Pension advice - bad or good?

theboylard

Hi,

put friend in touch with my IFA, who sorted him out and my friend appears to be quite happy.
However, my friend has no Key Facts paperwork for any of the bits he's been sold(!!!) and I'm not sure about the advice he's been given re his pension.
He had 12k in a with profits pension, held by Standard Life from his time with a previous employer. He has been advised to transfer this into a Scot Equitable pension.

Now then, my understanding is limited but I always thought with profits were better?
I've told my friend to go back to the IFA and query the Key Facts and pension advice, but I'd like any views on the pension specifically?

As I've lined up someone else for the IFA as well, I'll call him tomorrow and grill him - I did tell him that he had to look after my friend - so if he has been naughty then I'll out him publicly.

Ta in advance,

dunstonh

He had 12k in a with profits pension, held by Standard Life from his time with a previous employer. He has been advised to transfer this into a Scot Equitable pension.

what Scot Eq pension? Section 32, stakeholder, personal, flexible or SIPP?

Now then, my understanding is limited but I always thought with profits were better?

Nope. Completely the opposite. Indeed, there are really only two viable with profits funds out there today and Standard Life is not one of them.

I've told my friend to go back to the IFA and query the Key Facts and pension advice, but I'd like any views on the pension specifically?

We cannot give you specific views as we don't know which version of pension your friend has. However, Scot Eq are a well used provider and many IFAs are happy with them. Their fund ranges are good in each respective category of pension. No reason not to use them at all. I would put them above Std Life.

so if he has been naughty then I'll out him publicly.

I understand your concerns but your knowledge is limited and there is nothing in what you have said so far to suggest any issues. I would have the money out of Std Life With Profits as soon as I could (and I have).

The only thing you would expect is an illustration and key features document. There is absolutely no reason for these not to be available at point of application. Scot Eq can be a bit of pain as transfer illustrations have to be got from them and not online. There is nothing in the illustration that the IFA would want to hide unless they are on maximum commission and are embarrassed at the figure. That said, a fund value of £12k would not give a figure to be embarrassed about.

EdInvestor

dunstonh wrote: »

I would have the money out of Std Life With Profits as soon as I could (and I have).

Indeed, Standard life WP is not a good place to be.However the Standard Life personal pension offers a good range of other internal and external funds, and the pension has low charges.It seems to me that the same result could have been achieved simply by switching out of the WP fund and into a selection of other funds inside the same SL pension.

Of course this would not have provided any income to the IFA as there would have been no commission payable on such switches as they are free.

So I think the IFA should be asked about the justification for transferring the pension to a new provider (which would generate commission and extra costs to the investor - a process known as "churning" ) versus switching to new funds within the existing pension ( which would not generate commission - but a fee could be charged for advice on which funds to choose).

Churning for no good reason is grounds for a misselling complaint if there are subsequent losses.

dunstonh

Indeed, Standard life WP is not a good place to be.However the Standard Life personal pension offers a good range of other internal and external funds, and the pension has low charges.

Std Life charges are standard. Scot Eq can be cheaper. If its a works money purchase standard life pension then the fund range will be cut down from the personal range.

So I think the IFA should be asked about the justification for transferring the pension to a new provider (which would generate commission and extra costs to the investor - a process known as "churning" ) versus switching to new funds within the existing pension ( which would not generate commission - but a fee could be charged for advice on which funds to choose).

Justification will be a doddle on this.

If its a stakeholder pension then there is no cost to the policyholder and could be cheaper but not more expensive. If its the flexible pension then its probably cheaper (on terms over 20 years to retirement).

Churning is when it is done to generate a commisison with no justification. A pension transfer is not a churn where there is justification. The FSA issued guidelines on pension transfers called OP18 and it gives the instructions effectively of when and when not to make a transfer.

No-one on this board knows what the charges are or the contracts. So no judgement can be made.