Stakeholder pension charge cap removal - options?

Lady_Medusa

I have very little in my pension and have been unable to pay anything in for years, so it just sits there. I have been told that the charges I pay will now be uncapped, and it seems very likely that this will wipe out what little I have in there. Any advice would be appreciated. (I still can't afford to pay into it, but can I move it or anything?) Many thanks for any help.

jem16

Lady_Medusa wrote: »

it seems very likely that this will wipe out what little I have in there.

That would be very unlikely to happen.

Any advice would be appreciated. (I still can't afford to pay into it, but can I move it or anything?) Many thanks for any help.

You can move it to another pension if you wish.

What is the fund value and what charges are you going to be paying?

dunstonh

I have been told that the charges I pay will now be uncapped

There has been change to the charges regime that governs stakeholder pensions. So, it is not possible for charges to be uncapped. They will always have the stakeholder cap.

I am going to guess that your existing provider has a reduced charge or a cap when it got to a certain amount. i..e 0.9% or £1000 whichever is lower. They are now removing that monetary cap but still have to comply with the stakeholder cap.

it seems very likely that this will wipe out what little I have in there.

It is impossible for charges to wipe out a stakeholder pension.

Lady_Medusa

Thank you both for responding.
Jem16, I have roughly £8,500 over 2 personal pension schemes with Legal & General (actually a lot more than I thought). The letter I have rec'd says charges have been capped since 2001 when the maximum annual charge was 1% of the fund value per year "to ensure the charges were no higher than if you had a stakeholder pension ....... In 2010 you would have paid £38.90 more without the cap".
Dunstonh, as you see I misread the letter and do not in fact have a stakeholder pension, but personal pensions. I guess this makes a difference, as the letter states "charges will continue to be taken even if you're not making contributions ..... This may reduce your plan's value and over time it could reduce the value to zero".

dunstonh

This may reduce your plan's value and over time it could reduce the value to zero".

That is one of those automatic warnings that can appear even when its not possible. It really depends on the charging structure.

What are the charges? I thought L&G were only increasing the annual management charge on some of their funds. In which case ending up at zero is impossible.

Lady_Medusa

I can't find any reference anywhere to what the charges will be when they change. However, everything I am reading seems to suggest that I may be better off changing to a different provider. I guess I will wait until I know what the new fees will be and then shop around for my best option.
Many thanks for the advice - you have helped me clarify things in my mind.