Drawdown charges

zagfles

bmm78 wrote: »

Generally there has been very little comeback on non-advised sales providing that enough information was provided to make an informed decision, and it was clear to the customer that no advice was given. There have been exceptions, but as a rule of thumb not giving advice meant limited protection and recourse if things went wrong.

There is however huge pressure on the FCA to protect consumers, and to not simply give non-advised sales the Pontius Pilate treatment.

The so-called 2nd Line of Defence is probably just the beginning, and in due course there is likely to be a much greater onus on non-advised and execution-only brokers to prove they are acting in the best interests of their customers.

So what are you specifically thinking of? Giving warnings etc, or the list of questions the FCA have come up with? That should be quite easy to do. Refusing particular requests, eg drawing down the full pot in one go? That would completely go against the decision made by the govt that people should have "freedom" to do what they want with their pension pot.

A non-advised/execution only broker won't know the client's personal or financial situation (other than what they have invested through them), so how are they supposed to make a judgement as to what's in the "best interest" of the customer? OK there might be a few obvious exceptions like transfers from DB schemes, which are usually a bad idea, so require advice.

But the pensions minister Steve Webb is "quite relaxed" about people blowing their pension pot on a Lambourgini. So in that context, who judges what's in the customer's best interest?

I imagine there'll be political repurcussions if the FCA try to undermine the govt's policy of pension "freedom".

bmm78

zagfles wrote: »

So what are you specifically thinking of? Giving warnings etc, or the list of questions the FCA have come up with? That should be quite easy to do. Refusing particular requests, eg drawing down the full pot in one go? That would completely go against the decision made by the govt that people should have "freedom" to do what they want with their pension pot.

A non-advised/execution only broker won't know the client's personal or financial situation (other than what they have invested through them), so how are they supposed to make a judgement as to what's in the "best interest" of the customer? OK there might be a few obvious exceptions like transfers from DB schemes, which are usually a bad idea, so require advice.

Valid questions that hopefully the FCA can shed some light on. Sometime before April 6th would be super

zagfles wrote: »

But the pensions minister Steve Webb is "quite relaxed" about people blowing their pension pot on a Lambourgini. So in that context, who judges what's in the customer's best interest?

I imagine there'll be political repurcussions if the FCA try to undermine the govt's policy of pension "freedom".

It is the role of the politically independent FCA to protect consumers. It isn't their role to endorse legislative reforms, particularly when a) Those reforms are potentially at odds with their statutory objectives and b) The reforms completely undermined their own (slow) thematic work on the annuity market, and made them look weak and ineffective.

If the pension reforms are a disaster and people are worse off as a result, the FCA may not survive the fall out. That is a far greater concern to them than annoying a weak coalition government directly prior to an election.

Things have moved on a lot since Webb made that statement. Many of the discussions at Westminster seem to be focused on who gets the blame if and when things go wrong. Regardless of whether they buy into "personal freedom", they certainly aren't buying into "personal responsibility".

zagfles

bmm78 wrote: »

It is the role of the politically independent FCA to protect consumers. It isn't their role to endorse legislative reforms, particularly when a) Those reforms are potentially at odds with their statutory objectives and b) The reforms completely undermined their own (slow) thematic work on the annuity market, and made them look weak and ineffective.

If the pension reforms are a disaster and people are worse off as a result, the FCA may not survive the fall out. That is a far greater concern to them than annoying a weak coalition government directly prior to an election.

It's not annoying the govt thatt's the problem. It's annoying the public who were promised pensions "freedom".

Things have moved on a lot since Webb made that statement. Many of the discussions at Westminster seem to be focused on who gets the blame if and when things go wrong. Regardless of whether they buy into "personal freedom", they certainly aren't buying into "personal responsibility".

Perhaps we'll see manifesto pledges to reverse the "freedoms" then? The political parties need to decide whether they support the principles of pensions freedom in the 2014 budget. If they do, they need to ensure the regulator respects them and stops trying cover their backside. If they don't, they need to be honest about it in their manifestos.

SnowMan

ATS are in the process of announcing their revised drawdown charges. Looks like the set up charge for drawdown is being removed but their annual charge remains.

http://www.moneymarketing.co.uk/news-and-analysis/pensions/alliance-trust-savings-scraps-drawdown-set-up-fees/2018994.article

Note I think the £276 annual flat fee mentioned in that article incorporates the platform fee for the SIPP (as their SIPP flat fee is £186pa and their existing annual charge for drawdown is £90pa and the sum of these is £276).

They are making separate charges for UFPLS (uncrystallised funds pension lump sums) although those charges interact with the £90pa element of the drawdown charges it seems.

So for fund only drawdown portfolios (i.e no shares or ETFs), HL are cheaper than ATS for portfolios below £61,333 (=276/0.0045). Because ATS charge for buying and selling funds the break even where ATS becomes cheaper is going to be at some drawdown fund portfolio amount above £61,333. The exact break even will depend on how much buying and selling is going on and how many UFPLSs are taken. That assumes the pot isn't emptied in a year incurring HLs £354 charge.