Moving SW Stakeholder to SW Personal Pension

eldy123

Hi,

I have some specific questions about pension charges which I hope someone can answer.

I've had a Scottish Widows Stakeholder Pension since 2002 and it has a 1% AMC. I originally got the Stakeholder from a Lloyds TSB advisor who sorted out the paperwork but was not permitted to provide any investment advice.

Ive contacted the same advisor again to get the pension transfered to a SW Personal Pension so that I can select a wider range of funds and I am happy to do the more detailed research to find the right funds for myself.

However looking at this board it seems that going direct to the provider is not recommended due the higher charges involved compared to a discount IFA.

If I went to see a discount IFA would they be able to sort out the transfer and also provide lower charges for the SW Personal Pension compared to the Lloyds TSB advisor? How much of a difference in charges could there be between the discount IFA and the Lloyds TSB advisor? Would the Lloyds TSB advisor be able to provide a discount if asked?

Also, ive heard that loyalty bonuses are applied to SW pensions if held for a certain period of time. Is this the case and would I lose the bonuses if I did not see the same Lloyds TSB advisor to arrange the transfer and would I lose the bonus if I transfered to the Personal Pension even though the stakeholder is from the same company?

dunstonh

If I went to see a discount IFA would they be able to sort out the transfer and also provide lower charges for the SW Personal Pension compared to the Lloyds TSB advisor?

Easily. The tied rep retails the product at full commission based charges. The IFA has the ability to retail the product on the same basis but also cheaper. In addition, a number of the Scottish Widows products are cut down or have more limited features if bought from Lloyds or direct. Some Scot widows products from Lloyds are more expensive. Their life assurance and permanent health insurance for example.

For example, Scottish Widows have three main pension products currently but you can only buy two of them from Lloyds. The best one is only available from an IFA.

How much of a difference in charges could there be between the discount IFA and the Lloyds TSB advisor?

Depends on the terms you agree and what you want from the adviser. The value of the investments involved may be key to this. Are you looking for total execution only basis or are you looking at part advice, part execution only?

Would the Lloyds TSB advisor be able to provide a discount if asked?

No. In theory they can if they sacrifice their commission and put a case to their head office but it will be nothing like what is possible from an IFA.

Also, ive heard that loyalty bonuses are applied to SW pensions if held for a certain period of time. Is this the case and would I lose the bonuses if I did not see the same Lloyds TSB advisor to arrange the transfer and would I lose the bonus if I transfered to the Personal Pension even though the stakeholder is from the same company?

There are. However, moving away from the stakeholder will lose that qualifying regardless of whom you use. The loyalty bonus is small fry and not something you would base an investment decision on. Indeed just one days movement in the markets can wipe out the loyalty bonus. If it was stakeholder to stakeholder then its a consideration (although a full commission stakeholder from an IFA can be 30% cheaper than the stakeholder you have got at the moment). However, given the choice to move to improved investment options offering greater potential, then I wouldn't give the loyalty bonus a second thought.

I originally got the Stakeholder from a Lloyds TSB advisor who sorted out the paperwork but was not permitted to provide any investment advice.

This is a limitation of tied agents. This would not have been an issue with an IFA as we are required to give investment advice.

There is never a reason to buy a product from a tied rep as at worst you will end up with the same pricing but at best you will end up with cheaper and/or better quality.

EdInvestor

Worth checking what sort of deal you could get from this discount IFA:

https://www.cavendishonline.co.uk

jem16

As far as I'm aware Cavendish only offer a cut-down version of SW Personal Pension with 23 funds as opposed to over 100 funds available through other IFAs who will still be able to offer discounts.

eldy123

"Scottish Widows have three main pension products currently but you can only buy two of them from Lloyds. The best one is only available from an IFA."

Would this be the Retirement Account? In what way is this the best? I was planning to discuss the Retirement Account alongside the Personal Pension with the advisor (so I could compare charges and see if I would be a better product for me in future when the porfolio is the right size and when im more picky with the funds)- so he could he tell me that he is not permitted to discuss it even though its a SW product??

"In addition, a number of the Scottish Widows products are cut down or have more limited features if bought from Lloyds or direct."

I downloaded the Life and Pension Investors guide from the SW Advisors extranet to look at the funds available - I'll ask the advisor if this is a cut down version. However, as Jem16 said, Cavendish seem to restrict the SW PP to just 23 funds (which is the same offering as the SW Stakeholder and going direct to SW I would be offered over 100) so I guess that IFA's are not consistent with their product offerings and this is something to watch out for.

"Depends on the terms you agree and what you want from the adviser. The value of the investments involved may be key to this. Are you looking for total execution only basis or are you looking at part advice, part execution only?"

Im happy doing my own research and building my own portfolio so will look for execution only.

"moving away from the stakeholder will lose that qualifying regardless of whom you use. The loyalty bonus is small fry and not something you would base an investment decision on"

Seems the only consideration in transfering to a different SW pension is if it has the funds that I like available. And no benefit in sticking with the Lloyds advisor - The funds offered may be cut down, the advisor is restricted in providing advice and therefore the charges don't offer value for money.

dunstonh

Would this be the Retirement Account? In what way is this the best? I was planning to discuss the Retirement Account alongside the Personal Pension with the advisor (so I could compare charges and see if I would be a better product for me in future when the porfolio is the right size and when im more picky with the funds)- so he could he tell me that he is not permitted to discuss it even though its a SW product??

All the funds on the stakeholder and personal pension are available on the retirement account with the same annual management charge. There is no need to mix and match.

Importantly, the charges on the retirement account are tiered. The more you have, the cheaper it is. If you intend to mix and match stakeholder and external funds, it can be good value. If you plan to use only external funds then none of the Scottish Widows options are the best option. If your fund values are low, then the scot wid personal pension is likely to be better. Longer term, Scot Widows intend to close the personal pension to new business and the stakeholder probably wont survive after the introduction on the NPSS.

, Cavendish seem to restrict the SW PP to just 23 funds (which is the same offering as the SW Stakeholder and going direct to SW I would be offered over 100) so I guess that IFA's are not consistent with their product offerings and this is something to watch out for.

No, Cavendish havent updated their website thats all. The product they offer will be the retail IFA product. IThe only thing that normally differs between IFAs is charges/commission.

Most IFAs will do execution only. Cavendish are the cheapest but they only offer a panel of providers on execution. However, if the product is in their panel, when it comes to pensions, they are probably the cheapest (with pensions).

I would expect the amc on internal funds to be around 0.6% from Scot Wid via an IFA on fee based execution only.