Skandia Collective Retirement Account

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I'm 55 unlikely to earn again and have pensions with several providers (Equitable Life manage and wp, Scottish Equitable - various funds, Pru - Scottish Amicable, and Friends Provident) most don't have a loss of value on transfer (only Equitable). I don't need to take the pension now.

My new IFA wants to amalgamate them in a Skandia Collective Retirement Account because
Simpler
Plenty of fund choice
Low cost (not sure about this now I've read the small print)
Free fund switches.

Am I being churned?
Are Skandia a good choice?
Couldn't I just fund switch within the existing pensions?

Thanks

div_ad

DOes nobody know or am I posting at the wrong time of day?

dunstonh

Am I being churned?

Possibly. Possibly not.

Are Skandia a good choice?

I have my own pension on that contract. I think it is one of the best pensions out there. It has full fund supermarket range of choice. It can be set up to be cheaper than stakeholder if that is what you want or it can be run on a portfolio basis if you prefer.

Indeed, the Skandia pension can be the cheapest personal pension available I believe as you can get an AMC of 0.1% potentially.

It also uses UT/OEICs and not pension funds and Skandia have said they are going to offer ITs/ETFs once IFAs in future (assuming the FSA allow IFAs to offer those as their proposals have suggested).

Couldn't I just fund switch within the existing pensions?

Some of those pensions will have a limited range of insurance company funds. Some will only have a with profits fund potentially.

The IFA has to do a cost analysis. So, you will be told the differences in cost. However, if you are after quality, bigger range and options then, in my opinion, there are not much better than Skandia.

juicyjude

That is encouraging information about Skandia, thanks

div_ad

I'm really pleased by your reply Dunstonh. It give me confidence in the IFA and his other choices.

Its the 'am I being churned bit' that makes me think.

I think that some of the with profits funds probably should be shifted and maybe now is the time to move Equitable Life, however those where I can fund shift to better funds within the same pension surely are better left if the new provider twould take a cut.?

Is this why you said maybe, maybe not?

d

dunstonh

Its the 'am I being churned bit' that makes me think.

Any transfer is a churn. Even moving money from one savings account to another is a churn. However, where it is justifiable and the costs disclosed then its a valid thing to do.

however those where I can fund shift to better funds within the same pension surely are better left if the new provider twould take a cut.?

That is an option. However, you need to do a cost analysis and compare the options (or the IFA should). For argument sake, lets say the existing funds are 1 to 1.5%. You can get 0.2% on the Skandia for the Blackrock trackers, add the adviser servicing charge of 0.5% (assumption that you would have servicing) and thats 0.7% a year. In that case, if there are no transfer penalties, the Skandia pension can have tracker funds cheaper than the equivalent funds in the old PPPs. Thats a very very quick and basic comparison but it gives you an idea of the sort of thing you are looking at.

Is this why you said maybe, maybe not?

Not all old pensions are bad. Some have guaranteed annuity rates where the value in thta annuity rate, not the actual funds. ie..if the guaranteed annuity rate is 75% higher than the current open market rate, then the alternative would have to grow by 75% just to match the annuity rate difference. Funds with GARs tend to perform slowly because of the guarantees. Some old ones can also be cheaper. Ex Allied Dunbar plans, for example, have a really expensive pension when you are paying into it. However, if you make it paid up the charges cease and there isnt even an annual management charge as their charges were focused against the contribution. Others, like some of Pearls, have very large transfer values. That can put some people off. However, their ongoing charges are very high and when you calculate the differences until retirement, you can nearly always save money, often tens of thousands of pounds, despite the transfer penalty. A case of taking a step back to take two forward.

So, as long as there is good reason and you know the cost differences, then its fine.

Gatser

dunstonh wrote: »

I have my own pension on that contract. I think it is one of the best pensions out there. It has full fund supermarket range of choice. It can be set up to be cheaper than stakeholder if that is what you want or it can be run on a portfolio basis if you prefer.

Indeed, the Skandia pension can be the cheapest personal pension available I believe as you can get an AMC of 0.1% potentially.

This was interesting but from what I see on the Skandia (and other websites)...

• Skandia can charge 4.5% Initial Charge
• An "Investor Charge" is mentioned... ?
• The Fund AMC can be 1.0-1.75%
• as well as possible IFA charges

Am I correct in understanding that (with negotiation) it is possible to achieve:

• c.£500 for IFA to set up
• No initial charges from Skandia
• No Investor charges (whatever they are!)
• Rebated AMC's so net AMC = 0.5%

....or am I being unrealistic?

Interested to hear your experiences of this account...thanks...

dunstonh

Skandia can charge 4.5% Initial Charge

not quite. The IFA can take up to 4.5% but Skandia has no initial charge. So, if the IFA takes 1% then 1% is the total initial charge. if they take nil, then there will be none etc etc

An "Investor Charge" is mentioned... ?

Yes. Think of it as a platform charge. This is the sort of thing you are starting to see on explicitly charged platforms and will be the norm within a few years based on current FSA proposals.

The Fund AMC can be 1.0-1.75%

The fund amc can range from 0.1% to 1.75% (although the 0.1% fund has a higher TER than the 0.2% funds).

as well as possible IFA charges

Not quite, the charges you mention include the IFA remuneration.

Am I correct in understanding that (with negotiation) it is possible to achieve:

• c.£500 for IFA to set up
• No initial charges from Skandia
• No Investor charges (whatever they are!)
• Rebated AMC's so net AMC = 0.5%

....or am I being unrealistic?

If you pay the IFA say £500 for execution only with nil commission then the charges will be no initial charge, all fund based trail commission, where payable, refunded and a member charge of £52.32pa

So, a 1.5% AMC fund would typically have 0.5% fund based trail. That would be rebated.

Gatser

dunstonh wrote: »

If you pay the IFA say £500 for execution only with nil commission then the charges will be no initial charge, all fund based trail commission, where payable, refunded and a member charge of £52.32pa

So, a 1.5% AMC fund would typically have 0.5% fund based trail. That would be rebated.

Thanks Dunstonh!

Now I am with you regarding some preference towards PP's as a Drawdown vehicle as opposed to a SIPP by default.
With such reduced costs and investment choice... I am thinking "why bother with a SIPP?"

Now I just need to find one of those nice low cost/rebate orientated IFA's... I guess I just contact a few and ask?

dunstonh

Now I just need to find one of those nice low cost/rebate orientated IFA's... I guess I just contact a few and ask?

yes. That is the hardest part. You need to specify you want execution only and you only want the IFA to facilitate the setting up. Once set up you can transact online with fund switches etc. Some IFAs will not transact execution only or may have restrictions on what they can transact execution only. Some wont be bothered if they do it or not and will try and charge full basis. So, it may take a few calls around.

Gatser

dunstonh wrote: »

.... You need to specify you want execution only and you only want the IFA to facilitate the setting up.

If I find an IFA to set up the Scheme "execution only"... how do I then get some of the AMC rebated to me?

Do you favour Skandia to Scottish Widows Retirement Account?
I only ask because I believe they pipped Skandia to the Moneywise "Best Pension" Award in 2009. (Maybe not 2010?)

Thanks...