High pension charges?

Lucky_lass

This is my very post so please go gentle with me!

I'm looking for some advice about my personal pension charges.

In 1990 I took out a personal pension with Save and Prosper (later transferred to Countrywide Assurance) following advice from a financial advisor.

I effectively paid around £50 per month (plus tax relief) into the pension until end of 1993. The fund also contained protected rights and NI for 1990-1993 and added a few years NI protected rights as part of a government scheme.

Basically the scheme has been left alone since then (apart from a complaint when they reinstated me into a final salary scheme).

I recently contacted another Financial Advisor as I wanted to pay into a personal pension and was advised to move my personal pension with Countrywide. He informed me that the fund is now worth around £20k. I lost around £1k on transfer and have been paying 6.47% management charge to Countrywide (unsure of Save and Prosper charges) on half that fund. I was unaware of these charges and they seem excessive on £50pm when I keep reading about 1% charges!

I'm unaware whether it has 'performed well' or not.

Do I have a case to complain about this pension or are these charges normal?

Your_Hero

You say that you 'recently' saw another FA, how recent is this? i.e. pre-2013 or after?

What do your personal illustrations say regarding charges? It's hard to believe the management charges are 6.47% if this was a recent plan taken out. Who is the pension provider?

Where did you get this figure from? Did you manually calculate the charges and included the initial advice fees? Even then the 6.47% figure seems extremely high so there must be a mistake somewhere.

Please can you elaborate some more.

Regarding your potential complaint, what exactly are you complaining about?

Lucky_lass

Hi Your Hero

I saw the 2nd Financial Advisor in the last month or so. He advised me that 6.47% is the management charge that Countrywide have been charging me. I took the Save and Prosper pension out in 1990 and it transferred to Countrywide around 2011 (?).

I have looked at my latest statement from Countrywide and it doesn't state any pension admin charges, hence why I was shocked. It is the Managed Pension Fund with Countrywide and it was the Managed Pension Fund with Save and Prosper.

Your_Hero

Thanks for clarifying.

It seemed to me like you were saying that you were recently advised to transfer a plan from countrywide and when you spoke to the FA just now you realised it was charging 6.47% and you paid £1,000 for transfer fees etc etc.

That makes more sense now.

The charges are extortionately high and it's not uncommon as I've come across this a few times with legacy plans. The statements won't say anything about management charges because the charges are normally found in the fund fact sheets or KIIDs.

Unfortunately, I highly doubt you have a case for complaint because that was probably their regular charge for their fund back in 1990s and you will probably find details of the charges in the original documentations.

Better to review your current plan and look to transfer to a modern contract if it is right for you. The FA will be able to advise you. Make sure the adviser is independent, and if he isn't then you can find one from unbiased.co.uk

dunstonh

In 1990 I took out a personal pension with Save and Prosper (later transferred to Countrywide Assurance) following advice from a financial advisor.

I effectively paid around £50 per month (plus tax relief) into the pension until end of 1993

That is the problem. A 1990 plan would have had capital/accumulation units in the first few years to cover setting up charges. You needed to pay beyond that initial period to benefit from lower charges. You didnt.

The initial units would have very high annual charges as they are using those to pay the initial set up costs.

Do I have a case to complain about this pension or are these charges normal?

You would have been given an illustration at point of sale (and followed up with cancellation rights). The detail would have been on there (in 1990 requirements - which are lower than today). It was right for the era but initial units dont exist for modern plans and haven't for about the last 15 years.

Lucky_lass

So are you saying that the admin charge would have decreased from 6.47% if I had continued paying into the scheme?

Success - I've been looking in the contract documents for ages, but finally found details of charges in the cancellation documents you mentioned:

It says
"Each year until the planned pension age you started at the outset, or 65th birthday or earlier, there will be deducted from your account by way of annual charge 5.0% of the balance of units allocated to it in respect of:
i) the first two year's regular contribution, and
ii) the first two year's of any increase in regular contributions over and above the highest total of regular contributions made in any previous account year.
The contracted-out rebates and, if applicable, the 2% special incentive payments made by the DSS are treated as lump sum contributions and therefore do not incur the above account charges. "
It says the monthly contribution was £66.67 (which must be the £50 plus tax relief).

So, am I right that Save and Prosper were charging me 5% or was it more? Yet Countrywide charged 6.47% plus a transfer fee.