Pension or ISA

Richiegod2003

Hi, I'm self employed, nearing 50. I have a SIPP pension & a Stocks & shares ISA. I'm currently pay £240 a month into my pension & £50 into my ISA. My issue is I'm paying nearly £100 a month in fees on my pension. My dilemma is do I freeze my pension and pay it into my ISA instead or do I just continue and swallow the fees and carry on??
Any advice would be grateful. Thank you. R 

billy2shots

Pension should be the most tax efficient way to save, ISA gives you more flexibility as in you can draw on it any time and not wait until a set age. 

Any chance to move your pension to a cheaper provider/ better value investments ?

Albermarle

What does £100 a month mean in terms of % of your total pension fund .
Anything much above 1% is expensive nowadays and less than 0.5% is not unusual .

NottinghamKnight

Richiegod2003 said:

Hi, I'm self employed, nearing 50. I have a SIPP pension & a Stocks & shares ISA. I'm currently pay £240 a month into my pension & £50 into my ISA. My issue is I'm paying nearly £100 a month in fees on my pension. My dilemma is do I freeze my pension and pay it into my ISA instead or do I just continue and swallow the fees and carry on??
Any advice would be grateful. Thank you. R 

Who is your sipp held with there may well be cheaper alternatives, if you google for snowmans spreadsheet you can plug your investments in and find the nest supplier. Assuming you are diy then there is a split between fixed fee and percentage charging platforms, normally in the low tens of thousands, above that then fixed fee normally wins but you get charged for trading so may have to contribute and trade less frequently if you want to minimise costs. 

Richiegod2003

Thanks for you comments guys, I am not a Diy'er I have an adviser & fund manager. My total fees are 2.78% this includes pension providers annual charge (0.34%), Advisers charge (0.75%)  & investment charges (1.69%), I have a pot of around £100k at the moment. I have been advised to change to another pension that may perform better but will still incur these charges, just feel its throwing money away if I can invest in a Stocks & shares ISA with no heavy fees?? Yours thoughts are much appreciated.

NottinghamKnight

There's fundamentally no difference between what you can hold within an isa or a pension. You are getting charged so much because you have signed up to those terms and conditions, if you get a low cost sipp and use tracker funds then your total cost would be around 0.5%, well under a quarter of what you are paying now. If you are managing your own isa then you can manage your own sipp.

kinger101

Richiegod2003 said:

Thanks for you comments guys, I am not a Diy'er I have an adviser & fund manager. My total fees are 2.78% this includes pension providers annual charge (0.34%), Advisers charge (0.75%)  & investment charges (1.69%), I have a pot of around £100k at the moment. I have been advised to change to another pension that may perform better but will still incur these charges, just feel its throwing money away if I can invest in a Stocks & shares ISA with no heavy fees?? Yours thoughts are much appreciated.

Fees between pensions and ISAs shouldn't really differ that much if at all.  They're just slightly different tax wrappers, with the pension by far being the most tax-efficient.

What you're currently comparing is quite a high charge from the actively managed platform you're currently using with a low cost S&S ISA.  Find a better home for your pension.  Total fees of 2.78% is very high.    I doubt your adviser/fund manager is delivering above-market returns one they've bled that much off you. 

dunstonh

 My issue is I'm paying nearly £100 a month in fees on my pension

Why is that an issue?  

 My dilemma is do I freeze my pension and pay it into my ISA instead or do I just continue and swallow the fees and carry on??

Pensions and ISAs share the same investments and the same charges.  So, how would changing tax wrapper reduce your charges?

My total fees are 2.78% this includes pension providers annual charge (0.34%), Advisers charge (0.75%)  & investment charges (1.69%), I have a pot of around £100k at the moment.

That is too much.  Nowadays, with IFAs, you expect to be paying less than 1.7% typically on an advised portfolio. You can get lower than this. I am just looking at an ideal ceiling.   2.78% is ridiculous nowadays. However, the platform/provider charge and adviser charge is right in the ballpark of expectation.

 have been advised to change to another pension that may perform better but will still incur these charges, 

Is your adviser an FA or an IFA? (don't assume - check as over half of people seeing an FA think they seeing an IFA when they are not).  A modern hybrid portfolio would be around 0.1 to 0.5% depending on risk profile.  However, do be aware that there are some higher charged funds/portfolios with very good returns.   Charges are a secondary concern to where it is invested.   However, you do appear to be paying far more than you need.

 just feel its throwing money away if I can invest in a Stocks & Shares ISA with no heavy fees?

As the charges can be the same, that would not make any sense.

Albermarle

You need to talk to the FA/IFA about reducing the charges to an absolute maximum of 2% overall, preferably less.
Then you need to think about whether you can DIY cheaper ( typically 0.5% to 1 % ) and still get a similar result. A subject of never ending debate on this forum ......
One point to keep in mind is the IFA/FA advising you in other ways than just investing in your pension. For example tax advice, taking into account family situation, long term planning for the future ? In other words are you getting more value from them than just a brief once a year contact about your pension?

zagfles

Charges of 2.78% total is ridiculously high, these days anything much over 1% total is expensive. There's no reason to pay significantly more for a pension than an ISA, most providers charge the same or perhaps have a few minor extra charges for the pension.