Still confused.

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Comments

  • daisyrose
    daisyrose Posts: 142 Forumite
    First Post First Anniversary Combo Breaker
    Drawdown is a lot clearer now Thanks to all of your comments and links we think that we have decided to leave the tfls invested in the pension because we're not sure what to do with it for the best return and to move to flexi drawdown.
    The reason for taking the tfls was to reduce fees which would be 2.6%. This includes 0.75% I F A fee.
    I asked if these fees were high in another post and it seems that they are. I'm not confident about taking care of the pension myself so need the IFA to look after it.
    Leaving the tfls will increase the charges and erode the pension even more. The fund rose by approx 4% in the past year.
    I thought that I have read that between 3 and 5% per year is an amount to take from the pot. So if this is correct it's not good or am I looking at this the wrong way?
    Can I please have your thoughts and comments?
  • Andrew31
    Andrew31 Posts: 152 Forumite
    First Post Name Dropper
    If you are paying an IFA fee, would your adviser not help you decide what is best, after all that is what you are paying for?
  • daisyrose
    daisyrose Posts: 142 Forumite
    First Post First Anniversary Combo Breaker
    The IFA told us what our options are but the decision of how much we need for drawdown will be ours. When trying to make that decision I started to think about what % to drawdown and the effect of the charges on the pension.
  • Albermarle
    Albermarle Posts: 22,026 Forumite
    First Anniversary First Post Name Dropper
    fees which would be 2.6%. This includes 0.75% I F A fee.
    An IFA fee of 0.75% is not unreasonable for a medium sized pot . However if your total fees are 2.6% then the actual cost of the pension and funds is 1.85%, which is high .
    Something more in the region of 0.5% to 1.0% max would be more normal , so giving total charges of around 1.5% .
    You need to approach your IFA for an explanation of why you are paying so much for your pension and that you want it to be reduced .
    I thought that I have read that between 3 and 5% per year is an amount to take from the pot
    Yes it is thought that a 3% withd rawal rate is a safe option , meaning that your money only has a small chance of running out before you are very old .
    4% increases the chances of your money running out if you leave to a very ripe old age but is still a relatively safe %
    As you increase the % above that the risk of running out of money increases significantly . 5% is not a crazy figure and probably you would still be OK but anything above that is definitely not recommended.
    If you go for the higher % it helps to have a separate cash pot so you can reduce pension with drawals during times of market downturn .
  • daisyrose
    daisyrose Posts: 142 Forumite
    First Post First Anniversary Combo Breaker
    Thank you Albermarle for explaining this so well for me.
    I am ok with the IFA fee and I will query the fund charges. Are they likely to reduce their charge? I think that they are quoted in the terms and conditions.
    The Platform wrap charge, PEAS = 0.4% up to £99,999.
    The plan charges are:
    Annual admin charge £524,
    Annual pension fund withdrawal charge £158.
    All of the charges are average. I suppose that means that they change with the fund value.
    Is there any particular charge that is excessive or should I query the whole amount of 1.85%?
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