IFA charges

chiefdave

My employer uses an IFA for our company pension scheme, essentially we get a choice of products. I've been in this scheme for over 6 years. In Feb 2009 I managed to track down an old pension I had from a previous employer.

I spoke to the IFA and it was transferred to LV Sentinel which is separate to my current company pension. I recall at the time I asked if it could all be rolled into 1 pension (essentially transferring the old pension into my current pension) but this wasn't possible for reasons I'm not too clear on.

Since then the person dealing with my personal pension left the IFA my company uses and the pension got transferred over with him.

This has left me with 2 pensions with 2 IFAs.

Today I have received a letter regarding my personal pension suggesting that I transfer to an Aviva wrap. The thing I have noticed which I never realised before, my fault I know, is how much I'm being charged. The current rate is listed as 1.7% and the proposed rate for Aviva is 1.5% Do I need to be paying this. There is no new money going into the pension and there's not a great deal in there to start off with. Could I not just keep it in a scheme with no one managing it?

chiefdave

BTW the proposed 1.5% charge is made up of 0.2 platform charge, 0.55 fund charge and 0.75 servicing charge. Doesn't mean much to me but might to others!

jamesd

0.2% platform charge is a bit lower than the more usual 0.3%. 0.55% fund charge is also quite low, about 0.75% is normal for managed funds. 0.75% is higher than the normal 0.5% assuming it's a charge to be paid to the IFA but it does vary a bit depending on the value of the pension pot. If you have perhaps £20,000 or so it'd be reasonable enough if you need the help selecting investments. If it's £100,000 it'd be better to pay a fee for any advice, even annually.

chiefdave

thanks James, I think there's only about £2000 in there which is what made me think it may not be worth having it managed as I was thinking that wasn't enough to make it worthwhile keep moving it around.

I'm not adding any more payments in as they now go to my company pension.

dunstonh

The current rate is listed as 1.7% and the proposed rate for Aviva is 1.5% Do I need to be paying this.

The IFA is not getting that figure. They may well be getting a proportion of it but the three elements are typically the adviser, the provider and the fund house.

Could I not just keep it in a scheme with no one managing it?

You could. However, it would still incur charges and may or may not be suitable.

james has covered the charges breakdown and expectations.

jamesd

For £2,000 that's an excellent deal.

It's worth comparing charges and investment range to the work pension to see how that compares. While the Aviva one currently has 0.7% going to the IFA that could probably be lower if you had more money in there and it might end up low enough to beat the work one. The basic Aviva costs before the IFA charge are quite low so there's at least some potential for the IFA to beat the work offering.