Aviva Personal Pension

andmas

Originally posted by dunstonh

1 - the initial illustration doesnt reflect the use of the correct funds - that is an FSA breach

The illustration of charges is on the Aviva Key Facts sheet, which when I misread initially. When I carefully read my IFA’s letter (6 pages) he does say that the Key Facts sheet is for a different fund to those selected. What was confusing though was that he stated that the funds selected have a variable annual management charge and the ‘overall annual management charge’ of the funds selected will be between 0.5% and 1.00%. In fact (I believe) that this is the ‘Additional Yearly Charge’ which is in addition to the 1.00% ‘Annual Fund Charge’.


Originally posted by dunstonh

2 - Most allied dunbar pensions have no annual management charges when paid up. There is also usually a transfer penalty. So, you would be paying to leave and then going into a pension that costs you a lot more. So, its a good chance that you would need 9% growth (just picking a figure in there as we dont have the facts) just to match the figure if it had been left in the Zurich plan which got say 7%. I have yet to see an ex AD pension that I have recommended to transfer. The low charges and fairly decent internal fund range mean its rarely a good idea to move them

The Zurich / Allied Dunbar Plan is an Adaptable Pension Plan with funds invested in their Managed AP Fund. The contract is made up of non protected rights only. The transfer value is £63,663 which is the same as the current fund value so there is not a transfer penalty. Prior to involving the IFA I checked direct with Zurich who advised me that there was no charge for stopping payments to the plan but if I did and made it paid up there would be an annual management charge of 1% and an indexed policy charge (approx. £5.75 per month) until retirement. The plan also does not have guaranteed annuity rates.
I commenced the plan in March 1995 and gross contributions total £66,266 (£55,208 personal payments and £11,058 tax relief). The fund value is therefore less than the gross contributions, which is surely a very poor performance over the period. The IFA did apparently carry out his own assessment, which I understand he has to do before transferring a pension and concluded that a transfer would be the better option. I’m not sure if he investigated the possibility of changing from the Managed AP fund although I have been advised by Zurich that there is a ‘fund switch charge’ of £53.20.


Originally posted by dunstonh

Has the adviser given you a cost comparison using the same growth rates? e.g. if left where is, how much will it be at 7% p.a. compared to the alternatives using the recommended funds?

The short answer is no, presumably as he concluded after his assessment that it was better to switch funds. A comparison would probably be complicated as the Zurich plan is set for retirement at 60 whereas the Aviva plan is set for retirement at 65.

On another issue the IFA is charging 1% of the transfer value for transferring the Zurich plan and setting up a new Aviva plan for myself and another one for my wife. He is then charging 0.5% per annum as a ‘servicing commission’. Looking at previous posts on this forum the 1% seemed reasonable and the 0.5% per annum seemed about right??


Originally posted by peterg1965

As a comparison, I have an Aviva Personal Pension managed by an IFA. I have a medium to slightly high attitude to risk and this is my fund split:
European equity S6 - 10%
Corporate Bond S6 - 25%
UK equity S6 - 10%
Shroeder UK Mid 250 - 15%
Investec American - 15%
Property S2 - 25%
I have been very pleased how it has performed through the last 2 years - I started it in Dec 07 and fund it to the tune of £1150/month gross. It is in slight 'profit' in relation to the money paid in. The effects of 'pound cost averaging' are clearly apparent. The performance of the Corporate Bonds over the last few months has been incredible

Thank you for sharing your portfolio and its performance over the last couple of years, which appears good in the current economic situation. I note that your risk rating averages 3.4 whereas my selected funds average 4.0. The performance of the Corporate Bonds is interesting as they have a low risk rating on the Aviva tables. I’d heard Corporate Bonds were performing well but my IFA warned that they were likely to drop shortly? I also note that 4 of your funds have 0% ‘Additional Yearly Charge’ – presumably because they are Aviva internal funds? The monthly contributions you make are about the same as I intend so I may consider changing my plans a) to a lower overall risk rating and b) to reduce the AYC.

andmas

Originally Posted by whiteflag
I know exactly what the IFA has done but im unable to make it clear as I wouldnt want to damage the reputation of the IFA sector

whiteflag - I note you haven't elaborated on your statement - I would be grateful if after making such a statement that causes concern you would.

