personal pension transfer to stakeholder?

hinchy

Hi everyone would appreciate any thoughts on :-
am wanting to transfer a with profits pp (£50k) out of a closed fund .Am in a company scheme (10 years service ) and have 15 years to normal retirement age.
Have seen a couple of ifa's and both suggest stakeholders, one prefering Skandia ( whose high charges eg 5% initial charge were a definite no no ) and the other suggesting either Norwich Union (0.8% charge ) or Clerical Medical with its flexible personal pension series 3 .( which basically ties you in but rewards you in bonuses after 10 years)
Which left me thinking why should I bother with IFA's? , I can go out and buy a stakeholder myself. Is this pension advice the norm? by that I mean is the stakeholder the premier pension product today ?
(Any suggestion on which pension provider to look at would also be appreciated)

dunstonh

Skandia do not offer a stakeholder pension. They offer 2 varieties of personal pension. The one you describe sounds like the PP5 version which if you have a term of more than 14 years to go and invest in Skandia own range funds, will beat a stakeholder on charges. So, don't rule that one out because of the 5% up front. They have a 1% bonus paid every 5 years from the end of year 4 plus their amc on default fund is 0.75% and if you stick to in-house funds, you wont get above 1%. The charges reduce further when the fund gets above 75k.

NU stakeholder pension is cheap and used to be the best. However, the funds currently offered are just 4 (balanced managed, with profits, deposit and retirement protection). That doesnt really give much potential. However, NU are expanding that range next month and many IFAs are putting people on that now to gain access to the new funds next month. The NU PPP may offer better terms depending on amounts/timescale.

I am not aware of the CM Flexible personal pension. I think you are mixing up providers and mean Scottish Equitable. The FPP with scot Eq can produce lower charges than stakeholder if time is long enough.

Which left me thinking why should I bother with IFA's? , I can go out and buy a stakeholder myself. Is this pension advice the norm? by that I mean is the stakeholder the premier pension product today ?

I think your post answers why you should be bothered. You assumed that they were all stakeholder when they are not, misunderstood the Skandia PPP to think it was the most expensive when it could be the cheapest. Got Scot Eq and CM round the wrong way.

The difference between the different pensions and providers is very small. Therefore you will get different recommendations. An IFA may favour the Skandia pension if you are going to get regular reports on it as no provider can match Skandias reports. The Scot Eq FPP i have only used a couple of times. It can easily be cheaper than a stakeholder but Scot Eq can be a pain sometimes and I prefer not to place that much business with them. Clerical Medical pensions are fine and can often provide the lowest stakeholder charges but their in house range of funds consistently seem to perform below the others. NU service has, in the past been dire. However, for me its excellent as I have a dedicated support person due to the amount of business i place with them. An IFA that doesnt have that would find their service quite poor usually.

So, when looking at pension contracts that are more or less the same over the term, the IFA will advise based on what they feel will be the best option. Service and support (especially where a transfer is concerned) will be considered as well as fund selection and charges. All these things will give you a range of options.

Any of the three contracts you have mentioned would be suitable. I have done all three in the last few months. Which one is absolutely best? none of them. There is no absolute best. Each one offers pros and cons over the others but these three would certainly be up at the top end.

by that I mean is the stakeholder the premier pension product today ?

No its not. Its a defined charging structure which may be lower or higher than a personal pension. Personal pensions can have a different charging structure that can be higher or lower.

I can go out and buy a stakeholder myself

Of course you can but what you would you buy and why?

hinchy

Thanks , and yes I did get a little mixed up , the Skandia was a personal and it was Scot Eq. but the Norwich recommendation was for a stakeholder , the new funds to be offered next month were not mentioned so I'll get back to the ifa.
One question for now:- do all providers offer free switching from fund to fund within a plan and no matter how many times you switchie. from property fund to distribution funds)

whiteflag_3

Hi Hinchy

Can you answer a few questions re your post

What sort of commission structure (if any) were your IFA's proposing ?

Scot Eq have a standard PP, which has a large fund discount for funds over £50 K which can be further enhanced by the IFA giving up initial commssion, which can further reduce the amc. Means you get 90% of the benefits of the FPP without having to make the long term term commitment.

I cant imagine your "ifa" was proposing taking 8% commssion on the transfer to the FPP!.

Why did one IFA give you a choice? I would have thought making the choice of provider was his/her job based on your initial meeting! :eek:

EdInvestor

All this chat and absolutely no discussion about what the money should be invested in.


No wonder people are so disappointed about their pensions.

whiteflag_3

(

Any suggestion on which pension provider to look at would also be appreciated)

Sorry to disappoint Ed, just digging a little deeper to try and provide an answer to the poster's question (above) and get a feel for the quality of advice already given ( a subject close to your heart)

You, more than anyone will be aware that its so important to get the best wrapper before looking at the content.

What did you hope to gain from such purile comments? Why do assume everyone is disappointed with their pensions- Im not and I know plenty of others who feel the same . I got my annual statement today and my fund has increased 30% over the 12 months- im quite happy with that!

dunstonh

hinchy wrote:

One question for now:- do all providers offer free switching from fund to fund within a plan and no matter how many times you switchie. from property fund to distribution funds)

No. Some providers, like Skandia, are always free. Others have a limited number of of switches a year. A few will allow one switch but charge on further switches.

All this chat and absolutely no discussion about what the money should be invested in.


No wonder people are so disappointed about their pensions.

We cannot give fund recommendations here as that would be in breach of board rules and FSA rules. So why would you expect it?

The responses so far have probed the providers and the reasons they may have been recommended. We have not been present at the meetings so how on earth can you expect our responses to be any more detailed at this stage.

hinchy

Thanks for that Dunstohn; and Whiteflag you hit it on the head .I came away with a few recommendations from each ifa and not one concrete course of action." I'll still be paid commission whichever fund you choose, it is how the industry is now" certainly left me feeling that I wasted my time.
Surely an ifa worth his salt would have produced a documented report ?
This is my first experience of ifa's.

whiteflag_3

Surely an ifa worth his salt would have produced a documented report

Couldnt agree more! I cant understand why some IFAs chose to do business in this way. A report ( and recommendation)before any action is taken should be a bare minimum.

IFAs get a fairly bad treatment on this site which I think is overdone and can be quite annoying, however I find it a hundred times more annoying when I read about IFAs who had been asked to perform the most basic of functions and cant do it. Its not that they give bad advice but cant just give advice!

I'll still be paid commission whichever fund you choose, it is how the industry is now"

Not true :mad:
All the payments options, fees and or commission should have been discussed before any disussions on pensions took place.

Did you get a "keyfacts" the cost of our services documnent and also quote with commission disclosure form your IFAs?.

Im really disappointed your first contact with an IFA has left a bad taste!

EdInvestor

Did either IFA mention the (low cost online)SIPP option?
They would get no commission for doing so.
With a 50k fund, depending on what you invested the money in, this could be the cheapest way.

whiteflag_3

Ed

Did either IFA mention the (low cost online)SIPP option

Did you read in the press today that the FSA might be looking at the sale of SIPPs as they are concerned that they could be the next miss selling scandal.?

ps can you point out when mentioning SIPPS that unlike a personal or stakeholder pension SIPPS are not regulated and therefore do not provide the same investor protection

pps you dont disappoint!