Private pension fees

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SGE1
SGE1 Posts: 784 Forumite
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in Pensions, annuities & retirement planning
Hi all,

I've just had some paperwork through on my personal pension, which confirms all the various fees for the year. I'm assured by my adviser that these are all competitive, but would be interested in how these compare to others.

Platform fees are 0.32% a year
Investment management charges are 0.22% a year
Financial adviser fees are 0.5% a year
So total is 1.04% a year.

My pension is pretty small (c.£50k) so I figure that low % charges are better than flat fees that are likely to be higher.

Welcome any thoughts.

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  • Alexland
    Alexland Posts: 9,653 Forumite
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    They look reasonable for someone taking advice otherwise at £50k it should be possible to DIY for around 0.25% platform fees and around 0.15% for good equity and bond funds so around 0.4% total. If you go into drawdown that can cost more. Once you get towards six digits then flat fee platforms can be cheaper - mine are under 0.3%.

    Alex
  • Linton
    Linton Posts: 17,173 Forumite
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    Investment management fees are always a %. An advisor may charge either but £250/year seems rather low. £50K may be too small a pot for some advisors to bother with. 0.32% platform charge for £50K = £160/year is higher than the £90 annual flat fee charged by ii. Other flat fee platforms may be cheaper, and 0.32% is higher than some % rates available eg AJBell at 0.25% for funds. Transaction and other one-off charges could make a significant difference to the figures as the flat fee providers tend to charge more.


    I dont think a few £s/year is worth bothering about. Your total charges seem reasonable.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    Linton wrote: »
    £160/year is higher than the £90 annual flat fee charged by ii

    II charge an extra £120 ontop of the £90 account fee for a pension with the £90 available as trade credits. Also unlike my Halifax SD apparently II do not deduct either fee from the pension so no tax relief on fees.

    It is unlikely that the OP is yet at a stage where a fixed price platform would be cheaper.

    Alex
  • dunstonh
    dunstonh Posts: 116,387 Forumite
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    Charges are very good.

    There are cheaper platform in the 0.2x% range but being out of the market on a transfer could cost you more than the saving in charges. Its not big enough a difference to move unless there is a reason to move. There are plenty more expensive ones (DIY favourite, HL is 0.45% p.a. if you want context).

    IFA charge at 0.5% is the dominant figure used by IFAs firms. So, right on the money.

    0.22% is very cheap. We tend to be in 0.3% to 0.5% range (depending on risk profile - higher risk ones tend to come in a bit more expensive). However, investment charges are not something you aim to have the cheapest as a priority. INvestment method and selection is primary. Charges are secondary.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    dunstonh wrote: »
    There are cheaper platform in the 0.2x% range but being out of the market on a transfer could cost you more than the saving in charges.

    I would agree with that and when moving significant sums of money around always go in-specie where possible. I know others have had nightmare transfers with lots of different holdings and dividends to chase but I tend to stick to a minimalist volume of accumulation funds so it's been ok.

    Alex
  • SGE1
    SGE1 Posts: 784 Forumite
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    Very helpful - thanks all.
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