Pension advice needed

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
17 replies 1.6K views
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  • isasmurfisasmurf Forumite
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    DD Said
    Sorry, but that's the last time I'm going to put up with you spouting that kind of nonsense >:(

    From the fsa website:

    To paraphrase this means:
    They can't rip you off with high charges, you can start one with next to no money and if you decide you don't like the pension company, you free to take your all of your money elsewhere.
    Good or bad in your view, these conditions are designed to protect the consumer and they can't be ignored.

    To say they are the *same* as personal pensions is simply not  true.
    Er.. actually Stakeholder Pensions ARE Personal Pensions, but with Govenment restrictions on charges and minimum investment limits. They are the personal pensions equivalent of a CAT standard ISA.

    What you can do with a Stakeholder pension you can do with a Personal Pension. There is no difference.
  • Er.. actually Stakeholder Pensions ARE Personal Pensions
    Yes, Yes, very clever, I know that, but Personal pensions are not stakeholder pensions, which is what DD said. And to say that the only difference is "charging structure" is to mislead. Surely you understand what I'm trying to save. Don't you believe the ignorant should be protected?

    If they are 'the same' then why don't all the PP's make them SH compliant? answer - because there's no profit it it for them.
  • PalPal Forumite
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    Calm down guys. DD was simplifying.

    In general many personal pensions are now identical to stakeholders, but they are not able to be designated as stakeholders because the fees might be higher. The reason for the higher fee is that they allow access to higher charging "specialist" funds that cannot be used through a stakeholder. For example, many with-profits funds and property funds are only available through personal pensions as their charges exceed 1% a year. Depending on the funds, there may also be surrender penalties as well.

    Personally I think that most people would be fine with stakeholders, but there might be some rare occasions where a personal pension is more appropriate.
  • dunstonhdunstonh Forumite
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    DD Said
    Sorry, but that's the last time I'm going to put up with you spouting that kind of nonsense >:(

    From the fsa website:

    To paraphrase this means:
    They can't rip you off with high charges, you can start one with next to no money and if you decide you don't like the pension company, you free to take your all of your money elsewhere.
    Good or bad in your view, these conditions are designed to protect the consumer and they can't be ignored.

    To say PP are the *same* as SH's is simply not  true.


    Im sorry, I'm not going to let you get away with that kind of nonsense. You cannot copy and paste one line without showing the line that followed.
    Personal Pensions are the same as stakeholder pensions but usually have a different charging structure. This can be better or worse.

    A personal pension is the same as a stakeholder pension in what it achieves. It allows a different charging structure which can be either higher or lower than a stakeholder depending on the provider and what and how you are investing your money.

    A modern personal pension rarely has a transfer penalty. Legacy personal pensions often do.

    Scottish Equitable, Scottish Life and Skandia are three examples of providers who can manage to provide lower charges over the term with their personal pensions compared with a stakeholder.

    The impact of charges on a stakeholder usually brings it down from 7% to 5.9%. I have a scottish life PERSONAL PENSION illustration in front of me which has a figure of 6.3% with no transfer penalty applicable.

    So i repeat, personal pensions offer a different charging structure to stakeholder pensions which may be better or worse than a stakeholder.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • paul666paul666 Forumite
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    OK. Here's the *entire* body text taken from
    http://www.fsa.gov.uk/consumer/06_PENSIONS/mn_personal.html
    PENSIONS

    Personal pensions

    Unlike an occupational pension scheme you pay all the costs of setting up a personal pension plan. Traditionally, charges have often eaten heavily into your savings, especially if you committed yourself to saving regularly but then had to stop, perhaps because you lost your job, stopped work to have a baby or got the chance to join an occupational scheme. Of those who start a personal plan, as many as one person in every four stops paying in within three years. They often then see a large part - sometimes all - of their saving swallowed up by the costs of setting up the plan.

    But since April 2001, personal pensions that meet certain conditions have been able to qualify as Stakeholder Pensions. The conditions include low charges, flexible contributions and no extra charges if you transfer to another scheme. If you are newly starting a pension scheme, it makes sense to consider a stakeholder pension. If you already have a personal pension, beware of switching to a stakeholder scheme - you may already have paid the bulk of the personal pension charges and could lose by switching. If in doubt about what to do, get financial advice.

    Don't get me wrong, if PP's can offer most of these advantages that SH have then I'm delighted. If better performance is possible (but not guaranteed) with higher charges then that's an option worth considering.

    But when it comes down to it, the consumer has five choices:
    1. They can find a good IFA to get the best product for their needs.
    2. They can educate themselves to become their own IFA
    or
    3. They can place their trust in the 'quality' of a scheme that qualifies as a stakeholder.
    4. Join a company scheme.
    5. Not use a pension at all for their retirement and use some other means or nothing at all.

    All these points are contentious as we can tell from all the noise in this forum. However, 4 then 3 or 1 works for most people.
  • dunstonhdunstonh Forumite
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    That FSA comes over as being written some time back and vague in its comments.  Although does use the term traditional.  The personal pensions I mention are not traditional. But even many traditional personal pensions, which are no longer available for new business or top up, have lowered their charges to be stakeholder compliant but still arent called stakeholders (Prudential and LloydsTSB for example).  

    Last year the FSA issued a occassional paper on switching out of legacy personal pensions into newer lower charge products where it encouraged it when the charges over the term were lower on the new plan.  Yet in that page you linked to it gives a warning about switching out of PPPs.   The warning is correct to give but it does not appply to everyone.  Which is why it says seek advice. They same applies to personal pensions and stakeholders.

    The Scot Life plan i mentioned cannot be classed as Stakeholder compliant but it can provide lower charges than a stakeholder.  

    Back in 2001 when they were launched, you could generalise and say stakeholder was the best one of the two.  Today, you cannot generalise as to which of the two is best.   It depends on your circumstances

    A stakeholder does not guarantee quality. It gurantees that the charges will be within a defined set of rules. That doesnt mean that they will be lower or higher anymore. Quality is another issue and that is much harder to define.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Basically, stakeholders have forced pension providers to improve the t&c of personal pensions to be more competitive, or personal pensions would have disappeared.

    So the differences between many personal pensions offered today and stakeholders (a subset of personal pensions) are much less than three years ago.

    If you buy a personal pension, you have to be aware of transfer provisions, etc. Not so with stakeholders. Doesn't mean the different terms on a personal pension are bad, just means that it doesn't qualify in some respect for a stakeholder. Whether that matters depends on which provision prevents it being classed as a stakeholder, and whether that provision matters to the individual involved.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
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