Excessive pension transfer fees

stevep737

My wife has a pension plan from what was Allied Dunbar started in the 1990s but has recently stopped making contributions in favour of a newer, more flexible pension. When she enquired about transferring the pension to her new pension, they said there would be a £12,000 fee on a pension transfer fund of around £210,000.

This seems excessive, anti-competitive, and preventative in terms of allowing her to invest for her retirement. The old pension is not very flexible and charges high % fees annually when compared to a newer pension scheme.

Is this allowed and are there steps to overcome/avoid/challenge?

dunstonh

This seems excessive, anti-competitive, and preventative in terms of allowing her to invest for her retirement.

It isnt. She is effectively wanting to break the contract she agreed. It does not prevent her investing for her retirement.

The old pension is not very flexible and charges high % fees annually when compared to a newer pension scheme.

Are you sure? Whenever i come across old AD pensions, I find they are usually damned expensive if you remain contributing to them but once you make them paid up, the charges drop significantly. Some even have zero annual management charges when paid up. Frequently, I find the best advice is to leave it where it is but redirect future contributions. The transfer penalty also does not help.

Is this allowed

Yes.

and are there steps to overcome/avoid/challenge?

None. The charge is based on percentages and agreed in the contract at the outset. AD was never cheap for new business. Indeed, their new business contracts were typically up there with the worst on cost. However, when you buy the product, you agree to the terms.

I suspect you will find it is not actually a transfer charge but a reflection of the capital and accumulation units spread. An obsolete way of dealing with cost of sale back in those days. However, that is the way it is.

xylophone

http://www.independent.co.uk/money/pensions/excessive-exit-fees--hit-pension-transfers-7982673.html

http://www.talktalk.co.uk/money/pensions/guide2.html
"The cost of a transfer is usually about 5 per cent of the total pension pot, paid out in commission to the adviser and charges by the pension provider."

Is this the outfit nicknamed "Crowbar"?:eek: