Pension fund charges

garrunt

Hi have three defined contriubution pension funds from current and previous employers. I've been looking into the charges I incur in them and they seem to vary a lot.

1) Annual charge of 0.30%

2) Annual charge of 0.21%

3) Annual charge of 0.079%

Seems odd that the last is so much less than the others. 

I am wondering if (1) and (2) look typical of UK DC pension funds and perhaps (3) is the outlier ?

I am wondering if perhap (3) is not perhaps not taking into account charges within the underlying investment funds that that pension is invested in ?

Really just looking for any comments/thought here before I dig further into this

Rich1976

I wish mine were that low. The charge for my default fund is about 0.64%. The fund itself is fine and has done well over the last year or two and has a decent spread across the world. If I wanted a tracker fund then that would be 1%.

so I think yours are very good in comparison and looks like your employer/past employers have negotiated a good discount.

as regards your last question, it should say either in the online plan if you have access or on the paperwork/statements you get what charges you are paying. The last one does seem very low so could well be just the fund charge.

barnstar2077

All the fund charges you mention are so low (assuming that last one wasn't a mistake and should be 0.79!) that I would be much more concerned with the make up of the funds themselves, are they globally diverse, what is the equity to bonds split and are they aggressively invested enough for your age etc?  

garrunt

Thanks. No concerns here about what they are invested in, am all over the country, investment type, sector and currency diversification aspect and managing own glidepath relative to age. I have worked in FS for 20 years just haven't focused in on my pension charges before ..perhaps oddly/regretably

The third one I started more recently. Only when I saw how low that one was compared to the others did I consider the other two to be 'high'....though perhaps they are not given both your comments !  

0.079% is correct...and is after a heavy discount. I am currently looking into whether that discount stops when I leave the employer and/or stop contributing.

As you say ..with hindsight my rates are probably low due to companies I worked for (themselves FS) having negotiated well.

Still not sure if to switch it all over into (3) though.

Helpful replies thanks.

Albermarle

garrunt said:

Hi have three defined contriubution pension funds from current and previous employers. I've been looking into the charges I incur in them and they seem to vary a lot.

1) Annual charge of 0.30%

2) Annual charge of 0.21%

3) Annual charge of 0.079%

Seems odd that the last is so much less than the others. 

I am wondering if (1) and (2) look typical of UK DC pension funds and perhaps (3) is the outlier ?

I am wondering if perhap (3) is not perhaps not taking into account charges within the underlying investment funds that that pension is invested in ?

Really just looking for any comments/thought here before I dig further into this

Many pensions have two charges.
An administration charge ( often called a platform charge) which is the charge that is most visible.
Then a charge for the investment funds. These are normally paid out of the fund, so you do not see any transaction for them

Some pensions just have one all in charge. These would normally be paid automatically from inside the funds.

A charge of 0.08% for everything seems unbelievably low, so I think you need to check again.
Even 0.3% and 0.2% are very much on the lower side.

For example I have two ex workplace pensions, both of reasonable size.
One is from a large multinational that got a good deal from the pension provider. The platform charge is 0.17% and some funds only cost 0.1% . I have a couple of funds that cost more than 0.1%, so overall I pay around 0.33%
The other has an all in charge of 1% if using standard investment funds. Then a discount of 0.65%. However as I have one non standard ( higher charge) fund, then overall I pay 0.4%

garrunt

Albermarle said:

garrunt said:

Hi have three defined contriubution pension funds from current and previous employers. I've been looking into the charges I incur in them and they seem to vary a lot.

1) Annual charge of 0.30%

2) Annual charge of 0.21%

3) Annual charge of 0.079%

Seems odd that the last is so much less than the others. 

I am wondering if (1) and (2) look typical of UK DC pension funds and perhaps (3) is the outlier ?

I am wondering if perhap (3) is not perhaps not taking into account charges within the underlying investment funds that that pension is invested in ?

Really just looking for any comments/thought here before I dig further into this

Many pensions have two charges.
An administration charge ( often called a platform charge) which is the charge that is most visible.
Then a charge for the investment funds. These are normally paid out of the fund, so you do not see any transaction for them

Some pensions just have one all in charge. These would normally be paid automatically from inside the funds.

A charge of 0.08% for everything seems unbelievably low, so I think you need to check again.
Even 0.3% and 0.2% are very much on the lower side.

For example I have two ex workplace pensions, both of reasonable size.
One is from a large multinational that got a good deal from the pension provider. The platform charge is 0.17% and some funds only cost 0.1% . I have a couple of funds that cost more than 0.1%, so overall I pay around 0.33%
The other has an all in charge of 1% if using standard investment funds. Then a discount of 0.65%. However as I have one non standard ( higher charge) fund, then overall I pay 0.4%

OK so from what you say, overall charges in the range of 0.3% to 0.4% (not far off my first two), albeit low, seem to more realistic than my third, at 0.079%.

Thanks...I will continue to prod them further for answers.

LHW99

The main advantage of keeping 2 open, rather than putting them all in one would be if there is an IT issue at one, you would not be completely locked out of pension money for a few days / weeks.

Probably isn't an issue for the OP, but is something to have at the back of one's mind perhaps.