Appropriate Fees for a Pension Pot?

kinger101

Cus said:

What do you get for the partnership fee?

Robbed.

Alexland

Albermarle said:

Although to be fair normally on this forum we tend to make light of the chance of this protection for mainstream funds/platforms  ever being needed , so the fact that they are not insured funds is not really an issue that bothers most people?

Its certainly something I would want to make an informed choice about. Even if my choice is to have my SIPP entirely invested in a single ETF...

[Deleted User]

Alexland said:

Albermarle said:

Although to be fair normally on this forum we tend to make light of the chance of this protection for mainstream funds/platforms  ever being needed , so the fact that they are not insured funds is not really an issue that bothers most people?

Its certainly something I would want to make an informed choice about. Even if my choice is to have my SIPP entirely invested in a single ETF...

For assets like this from a mainstream provider, my only insurance concern would be coverage for unauthorized transactions. 

nj2020

Thanks for the tremendous responses received to my "Appropriate Fees..?" question. Please excuse my continuing naivety. It's the first time I've really dug into this and your comments have already moved me up the learning curve:

Summarising: (From your comments) 1.5% is high for a large-ish pension pot, which seems to fit into the ‘passive’ category, which I will not be adding to (because of Fixed Protection 2014), or drawing down anytime soon. The Current pension is 80% stocks (top five being: HSBC FTSE All-World Index... 30%, HSBC American Index... 15%, HSBC GIF Global Em Mkts Local... 8%, HSBC ESI Worldwide Equity ETF 7%, HSBC European Index... 6%).

I have been very happy with its performance so wouldn’t particularly want anything much riskier.

So where should I look for something comparable but with drawdown options and reasonable fees? (Bearing in mind that I’ll just leave it and, in say 10-15 years, start taking out tax efficient lumps). What should be my next steps?

And should I be concerned about insurance? Do pension providers go bust? How do you get it?

Further assistance greatly appreciated.

dunstonh

Summarising: (From your comments) 1.5% is high for a large-ish pension pot, which seems to fit into the ‘passive’ category, which I will not be adding to (because of Fixed Protection 2014), or drawing down anytime soon. The Current pension is 80% stocks (top five being: HSBC FTSE All-World Index... 30%, HSBC American Index... 15%, HSBC GIF Global Em Mkts Local... 8%, HSBC ESI Worldwide Equity ETF 7%, HSBC European Index... 6%).

If its passive only, then you are looking at fund OCFs being around 0.1%.  Platform around 0.15-0.25% (lets say 0.25% for the example) and adviser charge of 0.5%.   So, a total of 0.85%.    So, that gives you context with the 0.85%.    Advisers must use the MIFIDII charges disclosures which has transaction charges and incidental charges on top.   These also exist exactly the same whether you have an adviser or not but most DIY investors ignore them and just look at the OCF.    IFAs tend to pay lip service to them as well but they do appear in their disclosures.  So, this may add around  0.07% with most funds.

And should I be concerned about insurance? Do pension providers go bust? How do you get it?

WIth mainstream unit linked funds, there is very little chance of anything going wrong.   The fund houses cant access your money.   They are just administrators.  So, the only real risk is fraud.  A large provider would put right any staff member fraud (which is extremely rare).  A small unprofitable provider/platform could go under with a major fraud. So, its always worth making sure your provider/platforms are financially secure.

zagfles

What charges are you paying now? You say you're happy with it but need to move it because it's not flexible, ie you can't do drawdown, but then say you're not going to touch it for 10-15 years. So why the need to move it now, why not wait till just before you want to do drawdown? Charges change all the time, and you could eg find that the platform you move it to is good value for drawdown, but in 10 years time other platforms are better value. Or your current provider might change and offer drawdown in 10 years time.

Of course it could be better to move it now for other reasons, eg charges, performance etc, but there doesn't seem to be an immediate need to move it just because it doesn't offer drawdown.

For a comparison of platform charges, try Snowman's spreadsheet:

https://forums.moneysavingexpert.com/discussion/5583030/coolly-comparing-investment-platform-charges-snowmans-spreadsheet

You can look up fund charges on the platforms, but for passive funds they're usually low eg around 0.1%

Albermarle

I have been very happy with its performance so wouldn’t particularly want anything much riskier

It seems relatively high on the risk spectrum already . With over 10 years to go then that is not a bad thing, as long as you don't mind the ups and downs too much . Maybe when you get closer to taking it you could consider moving down the risk scale a notch or two .

nj2020

Thanks again to you all for the helpful observations. To Zagfles’s questions, the other reasons to change sooner rather than away from the current Reassure policy (in addition to no drawdown) is that, if I died, my wife would get taxed on the whole pot. Based on all of your feedback, the “policy charges” for it are also quite high at about 1.2%. 

I’m looking at the Vanguard “LifeStrategy 100% Equity Fund – Accumulation” which seems to have extraordinarily low charges at 0.22% and a similarly diverse equity base to my current pension. Easy withdrawals too.
Can anyone see any pitfalls associated with that? I’d save 1% fees per year compared to now (ReAssure 1.2%) and 1.3% compared to what my IFA is proposing (Old Mutual pension with 1.5% fees). How easy is it to manage this on your own without an adviser? -  In the past I've left my other smaller pension pots to my IFA to consolidate but I'm minded not to get them involved in this large one. Why pay high tens of thousands (0.5%) to them over 10 years when i'm not going to tinker with this pot at all. Any further observations most welcome.

[Deleted User]

If that's your choice, nothing to manage, no problem at all. 
Ditch the IFA.

[Deleted User]

What you are considering is a really good solution, and a huge improvement. You can always find a slightly better solution but its rarely worth the effort unless you have a large portfolio and it’s certainly not worth the delay.