Pension Commission

dgbshifnal

I have agreed with my IFA to pay a fee and the commission due to be re-invested.
Does the IFA /me have to claim the commission specifically to make sure the insurance company dows pay it into the fund.

I'd ask my IFA directly, but question has only just occurred to me and IFA is on holiday,

thanks

dunstonh

I have agreed with my IFA to pay a fee and the commission due to be re-invested.

That would be a breach of HMRC guidelines. Although i think you didnt mean it quite like that.

Does the IFA /me have to claim the commission specifically to make sure the insurance company dows pay it into the fund.

No. The IFA puts the contract through on nil commission basis. No lump sum is paid into your pension. However, depending on the contract, the annual management charges would be reduced (if mono charged contract) and/or initial charge reduced/removed (if multi-charge contract).

Often the best fee based option is to agree the fee but have it taken from the pension. All factory gate priced pensions allow this as do SIPPs and fund supermarket pensions. This way you get tax relief on the fee. eg. lets say your fee was £1000. If you pay by cheque you pay £1000. If you pay £1000 out of the pension then with basic rate relief its actually cost you £800 (£600 with higher rate).

This is an increasingly common method of remuneration and is referred to as hybrid fee or customer agreed remuneration.