Skandia Pension…

jawa1

Is it normal for pension funds to charge an initial investment charge of 5% ?
That is what Skandia have quoted me plus the AMC.

What really annoys me is the charges 9AMC or TER0 for external funds are not in the fund list so how do I now what the chargers are!
http://www.skandia.co.uk/funds/our_fund_ranges.asp

Read this about high charges at Skandia.
http://money.independent.co.uk/personal_finance/invest_save/story.jsp?story=612415

dunstonh

Yes, this is normal for the PP5 version of the Skandia Personal Pension.

However, you have to look at the overall charging structure of the skandia PPP. They have a 1% rebate (loyalty bonus) paid every 5 years from the end of year 4. So, if you have 19 years or more to go until retirement, you can find that the base charges of the Skandia PPP are lower than a stakeholder pension. I have seen Skandia illustrations show a reduction in yield of 0.7% (compared with 1.1% with the average stakeholder). Also, I belive the charge drops further when the fund is over £75k.

Obviously the reduction in yield will be influenced by the fund selection. If you use the skandia funds, the annual management charges are not that high and it is easy to be lower than stakeholder, over the term. If you start adding in any of the external fund managers, you can add quite a bit to the charges.

Personally, I tend to use Skandia mostly on single premiums where the term is over 19 years. Where regulars have been involved, i take no initial commision on these increases the allocation of each regular payment for the whole term.

So, in summary, the 5% may seem high in isolation but if you add back in the 1% paid back every 5 years it can be good value providing you have long enough to go until retirment.