does ifa really take 50% fee auto enrolement

stu12345_2

my partner pays 15% into group workplace pension, her employer does 1%, there is a £108 set up fee from ifa taken montly,and a 1.13% charge from provider royal london, she has been a member for 3 months.
we looked at her balance and £73 is deducted every month from the approx 150 she pays in on a £11000 salary. the plan states that ifa takes 50% of any contribution yearly dived into 12 payments, help.
that means even with 1 % employer and 20% tax relief and say 6% a year growth she is lossing, is that right, eg say 2000 a year contribution less 50% plus 1.3% plus 6% growth.
she is losing severly, she be better with a bank. royal london say ifa fees will continue till 2016, is she conned on this pension.

will her balance overtake her contributions even with 50% dedeuction over time and if so, when, should she cut and run and accept shes paid all these charges and set up fees, or reduce contribution to 1% till 2016 and loose growth,
and use her wages to pay avcs into my workplace dc fund that doesnt have these fees, i pay 15% via a roundabout way as to build one large pension in my name, we are married.

stu12345_2

her total paid in thro tax relief, employers contribution and har contribution is say£550, but balance is only £250 at mo, help.

im with zurich and balace is say 850, contributions 800, i can add avcs direct debit, can i add as much as 150 a month extra, partners money, just a thought or should she continue with her curent royal london fund
she also has 1200 in an old with profits aviva fund 83 quid with profits transfer value 1283, no ifa fee,should she put that into royal london or will they reduce it to 692 as seen as a adhoc contribution.

but this ifa 50% charge must be poor value, i mean even high interest credit cards are 30% a month, but that cost every month must be poor, how on earth can this be possible

she was under impression that she pays 15%, employer 1%, tax relief 20%, minus royal london 1.3%, was a good deal, but this 50% charge on her contributions makes it worse than using a bank deposit account, is that really true

stu12345_2

in summary-- 100% contribution plus 6% growth plus 1% employer contribution plus 20% tax relief =127% less 50% ifa, less 1.3% royal london fee = -26%
surely putting 100 wages into bank would equal 100 plus 1% ==101% advice plz

Mistermeaner

I'm so confused! Think you may need to put all the paperwork in front of someone knowledgeable as with all due respect I don't think you'll get the correct advice with the info you have presented.

stu12345_2

basically you see the tv ads, you pay in so does employer , gain!!!!!
but they dont say ifa takes 50% of your monthly contributions, this is daylight robbery.

overall its this clause that says any increase in your contributions will result in a 50% charge taken monthly from her plan.
this is destroying her fund, when will the growth override this, does she carry on till april 2016 when royal london state they will allow ifas to continue at mo to receive commission fees, and then sadly make their money some other devious way in the plan.

Mistermeaner

I doubt they do as that would be robbery, I suspect there is some confusion which is why I think you need to get all the paperwork together in front of someone knowledgeable

stu12345_2

looked at her online account it shows regular faf, financial advisor fees taken monthly equals 50% of the 150 quid she contributes.
her plan states 108 set up fee taken 9 pounds monthly and a 50% charge of any increase in her contribution taken yearly in 12 monthly payments
gov to cap fees at 0.75 from provider, but royal london to stop set up fees 2015 payable for employees and 2016 stop ifa monthly commission fees from employees, but ifa can recover costs in another form they fear they said

dunstonh

but they dont say ifa takes 50% of your monthly contributions, this is daylight robbery.

it is also false and not possible. The maximum period an adviser can take the advice charge over is 12 months. No longer.

The choice is to pay the advice fee upfront or over a defined period no longer than 12 months. No rip off. No daylight robbery. Just paying someone to do their job.

in summary-- 100% contribution plus 6% growth plus 1% employer contribution plus 20% tax relief =127% less 50% ifa, less 1.3% royal london fee = -26%
surely putting 100 wages into bank would equal 100 plus 1% ==101% advice plz

That is not how it works. You are mixing up initial charges with annual charges.

and use her wages to pay avcs into my workplace dc fund that doesnt have these fees

Which would be a silly idea as your AVC will have charges and you would not get the employer contribution. Plus, you are looking very short term at this. With Royal London there is a base annual charge to which fund based discounts are applied. Your wife's explicitly charged scheme could actually be cheaper than your commission based AVC.

financial advisor fees taken monthly equals 50% of the 150 quid she contributes.

So, that equates to an advice charge of £1080 (a net cost of £864 to your wife as there is tax relief on it). That is very reasonable.

Mistermeaner

If that is the case that is a ridiculous amount to charge, but must have been agreed to at some point.

Get the paperwork together and get it in front of someone knowledgeable with regards pensions. If you want meaningful advice from here you will need to provide full details word-for-word of what the paperwork says. Can you provide a link to the appropriate scheme etc?

stu12345_2

thanks, so this fee 50% lasts a year, then stops, that right, surely she be better just making 1% contribution for a year then, tiny total fee, or is it that she pays 15% into fund basically pays for her workmates only paying 1 %
say costs was 5000 total, 10 employees, does that mean she is paying a larger amount to subsidise her workmates, if she did 1%, how would the total cost be funded if ifa only has 12 months to charge, i thnk im cofused

dunstonh

surely she be better just making 1% contribution for a year then, tiny total fee, or is it that she pays 15% into fund basically pays for her workmates only paying 1 %

The increment in future would likely get the charge then. It would just be deferring it.

does that mean she is paying a larfer amount to subsidise her workmates

There is always some cross subsidy on a percentage based fee but it isnt the other employees that matter as they are not getting that fee.