Is 5% commission the norm for IFA moving funds?

watersign76

Hi there

I know I could in theory manage my own pensions...but it isn't my area of expertise etc.

I currently have 2 previous pensions from my last employed jobs. I now freelance, so was looking for a new pension that I could easily transfer variable amounts into as my income isn't steady. As it turns out depositing different amounts isn't that easy these days with financial regs being what they are.

So I have seen an IFA who has reviewed my pensions. His recommendation is to move the pensions into a new one which will be acessible via an online portal. This fund will then be actively reviewed once a year to check investments. The charge for that is 0.5%.

The commission paid on moving the funds is 5%, which is £0000s as I have an ok pension pot.

Is 5% an "average" charge? I do appreciate that they have to make money for their time etc.

TIA

Lokolo

You say £0000s but don't tell us how much the pension pot is or the fee. Difficult to guage. But I think 5% is too much, Dunston will come along at some point and tell us the average, but I am pretty sure its less than 5% and closer to 3%.

Also being in London would likely mean higher costs. So if its a small pot (£20k or so) then its unlikely to be any lower.

watersign76

Ok thanks.

Pot is c£70K, so 5% of that. I don't think it is on a sliding scale.

dunstonh

Percentages always have to be put in context of an amount as it cold be cheap or expensive. 5% of £70k is on the higher side. Although city locations and/or high net worth firms can often price themselves to be better value on larger amounts and not so good on smaller. You are in London so you would expect to pay more than someone in a more rural location.

its not excessive at £3500 but you could probably get that down to around £2000 with a bit of shopping around and going out of area assuming that they are both group personal pensions. If either is an occupational pension then you would expect the price to go up due to extra work and risk.

The 0.5% p.a. figure p.a. is the norm (indeed for 70k, its actually quite low).

BLB53

I know I could in theory manage my own pensions...but it isn't my area of expertise etc.

Its really not that difficult. The best option would be to open a sipp with the likes of Sippdeal or Hargreaves Lansdown, then transfer your existing pensions over and invest the whole lot in a few low cost trackers or possibly one of the Vanguard Lifestyle funds.

You can then add contributions to your sipp as and when appropriate.

Save you £000s in the long run.

Check out some of the relevant articles on www.monevator.com

Aegis

watersign76 wrote: »

Hi there

I know I could in theory manage my own pensions...but it isn't my area of expertise etc.

I currently have 2 previous pensions from my last employed jobs. I now freelance, so was looking for a new pension that I could easily transfer variable amounts into as my income isn't steady. As it turns out depositing different amounts isn't that easy these days with financial regs being what they are.

So I have seen an IFA who has reviewed my pensions. His recommendation is to move the pensions into a new one which will be acessible via an online portal. This fund will then be actively reviewed once a year to check investments. The charge for that is 0.5%.

The commission paid on moving the funds is 5%, which is £0000s as I have an ok pension pot.

Is 5% an "average" charge? I do appreciate that they have to make money for their time etc.

TIA

The answer is simply "no" in my view. 5% is far too high for a pension transfer case. I'd rather decline to do a case than propose a fee of 5%