Pension charges

sooty1234

Hi all:j

I've just put a lump sum into a pension and I think I've been a bit careless with not reading all small print especially the charges part. I think they might be a bit high and I've nothing to compare it to. The charges are 0.9% for the fund 1% for my IFA and a set up fee of £1650. The last bit especially seems high. I guess it's too late now. The pension is with Scottish Life.

I also look at have an investment he has suggested the charges are 1% trail commission, initial commission 2% and an intial charge of 2%. That is with skandia.

Seems a lot of money to me, what does everyone here think. Thanks:)


Edit, I'm not having a go I know I should have taken more time to read it through and try and compare costs.

dunstonh

The charges are 0.9% for the fund 1% for my IFA and a set up fee of £1650. The last bit especially seems high. I guess it's too late now. The pension is with Scottish Life.

Scottish Life has 1% for internal funds before discounts. These can take it down to around 0.5%. The 1% p.a. IFA is higher than the more typical 0.5%. However, it depends on value. The higher the value, the lower the IFA charge will be when using % terms. Typically you are seeing a move to 1% on values under £100k. 0.5% above. £1650 advice charge is not that high. Again, it depends on the work involved and the portfolio being built. You could get lower, you could get more.

I also look at have an investment he has suggested the charges are 1% trail commission, initial commission 2% and an intial charge of 2%. That is with skandia.

Skandia can be cheaper than Scottish Life. Both are at the top of the tables for low cost though.


To give any real indication of whether its expensive or not, we need to know the amounts involved.

sooty1234

dunstonh wrote: »

Scottish Life has 1% for internal funds before discounts. These can take it down to around 0.5%. The 1% p.a. IFA is higher than the more typical 0.5%. However, it depends on value. The higher the value, the lower the IFA charge will be when using % terms. Typically you are seeing a move to 1% on values under £100k. 0.5% above. £1650 advice charge is not that high. Again, it depends on the work involved and the portfolio being built. You could get lower, you could get more.



Skandia can be cheaper than Scottish Life. Both are at the top of the tables for low cost though.


To give any real indication of whether its expensive or not, we need to know the amounts involved.

Thanks dunstonh the pension was 25k and 400 a month and the investment was 10k. I put a bit more into the pension as it was 1% but when it went above 25k it went down to 0.9%. It's one of sl's adventrous life tracker pensions.

I've already got an isa with him of 15 over the last couple of years. With that and next years isa it won't be that far off that figure, I'll see if i can chip it down to 0.5 next year:D

Thank you again.

dunstonh

It's one of sl's adventrous life tracker pensions.

I have used it. Not so much nowadays but did a few years back when it was top of the pile. It's still at the right end but better really for lazy investor/advisers or transactional clients who dont want ongoing servicing (which is where I have used it).

So, its not bad. Your values are such that servicing advice is going to be more expensive in percentage terms than someone with a higher value. Your investments in that pension are such that they are self balancing and the IFA has no work to do on them. So, you should ask them to knock the price down as you need to ask what they are doing for the 1% a year. It certainly isnt fund research. If they were doing increments at no cost, then that would be fair enough. One of the increasingly common models is that if you are on a servicing contract with the IFA (and therefore paying x% or £x p.a. to the IFA) they will allow increments with no initial charge/cost. The servicing remuneration covers it.

sooty1234

Sorry for the delay in replying, been away for a bit.
I will ask him next time we meet. Overall he is pretty good and isn't lazy he contacts me quite often and is willling to drive over to have meetings at the such. yeah he did explain that at the lower end it was more expensive. Just thought I'd check.

One last thing
' If they were doing increments at no cost, then that would be fair enough.'

Could you explain that bit? Thanks.

atush

the lazy investor' mentionned is you, not your IFA i think ;-)

dunstonh

Overall he is pretty good and isn't lazy he contacts me quite often and is willling to drive over to have meetings at the such

That is fair enough. If you are getting servicing of some sort then you are getting what you pay for.

One last thing
' If they were doing increments at no cost, then that would be fair enough.'

Could you explain that bit? Thanks.

An increasingly common model for servicing IFAs (rather than transactional IFAs) is that where you paying for servicing, you will not be charged for advice related to topping up the investment as that falls under the servicing agreement. So, if you increased your payment from £400 to £500, a servicing IFA may not charge you for that and put it through with no initial charge/commission.

sooty1234

atush wrote: »

the lazy investor' mentionned is you, not your IFA i think ;-)

Hmm not really never done anything like this before, so same as anything new, there's always things you forget/wish you'd known etc.

sooty1234

dunstonh wrote: »

That is fair enough. If you are getting servicing of some sort then you are getting what you pay for.



An increasingly common model for servicing IFAs (rather than transactional IFAs) is that where you paying for servicing, you will not be charged for advice related to topping up the investment as that falls under the servicing agreement. So, if you increased your payment from £400 to £500, a servicing IFA may not charge you for that and put it through with no initial charge/commission.

Thanks again dunstonh, all seems ok now my mind is more at ease.