Extra annual pension management fee for changing employer

AntoPSC

In short because of the new IR35 rules in the private sector, I’m having to close down my company and move to an umbrella company.

I have an existing pension which my company paid into but the umbrella company is now paying into (via salary sacrifice).

So, I’m not changing the pension strategy in any way, only where the money to fund it is coming from.

I had a phone conversion with the pension company today telling me that they are going to charge me an extra annual management fee of 0.01% because a financial advisor hasn’t given this the OK.

To me this is daylight robbery as I haven’t changed anything about the pension only where the money is coming from.

Am I wrong in this?

I’ve logged a complaint with the pension provider but would like to hear if anyone else has experienced something similar.

dunstonh

I had a phone conversion with the pension company today telling me that they are going to charge me an extra annual management fee of 0.01% because a financial advisor hasn’t given this the OK.

0.01% is totally insignificant but yes, its not uncommon to be charged more if you buy a pension that is meant to have an intermediary but you choose not to use one and want someone else to do the work instead.

To me this is daylight robbery as I haven’t changed anything about the pension only where the money is coming from.
Am I wrong in this?

Who is going to pay for the work you are requesting if you are not paying the usual intermediary to do it?
If you want to DIY then maybe you should transfer the pension to a provider that caters for the DIY market rather than the intermediary market.     Providers that cater for the intermediary market are set up for the intermediary to carry out a lot of the jobs. Their pricing is based on the expectation that they will not be doing much of the work but the intermediary will do it.    If you then ask them to do the intermediary tasks as well then some will charge you a token amount to cover it.

It is worth noting that you are not just changing the source of funds.   It is moving from an individual direct debit payment to an employer payment and via a payroll by the sounds of it.  The employer will need to be money laundering checked along with any beneficial owners of that company.

I’ve logged a complaint with the pension provider but would like to hear if anyone else has experienced something similar.

The time it has taken to instigate the complaint has probably cost you more than the actual extra charge involved.

squirrelpie

dunstonh said:

its not uncommon to be charged more if you buy a pension that is meant to have an intermediary but you choose not to use one and want someone else to do the work instead.

Who is going to pay for the work you are requesting if you are not paying the usual intermediary to do it?

Either I'm misunderstanding the situation or you are. AntoPSC had his own company that paid into his pension. There was no intermediary mentioned. There's no suggestion that he had bought a pension where one was expected to be used. He's now liquidated the company and moved to an umbrella company who are paying the pension instead. So one company was paying the pension and now another is, not much difference and no sniff of any work that needs an intermediary.

And yes I accept what you say about money laundering checks, but those should be one off with an associated fee perhaps, not an ongoing charge, surely?

dunstonh

There was no intermediary mentioned. 

The first post says "because a financial advisor hasn’t given this the OK."

And yes I accept what you say about money laundering checks, but those should be one off with an associated fee perhaps, not an ongoing charge, surely?

Without knowing the pension in question its difficult to say.  Perhaps it is a mono charge scheme where the only fee is the AMC.

AntoPSC

Squirrelpie has hit the nail on the head. One company has stopped paying into the pension and another (umbrella) has taken over.
In addition the umbrella company already pays into the pension company for some of their other "employees" so any money laundering checks would be minimal.
The explanation I've been given for the charges are that a Financial Advisor has not been involved, but for the life of me I'm not sure what they actually could do in this instance even if I wanted to involve one.
A one off charge I could understand, but an annual fee!!!

Albermarle

It could be that the pension company has changed its policy regarding intermediaries over the years .

It looks like it is a case of accept the charge ( it is very small considering your pension could drop one thousand times that amount in a single day ) or move pension providers ( which is easy to do ) 

dunstonh

The explanation I've been given for the charges are that a Financial Advisor has not been involved, but for the life of me I'm not sure what they actually could do in this instance even if I wanted to involve one.

If the provider only retails their pension via an intermediary then its normal for the intermediary to carry out the transactions.   The intermediary takes on the liability for doing it. They key in the transactions etc.   Some providers are set up to only do business that way.  Some will do it but at extra cost.  That appears to be what is happening here.

A one off charge I could understand, but an annual fee!!!

If it's a mono charge plan then that is the only way they can do it.

If you don't like it, which clearly you do not then change pension provider to one that works on a DIY basis.