20% pension product charge (of input for year 1) by IFA - sound right?

Etta22

I am setting up a personal pension. I went to an IFA and was told that the cost will be 20% of my first year's contribution (approx £1000 of the £5000 I would be putting in). The annual charge of the product will then be 1% until it reaches a certain size, upon which this decreases (Scottish life). It seems from our conversation that I am only eligible for a personal pension (my company is too small for salary sacrifice i.e I am the only employee), all I want is to set up a DD to a pension pot and possibly at a future date get my work to put in as well (but this can jut as easily be achieved by a pay rise).

This seems like alot to me for such a simple product/1 hr chat. Is anyone out there an IFA or have experience and can advise if this is sensible rate?

Frank12345_2

Hello Etta,

I'm not to sure about how it works, i did once have a pleasant experience with a company called Hemscott Associates (they have a website with a request a call form), they are unregulated but deal with a bunch of IFA companies so they should know if the rate is correct.

Hemscotts advice is completely free as well, and there is no push, and if you wanted I'm sure they could find you a good plan as they did with me. Although don't quote me on that!

dunstonh

Not sure if this is a spam thread (new poster asking about new business followed up a couple of hours with a spam post by a company not regulated to discuss pensions and telling a bunch of BS).....

I went to an IFA and was told that the cost will be 20% of my first year's contribution (approx £1000 of the £5000 I would be putting in).

That seems fair.

The annual charge of the product will then be 1% until it reaches a certain size, upon which this decreases (Scottish life).

Scot life have a base 1% charge but use fund based discounts which sees it quickly drop to 0.4%. Good provider.

This seems like alot to me for such a simple product/1 hr chat. Is anyone out there an IFA or have experience and can advise if this is sensible rate?

£1000 seems reasonable. It wont be one hour. There is more to it than that. I wish it was one hour though. You do get tax relief on that fee. So, the net cost is actually £800.

Triumph13

Or, if you feel you know enough to choose your own funds, Cavendish online would set you one up for a flat £35 with eg Aviva who would then charge 0.7% pa dropping to 0.45% once over £20k.

One thing I wouldn't do is touch with a bargepole an unregulated company pushed by a new poster.

Etta22

Thanks everyone - I wasn't spamming. Advice appreciated!

gadgetmind

Etta22 wrote: »

This seems like alot to me for such a simple product/1 hr chat.

Yes, it is a lot of money but I'm sure IFAs can justify the amount if not the percentage.

If you're happy going ahead on your own (and Cavendish is how I started pensions for my wife and daughter with Aviva) then it's fairly easy to pick a fund, or even ask here for suggestions as to which might suit your needs.

Where IFAs are valuable is for more complex situations (tax issues, IHT issues, complicated DB pensions, etc.) so don't ignore them if/when your situation changes.