Pension transfer and IFA fees

Jaynorth_2

Hi

I was part of my employers pension scheme until Dec last yr when I was made redundant. Because I was not part of the pension scheme for more than 2 yrs, I have been informed that I can either receive a full refund of my contributions or transfer the pension to another provider. The refund value is about £1200 but the transfer value is about £4900, so I thought it would be best if I explore the option of transferring to a personal scheme.

I have spoken to a fee-based IFA and he has told me that the charge would be £1000 per transaction which I clarified as being a £1000 charge upfront only and no commission. However, I would also need to pay around £600+vat per yr for the service of actively monitoring the investment as well as my general portfolio (which is non-existent right now).

Is this a competitve fee? I have never used an IFA before and personally I think it is a bit steep but then I don't know much this.

dunstonh

However, I would also need to pay around £600+vat per yr for the service of actively monitoring the investment as well as my general portfolio (which is non-existent right now).

One assumes thats if you wanted that particular service. If you dont want it then you dont need to pay for it.

The IFA you have spoken to appears to be setting a fixed fee for a service that will be good value for someone with a large fund value but the size of yours makes it expensive. That is the business model of this particular IFA but you are probably best served by a different business model unless you intend increasing the pension pot by a lot.

Jaynorth_2

dunstonh wrote: »

Once assumes thats if you wanted that particular service. If you dont want it then you dont need to pay for it.

Yes, one would assume this and I specifically asked if I could just take the pension advice without active management and was told it would not be possible.

I do not intend to increase the pension pot by a lot - possibly a £100 per month so I think I will look for an IFA with a different business model. Do you think commission based would be a better option? Personally I would prefer to pay a one off fee up front that can be deducted from the transfer amount but I do not know if that would be possible.

dunstonh

On your fund value, I would say commission will be cheaper than fee. Commission will be around £245 and on a mono charged stakeholder or personal pension, it would take around 10 years for the charges in the plan to cover that.

Jaynorth_2

Okay, will explore that option. Thanks for your help.