Are Personal Pension fees of 1% to my IFA on the high side?

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Hi everyone, I realise this is going to be a “how long is a piece of string?” question, but here go’s….

I recently switched my Personal Pension from Clerical Medical to Cofunds and did so using the IFA that my employer uses for their Company Pension scheme. My Personal Pension is currently worth around £100K. I was previously paying in £100 per month and when I switched I doubled my contributions to £200 per month.

I tend to monitor performance and transaction details fairly closely and used to get a detailed statement each year from Clerical Medical showing how many units I’d bought, when and how much for etc. all of which I recorded in my Computer. During this time, I never noticed any charges being made by Clerical Medical, but I assume there must have been some somewhere.

When I switched to Cofunds, I can’t fault them for all the information they sent me, including details of the initial and ongoing fees that I would be paying. The problem is, after reading them, I never put them quite into perspective.

Now the Pension is up and running and I am able to login to the (excellent) Cofunds web site and see all my transaction details, I can see that I’m paying Cofunds approximately £22 per month for their “Platform Charge” (which is a 0.29% fee) and approximately £75 per month in fees to my IFA (which is a 1% fee).

In other words, the £100 increase in my contributions is almost all being eaten up in fees and charges!

On top of this, the IFA was paid £2,317 to set the Pension up in the first place.

I’ve not gone back to my IFA yet to question this because I first wanted to know whether these charges are the norm or not. I’ve considered going to see another IFA to ask what they would charge for something similar, but didn’t want to do that yet, until I’d got some thoughts from you kind people.

So…can you let me know if you think these charges are high or should I just expect to be paying around this amount for this?

Thanks in advance.

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bigadaj

The set up charge looks slightly in the high side but not ridiculous.

The ongoing charge to the ifa looks ridiculously high, he should have detailed all his charges when you met and went through with things, check your paperwork.

You can raise as a complaint but charges are normally outside th regulators remit.

Depending on what you are invested in then you will probably be paying fund charges on top of that, if you diy and use basic tracker funds then charges should be down at around 0.5%, though in this case you've obviously used the ifas services. Your current gross costs look as though they are up at around 1.5-2% so definitely high.

You can't really compare your increased contributions with these fees, they are based in the gross fund value.

dunstonh

In other words, the £100 increase in my contributions is almost all being eaten up in fees and charges!

That is not possible and your figures do not match that. Mainly as you are disregarding the annual costs you used to have on the old pension and looking at fees on the whole pot but only applying them to the increase.

I’ve not gone back to my IFA yet to question this because I first wanted to know whether these charges are the norm or not.

The IFA has no control over Cofunds pricing. It is set by Cofunds. However, they are competitively priced for a platform. (for example, the often quoted HL option on these boards is 0.45%. So, 0.29% is cheaper)

The IFA ongoing charge is in the ballpark. At £100k you are straddling the point where many IFAs would move you from 1% progressively down to 0.5% (so somewhere between 0.5% and 1% is typical).

The initial charge is high but its at the top end of the range you would expect to see.

So, in summary, they are not excessive but they are at the top end of the ballpark you would expect. Both figures could have been halved by shopping around if you were at the low end.

sandsy

Have you signed up to getting ongoing advice every year from the IFA? You can't be charged for it unless you're getting it.

If you don't want ongoing advice, tell the adviser then call Cofunds and tell them to turn off the ongoing advice charge. Then just pay for advice on an ad hoc basis.

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...very useful feedback. I also appreciate that the charges are based on the full value of the fund and not the monthly contributions, so, yes, I do understand that.

Cheers

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