Pension choices

Exodi

£11k in annual costs on a £590k pot is banana's. I'd forget about annuity/drawdown/mixed until you've resolved that situation.

It's wouldn't be difficult achieving costs 1/8th of that self managed or 1/3rd of that via an IFA. You could even get as low as 1/10th.

The charges thing is a red herring. Obviously the companies involved in administering your current funds want to make profit which they achieve through fees. That doesn't mean annuities don't make any profit because they don't charge annual fees, it is built into the rate they offer you.

poseidon1

FIREDreamer said:

MallyGirl said:

keith969 said:

MallyGirl said:

with that size of pot you ought to be on a fixed fee platform - or is much of that going to the FA?

Can you explain what you mean, I'm afraid my knowledge of these terms is limited! From the info I have from Brewin Dolphin, fees and charges amounted to 2.02% in 2023, of which 0.71% were BD fees, 0.49% were 'intermediary charges', 0.81% were 'underlying costs of external funds in your portfolio'.

I use Interactive Investor and the monthly charges are £21.99 which covers a SIPP, an ISA and a general investment account - regardless of the value in each - so £263.88 per year. I use Acc funds so the fund costs are hidden within the price but none are as high as 0.81%. I DIY so no advisor fees.

How are the charges apportioned across each account - is it pro rata based on fund value or all from pension or whatever?

In my case I have an active income generating GIA, so the £21.99  fee for all three accounts are deducted from the GIA. Currently in the process of migrating the rump of various Hargreave's accounts to take advantage of ii's flat fee.

Secret2ndAccount

Figure out how much you need (after tax) to survive - buy food, pay the bills and keep the house together. Subtract the State Pension. Buy an RPI linked annuity that covers the rest. Now you can put the rest into drawdown. It doesn't matter if it runs out because you have your basic needs covered. 
Of course, you can put a bit more into the annuity if you wish to. It's crystal ball gazing to know if drawdown or annuity is better in the long run, but you don't need to know - your needs are covered in any case.
Yes, your costs are too high.

kimwp

Secret2ndAccount said:

Figure out how much you need (after tax) to survive - buy food, pay the bills and keep the house together. Subtract the State Pension. Buy an RPI linked annuity that covers the rest. Now you can put the rest into drawdown. It doesn't matter if it runs out because you have your basic needs covered. 

This is my plan for when I get there.

Cus

Other than the investment portfolio and minor retirement planning advice, do you receive any other advice from your IFA?

dunstonh

Cus said:

Other than the investment portfolio and minor retirement planning advice, do you receive any other advice from your IFA?

The adviser isn't doing anything on the portfolio side. They have outsourced that to BD.

keith969

dunstonh said:

They are not the charges.  That will be from the cost and charges disclosure using your 2023 charges paid vs a snapshot valuation date.    It's likely your IFA charge is 0.5% and not 0.49%.  The cost and charges disclosures are good when detailing the monetary amount but the percentage figure is inaccurate.  its a not flaw.

Thanks, can you explain why it's 'inaccurate'? 

dunstonh

keith969 said:

dunstonh said:

They are not the charges.  That will be from the cost and charges disclosure using your 2023 charges paid vs a snapshot valuation date.    It's likely your IFA charge is 0.5% and not 0.49%.  The cost and charges disclosures are good when detailing the monetary amount but the percentage figure is inaccurate.  its a not flaw.

Thanks, can you explain why it's 'inaccurate'? 

Charges are not taken based on a snapshot valuation annually.  They are either taken daily or monthly using the value of that day or date in the month. That value zig zags over the year.

The cost and charges disclosure takes the monetary amount paid over that period (typically yearly). That figure will be correct.   
However, the flaw is that it doesn't display the actual percentage charge you are paying.  Instead it takes the monetary amount you paid and divides it by the valuation from the end value.   it doesn't use the values when the charges were actually taken.  So, the percentage given in the cost and charges disclosure will be above or below what it actually is depending on the performance in that period.  In growth periods, it will understate the percentage charge.  In negative periods, it will overstate the percentage charge.

TSCati

MallyGirl said:

keith969 said:

MallyGirl said:

with that size of pot you ought to be on a fixed fee platform - or is much of that going to the FA?

Can you explain what you mean, I'm afraid my knowledge of these terms is limited! From the info I have from Brewin Dolphin, fees and charges amounted to 2.02% in 2023, of which 0.71% were BD fees, 0.49% were 'intermediary charges', 0.81% were 'underlying costs of external funds in your portfolio'.

I use Interactive Investor and the monthly charges are £21.99 which covers a SIPP, an ISA and a general investment account - regardless of the value in each - so £263.88 per year. I use Acc funds so the fund costs are hidden within the price but none are as high as 0.81%. I DIY so no advisor fees.

Hi @MallyGirl and @poseidon1, I currently have an ISA and a GIA with Interactive Investor, and am very happy with fees and the functionality of the platform. I’m considering opening a SIPP with them and transferring my workplace pension, but in the back of my mind I’m concerned about having most of my investments with the same provider. Should I be, or am I being irrational?? 

MallyGirl

There is the slight risk that a tech problem with your single provider could prevent access to money when you need it but pensions aren't current accounts so a lag is to be expected anyway.