Does anyone else have any idea at what whiteflag is getting at - and should I be worried?

whiteflag_3

andmas wrote: »

whiteflag - I note you haven't elaborated on your statement - I would be grateful if after making such a statement that causes concern you would.

Does anyone else have any idea at what whiteflag is getting at - and should I be worried?

Sorry andmas

I have tried twice in the last two days to respond, ( took me half an hour each time to type a one page response ) but every time I try to upload it throws me out.

Wish I had the time to do it again

Have a look at these and see what category (if any) you fall into?
http://www.fsa.gov.uk/pubs/other/pensions_switch.pdf

http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/147.shtml

andmas

dunstonh - I read a reply you posted today which contained some information but it has diappeared - could you re-post it please

thank you

Former_MSE_Andrea

Once again, please can people stop making digs at each other?

The team have had to remove a few posts on this thread, some of which could have provided some useful information for the OP.

Andrea

andmas

some of which could have provided some useful information for the OP

Yes that is why I would like to see the useful information - I'm not interested in any personal battles!

peterg1965

andmas wrote: »

Originally posted by peterg1965

Thank you for sharing your portfolio and its performance over the last couple of years, which appears good in the current economic situation. I note that your risk rating averages 3.4 whereas my selected funds average 4.0. The performance of the Corporate Bonds is interesting as they have a low risk rating on the Aviva tables. I’d heard Corporate Bonds were performing well but my IFA warned that they were likely to drop shortly? I also note that 4 of your funds have 0% ‘Additional Yearly Charge’ – presumably because they are Aviva internal funds? The monthly contributions you make are about the same as I intend so I may consider changing my plans a) to a lower overall risk rating and b) to reduce the AYC.

May I ask how you worked out the risk rating figure?

andmas

May I ask how you worked out the risk rating figure?

peterg1965: I took the the Aviva Risk / Return Rating for each fund x the % of fund held, i.e. for your funds:
European equity S6 - 10% x Rating 4 = 0.4
Corporate Bond S6 - 25% x Rating 2 = 0.5
UK equity S6 - 10% x Rating 4 = 0.4
Shroeder UK Mid 250 - 15% x Rating 4 = 0.6
Investec American - 15% x Rating 5 = 0.75
Property S2 - 25% x Rating 3 = 0.75
TOTAL (AVERAGE) = 3.40
Apologies if my method of calculation is wrong!

jem16

andmas wrote: »

dunstonh - I read a reply you posted today which contained some information but it has diappeared - could you re-post it please

thank you

I managed to find the cached version which contained Dunstonh's reply. Rather than upset anyone by pasting a link I've copied it below for you.

dunstonh wrote:

The short answer is no, presumably as he concluded after his assessment that it was better to switch funds. A comparison would probably be complicated as the Zurich plan is set for retirement at 60 whereas the Aviva plan is set for retirement at 65

I would still want to see that one. The AMC on the dunbar plans with no effective AMC shows they charge it and rebate. So, the only way to compare costs is to compare 7% projections.

On another issue the IFA is charging 1% of the transfer value for transferring the Zurich plan and setting up a new Aviva plan for myself and another one for my wife. He is then charging 0.5% per annum as a ‘servicing commission’. Looking at previous posts on this forum the 1% seemed reasonable and the 0.5% per annum seemed about right??

No problem with that. Rebalanced portfolios tend to outperform those left to their own devices and it also makes sure that you dont end up in some obsolete fund.

The fund value is therefore less than the gross contributions, which is surely a very poor performance over the period.

No, that is not poor performance. Thats just bad timing and the fact that AD had high charges against the contributions. The dunbar managed fund has been an above average performer wtih discrete performance ranking it in the 1st quartile for 4 of the last 5 years. Compound over 5 years it has grown 45.32% compared to sector average of 33.79%.

Even if you want to move up the risk scale and pick a higher risk spread, Zurich do offer funds to do this.

Your recent post confirms that a greater level of research has gone into this than initially appeared from your first post and if the projections (which are basically a mandatory) comparing the recommended plan, stakeholder and the AD plan are shown to you and there isnt a lot of difference then there is no real problem with it.

andmas

jem 16 - Thanks very much for posting dunstonh's information from the post that was removed. Much appreciated. I didn't realize that there was so much rivalry on this forum!!