invest in a range of shares, fixed interest, cash and sometimes property. The average has turned £1,000 into £1,308 over three years. We have picked out the largest of the poor performers from this popular sector and the Stockmarket Managed sector.

These plans were sold through independent financial advisers and company salesmen. But it appears that some advisers take their eye off the ball once the product is sold. There is still an enormous £6.7bn tied up in Scottish Equitable Mixed fund, which has grown by just 22.8% in three years against its own benchmark of 30.8%. It has managed less than half the 55.8% at rival Framlington Exempt Balanced.

If you are in a duff fund, you have three choices: switch to a different fund within the same company; move your plan to another provider; or take out a Self Invested Personal Pension (Sipp), where you retain much more control over your investments and pay less in charges.

But beware. The cost of switching out could be prohibitive as companies look to reap the charges they expected to earn from you in the future. You might find that you are unable to make up the costs in your new fund between now and when you retire.

On old-style policies you can see 5% of each monthly payment go in charges plus 1% to 1.5 % a year on your money in the fund. But over the first couple of years, the annual charge can be 3.5% or more."


BTW I'd love to know what percentage of people with pension funds actually have regular contact with an IFA. Anyone like to guesstimate?

oceanblue_3

EdInvestor wrote:

It's easy to spot the general theme

Yet again, Ed, you are missing the point: I have no objection to low charges (read my post).

On occasions, you post untruthful information on this site (I hesitate to use the most appropriate word), you make dangerous generalisations, and you often don't ask posters for essential information before you eulogise about low-cost SIPP's. Do you read your own posts? I do, and I am constantly amazed by what you say; if you were a colleague, I would have reported you a long time ago.