Fee for Pension consolidation

Pacamack

I have £85,000 spread across 3 occupational pension schemes (all defined contribution) and 2 personal pensions. My IFA is quoting 5% of the fund value to consolidate these into a single pension scheme, pick an optimal spread of funds and review every 6 months, does this sound reasonable?

opinions4u

Sounds high to me.

What are the benefits of consolidating?

Have you asked about a flat fee option?

Pacamack

The response I got on the flat fee is that it would be the same, i.e. £4250.

The benefits were sold as being a better choice of funds and a reduction in fees. Projections using the same assumed growth rates showed an increase in value of the consolidated fund over the cummulative value of the individual funds.

dunstonh

Sounds high for defined contribution. You can easily get that down to around £2000. Possibly lower. Ideally use a fee paying firm. Not commission paying (as that is what you have been quoted so far).

The response I got on the flat fee is that it would be the same, i.e. £4250.

Walk away. Firms should not price their fee to match commission (sometimes inevitable with small amounts but not £85k).

Fees are like any other service business. If you ask a builder to quote a job, then one may say £10,000, another £20,000 and another £30,000. Its not different.

Pacamack

The fee response did make me feel a little uneasy.

westy22

Projections using the same assumed growth rates showed an increase in value of the consolidated fund over the cummulative value of the individual funds.

So how long would it take for the improved annual increase to fully offset the £4,250 fee?

dunstonh

westy22 wrote: »

So how long would it take for the improved annual increase to fully offset the £4,250 fee?

It is an FSA requirement for the cost of implementation to be included in the comparison. So, the figures should have factored it in.

jamesd

Why not do most of the work yourself? A place like Hargreaves Lansdown has good administration and would probably be entirely happy to take transfers in from all five pensions. All it takes is a few forms being completed and HL will make it very easy for you. Then you could work with an IFA to move from HL to a cheaper place for your total pension pot value.

savingforoz

I agree with jamesd - do some research, read these forum posts, educate yourself about investments and pensions and do it yourself. It's not difficult but you need to get clued up before attempting it. You'll save yourself a load of money and in the process gain invaluable knowledge that will serve you well for the future.

gadgetmind

Pacamack wrote: »

My IFA is quoting 5% of the fund value

Of course he is, but that's no reason to pay it. Way OTT.

consolidate these into a single pension scheme

This is trivially easy.

pick an optimal spread of funds

This is totally impossible. No, really, optimal doesn't exist. Sensible does, and "in line with your attitude to risk", and many more along the same lines, but not optimal.

review every 6 months

Too often IMO.

does this sound reasonable?

No.

Others have suggested DIY but only do this if you're prepared to buy a few books and read them. These will tell you how to construct a sane portfolio, or perhaps scare you off the idea, but at least after giving you an insight into the basics.

gadgetmind

jamesd wrote: »

Then you could work with an IFA to move from HL to a cheaper place for your total pension pot value.

But the IFA would still be wanting 5% up front and 0.5% trail. Even HL want the trail, yet do shag all for it!

If you DIY, DIY right, and use a platform the refunds trail.

If you use an IFA, use an IFA right, and get set up with a platform than will be last well post-RDR in its current form, and ideally get low-cost on-platform rebalancing (or DIY this simple job) rather than parting with trail.

Dear OP: We're all going to bicker for a while, and use technical terms. Sorry about that. Watch carefully, and learn, but don't panic. The main reason not to panic is that you have time on your side: things are changing, and mostly in your favour, but right now is a bit of a difficult time to be doing anything.