Are these charges OK? Can I do better?

dunstonh

If (most) pension funds no longer have bid/offer spreads, if mine didn't why would they list 5% spread on the list of fees and charges?

Because it may be applicable to your contract.

How do you arrive at 1.25% total annual charges if the list of fees and charges is as they sent me?
Financial Advisor - 0.5%
Annual management charge - 0.75%
Fund Based Commission - trail commission to Financial Advisor 0.25-0.5%
Fund Manager AMC dependant on funds chosen 1.35-1.75%

....edit below

I don't use any platform actively but the service that provided the list of fees and charges is Skandia.

Is that Skandia Life or Skandia investment solutions (ex Selestia)?

edit.. i recognise that contract. It looks like the old Skandia Life PP5 contract (if the policy starts with PP5 then it would be). One of the best in its day but obsolete now and no longer available for new business. The contract had an initial charge (not bid/offer spread) and an annual charge of 0.75%. The fund charge and adviser charge were on top. The fund charge could be nil (e.g. the skandia cautious managed fund - an internal fund) but its selection of external funds would have an increment to them depending on the funds chosen. Every 5 years it would rebate 1% of the fund value. It could be quite cost effective on single premiums/transfers but not great on cost for regulars. However, Skandia were the first to offer external funds and whilst it looks high on charges today, it was good for its time.

I should have spotted it earlier from the OM you put in front of two of the funds. Skandia is currently being rebranded under the parent company brand Old Mutual.

Chances are that pension needs an update. I moved many of my PP5 contracts internally to the Skandia platform

sandsy

I reviewed a pension product last week with a very similar charging structure. It also had a 5% bid-offer spread, and some of the funds incurred extra charges on top of the standard AMC.

I was able to replicate the illustration in its entirety which gave me a level of certainty that all of those charges were actually being levied so your contract is not so unusual.

Lokolo

dunstonh wrote: »

Chances are that pension needs an update. I moved many of my PP5 contracts internally to the Skandia platform

Agreed, but surely the IFA should be doing this as part of his servicing contract?

mania112

You may find that those (of you) who have a 5% bid/offer spread will also now have a 105% allocation rate.

It seems like a problem with providers' systems so they can't remove the charges, but they counteract it by putting more money into the investment.

0.75% is within an acceptable norm, i'd say, but to answer your question, yes you can do better.

But not knowing the cost of the funds (if applicable) makes it tricky to judge.

sandsy

mania112 wrote: »

You may find that those (of you) who have a 5% bid/offer spread will also now have a 105% allocation rate.

It seems like a problem with providers' systems so they can't remove the charges, but they counteract it by putting more money into the investment.

0.75% is within an acceptable norm, i'd say, but to answer your question, yes you can do better.

But not knowing the cost of the funds (if applicable) makes it tricky to judge.

Over 100% allocation rates are prohibited for advised business post-RDR.

mania112

^ yeah, I know. You also won't find bid/offer spreads...

Doesn't mean that they aren't there for existing business.

dunstonh

Over 100% allocation rates are prohibited for advised business post-RDR.

but ok for pre-rdr arranged business.

I seem to recall the PP5 has a discount applied when fund is above a certain amount as well.