Recommend me a pension with lower charges

Retired_Minky

I currently have £135000 in my current pension but the charges seem quite high. I've chosen the funds myself and the advisor who set it up doesn't really help.

I'm with Friends Life at the moment. Most of the funds show a .75% on my annual statement but not sure if there are additional charges. I've asked but not heard back.

Anybody recommend an alternative. I'm happy to look at a SIPP or robo-investor. I just want to put an amount in each month and not worry about daily tinkering. I'm mainly think using of tracker funds.

Sites I've seen so far:
Cavendish - bit confused. Not sure what the charges are here. Not clear to me.
Pension Bee - 0.5% fee. Looked good.
Nutmeg - 0.7% managed. Similar percentage to what I'm paying but someone would actively manage it.

Any advice appreciated.

dunstonh

Anybody recommend an alternative.

Any local IFA to you.

I just want to put an amount in each month and not worry about daily tinkering. I'm mainly think using of tracker funds.

if you use single sector funds, then you will need to do "tinkering". Rebalancing periodically and adjusting allocation to suit where we are in the economic cycle.

Nutmeg - 0.7% managed. Similar percentage to what I'm paying but someone would actively manage it.

Every model has some form of active management. However, if you are paying nutmeg 0.7% for non-advised then you may as well pay an IFA for advised.

jamesd

So far as Nutmeg goes, it appears that you may have been taken in by what looks like a lie on their home page:

"Expertly managed
Your own intelligent, diversified portfolio, regularly rebalanced and fully-managed by our expert team."

If you scroll down a little more you'll find that what they really invest in is exchange traded funds and those are not managed investments. You'll also find that their own charge is 0.75% but the actual fund charges are an additional roughly 0.19%. Even high cost providers like Hargreaves Lansdown can easily beat that pricing if you don't want advice. The "management" they seem to do is just picking some combinations of investments, getting you to choose one of the combinations, then keeping the percentage split the same each year by doing a little buying and selling with a computer programming. If you just want that, there are plenty of suggestions around and it's easy to do without paying so much for it.

They appear to be misrepresenting "you pick from a list of rebalanced unmanaged investment mixtures" as actual management. Given how much they are charging for something as basic as that it's not surprising that they only compare their fees to high priced wealth management firms.

Looks like very poor value unless you want to pay quite a bit for mostly slick marketing.

jamesd

Friends Life probably includes all of their charges and those normally reported by funds in the 0.75%. That's how typical insurance firm pension products quote costs, all-inclusive. Probably using managed funds.

If you just want cheap, wait a few months and there might be a fairly inexpensive offering from Vanguard that offers their rebalanced risk-matched (so all Nutmeg does) at about 0.28% for the fund plus a currently unknown extra pension charge that might be 0.15% if it matches what they have done with their ISA. Like Nutmeg, no managed options for that price.

jamesd

Pensionbee appears to be more reliable than Nutmeg since their 0.5% seems to be inclusive of the fund fee. The State Street tracker fund used for that price includes the routine rebalancing work for the sub-funds it uses. The match option uses trackers but has the useful flexibility for the manager to vary the equity proportion based on market conditions, of their three it looks most interesting, it's also the sort of thing that is typically used for pension default funds. The most expensive tailored option looks like the worst of the three. It blindly cuts the equity proportion over time based on how many years there are left until 2043. This reduction in equities is large far before it needs to be and is likely to seriously reduce investment gains. Rebalancing is included in what it does, of course.

They do seem to use false charge claims for Hargreaves Lansdown, though, adding a 0.55% tracker fund charge to the HL 0.45% when you can get trackers from HL for far less than that, starting at about 0.06%.

Retired_Minky

jamesd wrote: »

The "management" they seem to do is just picking some combinations of investments, getting you to choose one of the combinations, then keeping the percentage split the same each year by doing a little buying and selling with a computer programming. If you just want that, there are plenty of suggestions around and it's easy to do without paying so much for it.

Thanks for the reply. Can you recommend some alternatives that would do this for a lower charge.

