Annual Pension costs

daisyrose

What is an average annual cost?
My oh has received a statement for taking his pension in drawdown. The annual charges with the IFA feed are 2.6% pa. Like everyone we need to get the most from his pension and the more I read the more confusing I find it all.
Thank you.

Alexland

My two pensions have six digits valuations and the total platform and fund costs are under 0.30% pa each.

You can open a stakeholder pension or SIPP with an initial circa £25 contribution and the total platform and fund costs will be around 0.55% pa.

Still you are paying advisor fees ontop so that is likely to increase the cost by at least 0.5% depending on the size of your pot. Some platforms also charge a bit extra for supporting drawdown.

2.6% sounds very expensive and is likely to damage the long term investment return.

Alex

dunstonh

What is an average annual cost?

Simple, low value no ongoing arranged via IFA 0.3x% (can be lower depending on fund value.
Ongoing servicing with model portfolio around 1.2% (generally you find lower risk has lower charges and higher risk has higher charges. So 1.0% to 1.6% range is typical).

The annual charges with the IFA feed are 2.6% pa

That's too high. You really shouldn't get getting above 2%. That is double the figures you generally find the IFAs that contribute to this site would have.

bostonerimus

2.6% is around half of the income you can expect to withdraw from you pension each year. Even a fee of 1% is a quarter of your annual income. So you do the maths.........

Linton

2.6% sounds very high. However it does rather depend on the size of the pension pot. 2.6% of £10K is probably cheap. 2.6% of £500K is ridiculous. Another factor is that some providers charge for taking drawdown - typically £100/year.

AnotherJoe

Subject to provisos on it being a small pot, that's an outrageous amount. Move it.

daisyrose

Thank you all so much. I don't think I know enough to open and manage a sipp. The fund is in low risk funds now.I don't want to make any costly mistakes. Any advice or information would be appreciated.Thank you

Linton

daisyrose wrote: »

Thank you all so much. I don't think I know enough to open and manage a sipp. The fund is in low risk funds now.I don't want to make any costly mistakes. Any advice or information would be appreciated.Thank you

What is the size of the pension pot? An IFA may not be interested in taking on a small pot or may charge a very high fee to encourage you to look elsewhere.


The best and cheapest advice is likely come from a small high street IFA. If you cannot get recommendations from family and friends get your OH to talk to say 3 local ones. Choose one with reasonable fees and who your OH feels he can work with.

dunstonh

daisyrose wrote: »

Thank you all so much. I don't think I know enough to open and manage a sipp. The fund is in low risk funds now.I don't want to make any costly mistakes. Any advice or information would be appreciated.Thank you

If you dont want to move to DIY but have an adviser then change adviser to one that is cheaper.

bostonerimus

daisyrose wrote: »

Thank you all so much. I don't think I know enough to open and manage a sipp. The fund is in low risk funds now.I don't want to make any costly mistakes. Any advice or information would be appreciated.Thank you

I'm not sure what you mean by "low risk funds", but when I made my estimate that 2.6% in fees would be half of your expected drawdown I was assuming the funds had a high equity component ie they had some risk......if you are in low risk funds a 2.6% fee might be taking all the income you can generate.

westv

2.6%? Low risk funds? Ouch!