Changes to Trail Commission

thenudeone

I consider myself financially literate but I've never got a grip of the implications of charges and commissions on pensions.

IIRC, TD Waterhouse will be rebating all trail commission into SIPPs from 1/1/13, and will be introducing an annual charge of 0.35% for those funds which pay a trail commission of 0.5% or more.

H-L will be offering a "loyalty bonus" on certain funds from 1/1/13, presumably from the trail commission they receive.

I currently have funds in a L&G Group Personal Pension 2000. My investments are at a level where the annual charges on any extra investments are 0.3% pa.

What is likely to happen (if anything) to the L&G pension when the changes to trail commission are implemented from 1/1/13? (Some of the investments are external (i.e. non L&G) funds, if that makes a difference)

Assuming that I could invest in the same funds, would it be better to place any new contributions into TDW or HL rather than L&G, or does this depend on each fund and the trail commission payable?

Is there a guide anywhere which explains the implications of the forthcoming changes to trail commissions on group personal pensions and low-cost SIPPs such as H-L?

Thanks

dunstonh

What is likely to happen (if anything) to the L&G pension when the changes to trail commission are implemented from 1/1/13? (Some of the investments are external (i.e. non L&G) funds, if that makes a difference)

Nothing. It is a legacy product. You can ask L&G to stop paying it to the agent but they wont refund it to you. it will go to L&G.

Neither HL or TDW will be compliant with platform review. Both of them are short term interim pricing.

Assuming that I could invest in the same funds, would it be better to place any new contributions into TDW or HL rather than L&G, or does this depend on each fund and the trail commission payable?

If you are comparing L&G internal funds with the UT version then you tend to find the pension fund version is cheaper than the TER on the UT/OEIC version.

Is there a guide anywhere which explains the implications of the forthcoming changes to trail commissions on group personal pensions and low-cost SIPPs such as H-L?

Non-advice platforms can still retail trail paying funds. That is until the fund houses close their non-trail version which may not happen until after platform review (which is running around 1 year late - it was mean to be with RDR but is now looking at 2014).

mania112

Speaking of which, i'm not sure yet how HL are going to charge for their SIPP from January.

Now, there's no explicit fee for owning their Vantage SIPP, they receive their slice from the fund - which I understand isn't possible next year onwards.

I wonder if their clients have been informed of changes?

DevCoder

They can introduce an explicit fee, they can unbundle the fee in writing so it's transparent, they can claw back the revenues in other fees (safe custody, cash advisory fees).

RDR has far too many get-outs imo. That and the initial target is res non-doms for Jan 2013.

grey_gym_sock

AIUI, because HL are not offering advice (to most of their customers - they have a separate advice service), they are not prevented by RDR from keeping trail commission, nor from keeping platform commission. the platform review might (should) prevent this, from the year after next.

i think HL's SIPP will have the same rebates they already give for ISAs and unwrapped. this is rarely more than 0.25%. so they still might be keeping 0.5% of total commissions.

they already have explicit fees for a few funds (which pay little or no commission), so presumably they'll extend those fees if/when the commissions go.

dunstonh

Speaking of which, i'm not sure yet how HL are going to charge for their SIPP from January.

They will probably still retail the commission paying funds. They are only closed for advised transactions. Not non-advised.

xylophone

http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

Since this mentions the new SIPP rebate from 1 Jan one assumes the fee information given here also applies from that date?