Moving to Cavendish Online

richardw

I have a stakeholder pension and due to ill health I am not paying in to it.
I may also not live into my 60s.

I do not want the pension to be eroded by commision charges.

Is it easy to move the pension to Cavendish?

dunstonh

I do not want the pension to be eroded by commision charges.

Its hardly going to be eroded. Most advice based stakeholders would be 0.6 - 1% annual management charge. Cavendish will take you to 0.6-0.8.

You will also be responsible for the selection of the funds. With stakeholders, fund selection is the main priority given the tiny difference in charges.

Also, considering your ill health situation, you may find that a stakeholder is not appropriate. There are some personal pensions with higher initial allocations and can still give 0.6% AMC with full advice and remuneration included. The higher allocations would in effect be free money should the worse happen.

I do not want the pension to be eroded by commision charges.

Depends on who you are with at the moment and who you choose for it to be transferred to. A company like NPI can take a year to transfer and a company like NU can take 3 months just to do the admin. It isnt Cavendish you are transferring it to. They are just IFAs taking reduced income. They complete the same process as any other IFA. They just dont give any advice.

Good ones can take 3 weeks. My longest oustanding one began in August 2004. Many take 3 months and thats with all the discharge and national insurance forms completed in advance.

MiserlyMartin

Hello again Dunstonh. I have still not moved my pension via cavendish. To be honest it seems quite a complicated and drawn out process and you make valid points about lack of advice and time to transfer. One would certainly not gain much if one has less than 5 years to go until retirement. I would assume that performance of the new fund would suffer though lack of advice on picking the best funds throughout the years.But thats assuming that the IFA will stay in touch with you and advise you throughout the pensions life. A lot of IFAs don't seem that keen once they have recieved the intial commission.

This does seem like swings and roundabouts and I don't think that Martins article on Cavendish tells quite the whole story, perhaps it should be updated?

paul666

Your circumstances sound un-typical and you might not be suitable for typical solutions.
If you've got reduced life expectancy, , then you may be able to take the benefits early. You should also be able to get an increased annuity. It may well be worth taking advice on getting the annuity maxed out.

dunstonh

Hello again Dunstonh. I have still not moved my pension via cavendish. To be honest it seems quite a complicated and drawn out process and you make valid points about lack of advice and time to transfer.

Its a hit and miss area. Some are fairly smooth. Some take ages. Some of the "new" providers are very good in pension transfers, others leave it to the IFA to do all the work. If no IFA, that means you.

One would certainly not gain much if one has less than 5 years to go until retirement.

Dont count on it. Ive done some with little less than 3 years to go. Often when that close to retirement, there are no penalties and if you are in a zero bonus pension, you could switch to a spread of property, gilts, fixed interest, corp bonds and maybe a really small bit of stockmarkets and get a boost in the 5 years. Anyone doing that 3 years ago, would almost have doubled their pension fund with stockmarket investments.

I would assume that performance of the new fund would suffer though lack of advice on picking the best funds throughout the years.

Potentially. However, that would depend on the quality of the advisor. Remember its not so much picking funds but picking sectors and the right percentages to suit your risk profile.

But thats assuming that the IFA will stay in touch with you and advise you throughout the pensions life. A lot of IFAs don't seem that keen once they have recieved the intial commission.

The term "IFA" can mean a number of different levels of service. An employed IFA who only gets to keep 30% of the commission will virtually always do business on initial commission only and wont be interested in long term servicing as much. You can't blame them really. One of the larger IFA groups forces it's advisors to take reduced initial and normal trail commission but only pays them something like 90% of that initial but keeps the trail for itself. Again, that doesnt encourage the IFA to look at long term business.

A sole trader/Partner/Director IFA doesnt have those issues. They also have greater flexibility to offer better terms too. An IFA only getting 30% commission cant really gift much. An IFA getting 100% can afford to.

I have clients have been dealing with for 15 years and they get anything from monthly through to annual reports. That can be anything from 3 pages to 20 pages depending on the information agreed at the start. I think that is the key thing. If you discuss your requirements with an IFA at the start and they are willing to give those reports, either based on size of the trail/renewal commision or by regular fee payment, then thats fine and they should stick to it. I have to say that the periodic reports are a big part of my business now both for income for me and for time spent doing them. I also know IFAs that don't go near that side of the business and just look for one off transactions which pay the initial.

If you were ever going to use an IFA, I would certainly try and get in with a small local firm with one or two advisors or with the owner/partner/director.

This does seem like swings and roundabouts and I don't think that Martins article on Cavendish tells quite the whole story, perhaps it should be updated?

The article is correct in what it's aiming for but puts too much focus, in my opinion, on saving 0.2 - 0.4% p.a. I wonder how many people transferred their pensions to a Norwich Union stakeholder because that is the example in the article? and they would have selected one of only 4 funds available at that time, all of which are dire. Whats the point of saving 0.4% when you will be investing in a poor fund? As it happens, NU have just relaunched their stakeholder with a greater fund range and now includes a better range. Howevever, the NU personal pension is better than the stakeholder as it has the same fund range at the same charge plus a load more external managed funds and higher fund based discounts which can make the PPP cheaper than the stakeholder.

Scot Widows is another one. They dont have fund based discounts at all but they have an cracking fund range and now include a newly launched European Property fund which is extremely desirable as not many offer those and its a growth area. Again though, their PPP is better than the SHP as it has the same charges on the stakeholder funds but offers a load more external funds.

Many people assume stakeholders are cheaper than personal pensions and that is not always the case.

I have arranged over 200 pension transfers year to date. I would say that about one in five is not worth transferring as the funds are fine where it is and it has lower charges where it is. Not all old pensions charge more.

I personally feel that in an area like this, its better to seek advice and get it right rather than do it yourself and end up losing a bucket load in charges.

Here's a scary one for you. One last week came my way. Pearl pension just over 30k fund. Pearl projections to age 65, showed a final fund value of £18,000. A drop of 12k. Alternative PPP quoted on same basis game out at £90,000. Pearl are a pain with transfers but look at that difference!!

dunstonh

Yay, my longest outstanding pension transfer completed today. Applications, including discharge forms, signed and sent off 26 August 2004 . Disgraceful really as the client has missed out on about 25% growth on his pension portfolio in that time based on the funds chosen.

EdInvestor

Yay, my longest outstanding pension transfer completed today. Applications, including discharge forms, signed and sent off 26 August 2004 . Disgraceful really..

It's a zombie fund.Isn't that what you have to expect?