pension fund transfer

sterling2

I am 57 and self employed. I have a contracted out pension fund with Aegon (£12500.00) and a non-contracted out fund with Phoenix (£19500.00). My IFA has advised the Phoenix fund (no transfer penalties) be transferred to Aegon and both funds be placed in a Flexible Pension Plan using the Scottish Equitable Newton Balanced Managed Fund.
The illustration states that for the £19500 fund a financial adviser charge of 5.5% is payable along with a 1.8% yearly management charge. There are add ins depending on fund size. For the £12500 fund there is just the 1.8% annual charge.
For doing the leg work re the above and also finding out my projected state pension, along with providing annual reviews, my IFA will also charge me a fee of £305.00.
I have no experience in this field at all, am I getting a fair deal here??
Your advice & opinions would be greatly appreciated.

dunstonh

The illustration states that for the £19500 fund a financial adviser charge of 5.5% is payable along with a 1.8% yearly management charge. There are add ins depending on fund size. For the £12500 fund there is just the 1.8% annual charge.

The intial charge is reasonable as it comes to the sort of level you would expect. By paying via the pension rather than cheque you effectively benefit from tax relief on the fee. So, that is good.

For doing the leg work re the above and also finding out my projected state pension, along with providing annual reviews, my IFA will also charge me a fee of £305.00.

Is that the annual cost or a second initial one off cost? If annual, then again, that is the sort of going rate. £500 is more typical.

Your timing is good as another person has just posted another thread on the same product but using a tied sales rep (who they thought was an IFA but wasnt) and they are taking four times more than your IFA is charging.

The Aegon product is up there with the lowest cost products. Also, it does have fund based discounts. So, the 1.8% p.a. will probably be lower than that after discount (although you may be quoting the net position of IFA annual cost, fund cost minus discount)

sterling2

Thank you Dunstonh for your reply. (and for the response to my other pension post).
You are right, he is not an IFA but a representative of Openwork. The company he works for originally arranged the Phoenix pension for me.
The £305.00 fee is a one off. In addition to the % figures given in the original post there is a section in the illustration stating that they will pay the FA £1555.00 immediately and then an annual fund value rated commission of £167.00* during year 2 and £151.00* at age 65 (based on mid growth rate*). There are monthly 'refunds' starting at 0.25% and rising to 0.65% depending on fund size which will reduce the 1.8%.
I think I will let him run with this as we may be too far down the line to avoid the £305.00 fee, but will make enquiries elsewhere regarding the new pension as those commissions were nasty. Again, thank you for your insight.

CannySaver_2

sterling2 wrote: »

Thank you Dunstonh for your reply. (and for the response to my other pension post).
You are right, he is not an IFA but a representative of Openwork. The company he works for originally arranged the Phoenix pension for me.
The £305.00 fee is a one off. In addition to the % figures given in the original post there is a section in the illustration stating that they will pay the FA £1555.00 immediately and then an annual fund value rated commission of £167.00* during year 2 and £151.00* at age 65 (based on mid growth rate*). There are monthly 'refunds' starting at 0.25% and rising to 0.65% depending on fund size which will reduce the 1.8%.
I think I will let him run with this as we may be too far down the line to avoid the £305.00 fee, but will make enquiries elsewhere regarding the new pension as those commissions were nasty. Again, thank you for your insight.

Hi

A few thoughts / comments:

1. Always, always always use an IFA, there could be a cheaper way of you accessing this Newton fund

2. A fee of £1,555 to a tied agent for a pension transfer recommendation into one fund sounds excessive to me, he hasn't even had to look at any other options other than those allowed by Openwork. The charges only come from one place, i.e. your pension and will naturally reduce your level of income in retirement

3. If you "run with this" and the transfer takes place you will pay the full £1,555

4. I'd take a step back and speak to a fee charging IFA, find one at www.unbiased.co.uk and ask them to review your retirement planning and even the recommendation given by the Openworl adviser

5. What do you get for annual reviews? If he is a tied adviser he will struggle to review the wrapper (in your case Aegon) and any adviser who is fund picking should be treated with extreme caution in my view. Therefore what are you getting for these annual reviews? £151 or £167 is an expensive meeting for someone to just read an annual statement to you!

I hope this helps.

The Canny Saver