Do Pension funds front load their fees?

dibleyob

I'm not keen on paying into a pension, and would rather consider other investments. One reason is that I've heard that they often have fees and charges and these can be heavily front loaded, so the early contributions you make will have lined their pockets even if you don't keep up your pension contributions later on. Is this true?

dunstonh

I'm not keen on paying into a pension, and would rather consider other investments

pensions are not investments. They are a tax wrapper that you put your investments into. A container as such.

. One reason is that I've heard that they often have fees and charges and these can be heavily front loaded

That reason is not valid. Some pensions are mono charged (just have an annual management charge). Some are front loaded. However, some of those plans which are front loaded come in cheaper than a mono charged pension.

so the early contributions you make will have lined their pockets even if you don't keep up your pension contributions later on.

Not quite as severe in the way you put it but correct. Typically it just adds to the amc for the first 3-5 years rather than your contributions suffering any initial charge. However, there are versions that can have an initial charge and come out cheaper.

Pensions are very cheap nowadays whether you go with a factory gate price plan or a mono charged plan. Especially when you compare the charges to ISAs or unwrapped unit trusts.

EdInvestor

dunstonh wrote: »

Pensions are very cheap nowadays whether you go with a factory gate price plan or a mono charged plan. Especially when you compare the charges to ISAs or unwrapped unit trusts.

If you go through a discount broker they will all be much cheaper than using any kind of advisor or buying direct.

dunstonh

If you go through a discount broker they will all be much cheaper than using any kind of advisor or buying direct.

Not necessarily. A 30 year old paying £100pm with an IFA using a factory gate priced pension taking a £1500 fee will be cheaper than a nil commission stakeholder bought on execution only. Mainly as many of the factory gate priced pensions are not available direct or through discount IFAs.