Help me to understand my pension charges...

Empor

...please!

This is Scottish Widows. I know I should really call them but a) it's a bank holiday and b) I think I have a better chance of understanding someone here.

So I'm in a workplace group personal pension scheme. I got a letter stating that they've abolished the 'inactive' fee, and the fees are now capped at 0.75% if the default investment fund is used.

I'm in the default funds, currently I'm told I have have half in 'Pens Portfolio Two' and half in 'Pens Portfolio Three'.

Online, the SW system tells me my annual management charge is 0.45% regular and 0.45% transfer value.

So, can I take it that SW charge me 0.45% per year? And if I wanted to transfer the whole lot I'd pay another 0.45% fee? Does the 0.75% cap not come into play then?

Am I correct in thinking this annual management fee is in addition to fees paid in the fund? If so, what are these fees? I can't seem to find these, the SW site isn't much help on this.

I was thinking about starting up a SIPP as I was assuming I was getting nailed for fees, but tbh these don't seem too bad to me, and as far as I can tell the funds are doing ok. Also I think SW have abolished exit fees.

Am I missing anything?

dunstonh

So, can I take it that SW charge me 0.45% per year?

From what you say, that is correct.

And if I wanted to transfer the whole lot I'd pay another 0.45% fee?

No. Annual management charges are annual management charges. It is not a transfer penalty.

The separation is largely historical as some providers used to have plans that charged different amounts for transfers in, single premiums or regular premiums. You dont see it much nowadays on modern contracts but some providers are running old software.

Does the 0.75% cap not come into play then?

It does apply to all workplace schemes. However, you are 0.45%. So, well under it.

Am I correct in thinking this annual management fee is in addition to fees paid in the fund?

No.

If so, what are these fees? I can't seem to find these, the SW site isn't much help on this.

There isnt any.

I was thinking about starting up a SIPP as I was assuming I was getting nailed for fees, but tbh these don't seem too bad to me, and as far as I can tell the funds are doing ok. Also I think SW have abolished exit fees.

SIPP is going to be more expensive for you.
SW havent had exit fees on any new business contracts since about 2001. They are possible on older schemes.

Empor

Thank you for your help, much appreciated.

Could you help clarify the charges on the actual funds though? This is the link to their "group personal pension" charges sheet -

http://www.scottishwidows.co.uk/extranet/literature/doc/47122A

All these funds have charges upwards of 1%. The funds I have ('Pens Portfolio Two' and 'Pens Portfolio Three') don't seem to be listed here. Is this because, as you say, there are no charges? So why no charges for these funds, but charges for all the others? Are the charges covered in the 0.45% annual management fee?

dunstonh

Empor wrote: »

Thank you for your help, much appreciated.

Could you help clarify the charges on the actual funds though? This is the link to their "group personal pension" charges sheet -

http://www.scottishwidows.co.uk/extranet/literature/doc/47122A

All these funds have charges upwards of 1%. The funds I have ('Pens Portfolio Two' and 'Pens Portfolio Three') don't seem to be listed here. Is this because, as you say, there are no charges? So why no charges for these funds, but charges for all the others? Are the charges covered in the 0.45% annual management fee?

They are the default charges assuming it was on maximum charge basis for one of their types of plan. Yours is not a default on maximum charge basis and is probably not that version of the plan. You possibly have the more recent auto-enrolment version which is where their pens portfolio funds tend to come in.

With pensions and life contracts, the generic documentation always assumes maximum charge basis. Personalised documentation would have the actual charge basis.