Fund pension pot AMC not what they advertise

bowlhead99

TCA wrote: »

bowlhead99 wrote: »

Surely comparing £180pa with £600 is not like with like, if the £600 or 0.6% is 'single charge' for the pension investment as dunstonh says.

If you go to a DIY pension provider and pay them £180 just for administering a SIPP wrapper, you are still going to need to buy investment funds to sit inside that wrapper, and there will be a charge for that (from about 0.25% passive to 0.75 or even more on some active funds, but entirely dependent on what you actually hold)

As far as I can see iWeb only charge £60 for pension transfers-in and there are no other ongoing custody fees.

Maybe we are at cross purposes.

The in house funds in your pension are charging you £600 on £100k, right? So 0.6% all in. I mentioned my own workplace one was 0.65%. Not too expensive overall. This covers the admin for the access to investments, and the investment management fees too.

And you said IWeb would be £180 a year. And i highlighted that this was not apples to apples because the IWeb £180pa is not the cost of the investments themselves, just the cost of administering the SIPP, so on top of that £180 whatever collective investments you buy to put in that SIPP, will have some sort of operating cost, whether it is a passive tracker or an actively managed oeic or investment trust.

Now you are saying iweb charge for transfers in of existing pensions (true) and no other custody charge. Well, there is the £45per qtr admin fee or £180pa, which you've mentioned. You are right though, no other custody or admin fee beyond that.

But the point is, the £180 only gets you custody/admin. It doesn't pay the managers of the investment funds you are going to buy. For example, if you select a relatively cheap (for a managed oeic) fund with a 0.5% ongoing charges figure, you are paying £180pa to IWeb and £500 to the fund manager. That's £680 to compare with your £600 you said you had currently.

TCA

bowlhead99 wrote: »

Maybe we are at cross purposes

It's more me failing to grasp exactly how the all-in charge works within a pension. For example, in my pension I have some units of FL BlackRock European Equity Index (Aquila HP), an index fund, for which there is no extra AMC and no additional expenses. Therefore I pay only my "base charge" of 0.6%, for which they deduct units every month.

I was assuming that there was an additional charge made by BlackRock themselves. i.e FL invest in the BlackRock fund which itself has an AMC, management fees or whatever, so I'm effectively paying that already as well and that's what I'd be more explicitly paying as a fund charge on say iWeb. Sounds like I'm getting my apples and pears mixed up.

grey_gym_sock

yes, the 0.6% is all-in - it includes what they pay to blackrock.

you can now get all-in charges of well under 0.6% on a £100,000 pension pot. there are some options with an all-in charges of c. 0.4% here: https://www.cavendishonline.co.uk/pensions/personal-pensions/

a SIPP could also be cheaper than 0.6%, depending on what you hold in it. in this case, you need to add the cost of the underlying investments to the cost of the SIPP itself.