Joey_Soap

With a decent size pot like that, you owe it to yourself to look at the fixed fee platforms, not the % based ones. Look at Alliance and II, they are the two main fixed fee options. Of the two, I went with II.

bostonerimus

jamesd wrote: »

They do seem to use false charge claims for Hargreaves Lansdown, though, adding a 0.55% tracker fund charge to the HL 0.45% when you can get trackers from HL for far less than that, starting at about 0.06%.

This!
I'm glad the OP is looking at expenses and have found that using low cost trackers to be an efficient,easy and rewarding investment strategy. There are several low cost platforms recommended regularly on this site where that strategy can be implemented. FYI this is what I do with Vanguard in the USA and I have annual total expenses of 0.06%. Maybe wait to see what Vanguard UK brings out in the pensions area.

seacaitch

binning wrote: »

I currently have £135000 in my current pension but the charges seem quite high. I've chosen the funds myself and the advisor who set it up doesn't really help.

I'm with Friends Life at the moment. Most of the funds show a .75% on my annual statement but not sure if there are additional charges. I've asked but not heard back.

Anybody recommend an alternative. I'm happy to look at a SIPP or robo-investor. I just want to put an amount in each month and not worry about daily tinkering. I'm mainly think using of tracker funds.

Sites I've seen so far:
Cavendish - bit confused. Not sure what the charges are here. Not clear to me.
Pension Bee - 0.5% fee. Looked good.
Nutmeg - 0.7% managed. Similar percentage to what I'm paying but someone would actively manage it.

Any advice appreciated.

If for some reason you wished to remain with FL (albeit via a circuitous route) you could probably get those charges down to 0.35% for existing contributions and 0.45% on any new contributions.

These would be the costs you'd be paying at FL if you transferred into its NGP product via Cavendish; see charges breakdown here:
https://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/friends-provident1/

The FL NGP product has a broader set of funds:
https://www.friendslife.co.uk/funds/fund-centre/pension-funds/fund-factsheets-for-ngp-corporate-pension-products.jsp

than what I'm assuming is your existing FL product:
https://www.friendslife.co.uk/funds/fund-centre/pension-funds/fund-factsheets-for-all-other-pension-products-that-include-friends-life-internal-funds.jsp

If you went down the FL NGP route via a Cavendish transfer-in, you would need to stick to the lower charging FL funds, having notional charges of 0.8%.

With reference to the Cavendish page above, then with you having total funds > 100k that would bring a 0.25% discount on the total fund holding (NB this discount is not tranched, it's applies to everything). Also, all transferred-in funds would receive a further 0.2% discount [hence 0.8 - 0.25 - 0.2 = 0.35% mentioned in my 1st para]. New contributions made after the transfer-in would see a lesser 0.1% discount [hence 0.8 - 0.25 - 0.1 = 0.45% in my 1st para].

You should hopefully be able to do things cheaper in a SIPP product but it may be relatively tight unless you're very careful. The FL product means you have no transaction charges on monthly purchases, or further custody or platform charges, which might get overlooked when performing costs comparisons. Of course, with a SIPP product you will have a much, much broader range of investment products available to you. Regardless, the above may give an idea of an all-in-costs level for you to aim to beat.

Retired_Minky

Joey_Soap wrote: »

With a decent size pot like that, you owe it to yourself to look at the fixed fee platforms, not the % based ones. Look at Alliance and II, they are the two main fixed fee options. Of the two, I went with II.

Bit confused with th pricing on their site. It says SIP fee of £96 per year but the adds £10 per trade for all investments? Does this include funds?

If so this would get quite expensive. I pay in to a number of funds monthly. £10 each would add up quite quickly.

Joey_Soap

Bit confused with th pricing on their site. It says SIP fee of £96 per year but the adds £10 per trade for all investments? Does this include funds?

If so this would get quite expensive. I pay in to a number of funds monthly. £10 each would add up quite quickly.

Regarding II, for the GBP 20 per quarter platform fee you get 2x GBP 10 trades included, so, in effect 2x "free" trades per quarter. That is usually enough for me. There are different charges for monthly purchases, I do not know what they are, sorry. If any doubt, give them a call, they are usually helpful on the phone.