OMG the fee's

sgx2000

Bl**dy He*L

I have just used a drawdown calculator to see what my potential pension could be...

The 1st year in drawdown the fund fee's are approx the 1st months pension.....

I dont know what I was expecting, but it wasn't that much

QrizB

You've either got a high fee or a large fund!

Although, if you are drawing down 4% and your fees are 0.5%, the fees are 1/8th of your annual drawdown (1.5 month's worth).

Marcon

sgx2000 said:

Bl**dy He*L

I have just used a drawdown calculator to see what my potential pension could be...

The 1st year in drawdown the fund fee's are approx the 1st months pension.....

I dont know what I was expecting, but it wasn't that much

What's the fund value and how are fees calculated?

Secret2ndAccount

I'm no fan of high fees but you have to look at it differently. If there was a magician who charged double the fees, but made double the returns you would jump at the chance, wouldn't you? Would those fees be twice as bad?
If you drew down half as much, the fees would be two months' worth. Would that make them twice as bad?
You are not comparing your fees to something comparable. Ask questions like "What am I getting for my fees?  Are they avoidable or reducible, and what would be the risk or downside of that?  How do the fees compare with alternatives?"
Then you can decide if you have to pay up and live with it, or if you can take steps to get better value.

dunstonh

The 1st year in drawdown the fund fee's are approx the 1st months pension.....

If you were using a calculator, did it use the actual charges or an example charge?   Often the default example charges are higher than reality.

The 1st year in drawdown the fund fee's are approx the 1st months pension.....

That isn't really a sensible comparison though. As the two things are not relative.  e.g.  High value with low draw rate vs low value with high draw rate.  Fund charges are relative to the fund value.  That is how you measure them.   Not by the amount you choose to draw.

zagfles

Secret2ndAccount said:

I'm no fan of high fees but you have to look at it differently. If there was a magician who charged double the fees, but made double the returns you would jump at the chance, wouldn't you?

No. Any "magician" who could do that wouldn't bother investing other peoples' money, they'd make a fortune with their own. So anyone who claims anything like that is likely to be lying or a scammer

zagfles

sgx2000 said:

Bl**dy He*L

I have just used a drawdown calculator to see what my potential pension could be...

The 1st year in drawdown the fund fee's are approx the 1st months pension.....

I dont know what I was expecting, but it wasn't that much

What fees are they? Platform, fund fees, IFA fees? You could probably reduce or even eliminate some of them.

Thrugelmir

sgx2000 said:

Bl**dy He*L

I have just used a drawdown calculator to see what my potential pension could be...

The 1st year in drawdown the fund fee's are approx the 1st months pension.....

I dont know what I was expecting, but it wasn't that much

Care to provide some numbers for context? 

sgx2000

This was just me bored.. so did the drawdown calculator.. I think is was the HL one...

I currently have a Superannuation pension paying
And a small addition pension I am currently paying into at work £75K at the moments
Figure from memory was 10% cash the rest aimed at £4K for 20 years.....

While it was just a cursory look the fee's astonished me
If I have it right (probably not)  There is a set fee and a % fee based on remaining pot
So again, if I have it right the set fee will pretty much be the same but the percent fee will reduce with the remaining pot...
So while the fees seem large now the proportionately will grow larger as the pot dwindles

eskbanker

sgx2000 said:

This was just me bored.. so did the drawdown calculator.. I think is was the HL one...

I currently have a Superannuation pension paying
And a small addition pension I am currently paying into at work £75K at the moments
Figure from memory was 10% cash the rest aimed at £4K for 20 years.....

While it was just a cursory look the fee's astonished me
If I have it right (probably not)  There is a set fee and a % fee based on remaining pot
So again, if I have it right the set fee will pretty much be the same but the percent fee will reduce with the remaining pot...
So while the fees seem large now the proportionately will grow larger as the pot dwindles

But the fees are dependent on where your pension is, and if you're looking to make drawdown calculations, you'd need to feed those figures in, rather than have a third party calculator tell you what they are?

So the question remains, where is this pension held and what is its fee regime?

TELLIT01

It's the different fees that are getting my head spinning too.  With the old 'company' pensions (for want of a better description), come retirement you got a letter saying that you can take X tax free and will receive a pension of £Z per month.  No separate on-going costs for administering your individual pension.  I'm sure they were there, but built into the package.

Now there are so many potential providers with differing charges and differing growth projections, it's difficult for the layman to work out the most cost effective option.  I fear that with many smaller pension pots, annual administration and drawdown fees will exceed any growth from investment.