LTA taxed at 55% taken as lump sum, 25% as income

atush · 7 March 2018 at 12:20PM

I understand the SJP fee structure (which isn't that different to alternatives, maybe 0.4% higher ?)

No i dont think you do, as you have missed the whole 6% exit fee which no one else has. And I suspect that guarantee isnt made of much. It should be a HUGE red flag that they charge 6% to anyoneeveren if they wont for you.

Would you jump over a cliff if your friends at work did?

and i'd be surprised if they were just 0.4% higher. They are much higher from what I have seen.

Then, they dont do whole of market- they will only sell you hteir own funds. And wont sell you the inexpensive options most of us use (such as multi asset funds like Vanguard, or cheap global trackers)

dunstonh · 7 March 2018 at 12:37PM

(i) I understand the SJP fee structure (which isn't that different to alternatives, maybe 0.4% higher ?)

We were recently competing against SJP for a £500k investment. Our initial charge was £2500. SJP was £25,000. As usual, SJP's charges lacked transparency and were hidden in the fund charges as if it was still 2012. Their annual charges were about 0.7% a year more all in and that was using their own in-house funds (as they have to) vs us using whole of market funds. If we feel a fund needs changing as its going off the boil or we are in part of the economic cycle that suits a different invesmtent style, an IFA can change it. SJP cant as you are stuck with their internal fund range.

So, are you sure you understand the differences? Even if you do, why do you want to use such an expensive distribution channel with such heavy restrictions? We know that SJP can brainwash people with their slick marketing but this should really be a no-brainer.

(ii) Hundreds of colleagues used them and over the last 5 years have experienced phenomenal growths (typically 13% per year !)

And all of them paying over the odds and no-one stays with SJP once they realise the alternatives. The last 5 years have been very good for all investments. Just think how much more they would have got with a portfolio using whole of market funds at less cost.

NoMore · 7 March 2018 at 1:05PM

From your user name Cautious Invester - why are you wanting to transfer a DB pension in the first place? Going from zero risk to even low risk is not really cautious ?

Credit-Crunched · 7 March 2018 at 2:36PM

atush wrote: »

No i dont think you do, as you have missed the whole 6% exit fee which no one else has. And I suspect that guarantee isnt made of much. It should be a HUGE red flag that they charge 6% to anyoneeveren if they wont for you.

Would you jump over a cliff if your friends at work did?

and i'd be surprised if they were just 0.4% higher. They are much higher from what I have seen.

Then, they dont do whole of market- they will only sell you hteir own funds. And wont sell you the inexpensive options most of us use (such as multi asset funds like Vanguard, or cheap global trackers)

My parents have an SJP pension and are very happy with it, the adviser was very flexible on the terms and reduced the early exit to 1 year, and the TOTAL charges including his 0.5% were 1.3% per annum. This seemed comparable to the IFA quotes they had who were charging 1% per annum, plus fund AMC plus platform costs.

So, I think if you are able to drive down the initials, then they are a good bet. They have bi annual reviews, birthday card, christmas card, and answers calls every time. Their previous IFA met them once, signed them up and then never returned a call or met them each year.

I suppose with all jobs, good and bad ones.

dunstonh · 7 March 2018 at 3:06PM

My parents have an SJP pension and are very happy with it, the adviser was very flexible on the terms and reduced the early exit to 1 year, and the TOTAL charges including his 0.5% were 1.3% per annum. This seemed comparable to the IFA quotes they had who were charging 1% per annum, plus fund AMC plus platform costs.

AMC is old hat. No-one works on AMC nowdays. OCF has been the standard for some years. So, when you see charges mentioned on this board or via an IFA, they are referring to the OCF. Not the lower AMC.

e.g. SJP Multi-Asset L is 1.36% AMC. However, the OCF is 1.69%.
L&G multi-index 4 is 0.24% is OCF. They are not even bothering with the AMC any more.

Those two funds are the same risk but the L&G would need a platform. So add in around 0.3% and that makes it 0.54%. Add on 0.5% for IFA if you want ongoing and that makes it 0.94%. Vs the 1.69% on a like for like basis with SJP.

And performance wise, L&G has returned 34.12% since launch in Sept 13 vs SJP doing 12.57% in the same period. That was not cherry picking as I could find very many more funds that did better than L&G. I just picked a simple whole of market mainstream alternative.

This seemed comparable to the IFA quotes they had who were charging 1% per annum, plus fund AMC plus platform costs.

If its a small pot, then 1% is typical. If its a larger pot, then 0.5% is the most dominant figure.

So, I think if you are able to drive down the initials, then they are a good bet. They have bi annual reviews, birthday card, christmas card, and answers calls every time. Their previous IFA met them once, signed them up and then never returned a call or met them each year.

If you employ an IFA on transactional basis then they will operate on a transactional basis. You are not going to get ongoing reviews for free. However, you get lower costs instead. I, like most IFAs out there, have done plenty of transactional investments/pensions. More than ongoing servicing cases as it happens. One shot transactions are more than suitable for many people. They can get a pension at total annual costs of around 0.3% and dont need reviews in it.

With IFAs you get the choice of transactional or ongoing servicing. With SJP you do not. it is unfair to compare a transactional service that is not being paid for with ongoing servicing that is being paid for.

SJP are very slick on the marketing. They can afford to be with their charges. Some years back, I did a pension transfer from SJP that still holds the record for me as the effect of charges over the term was over £300,000 more than what I arranged. So, if you think birthday cards and Christmas cards are worth £300k because of charges then that is fine. It's a choice. I personally think that is bit expensive for a bit of glossy.

Credit-Crunched · 7 March 2018 at 5:58PM

dunstonh wrote: »

AMC is old hat. No-one works on AMC nowdays. OCF has been the standard for some years. So, when you see charges mentioned on this board or via an IFA, they are referring to the OCF. Not the lower AMC.

e.g. SJP Multi-Asset L is 1.36% AMC. However, the OCF is 1.69%.
L&G multi-index 4 is 0.24% is OCF. They are not even bothering with the AMC any more.

Those two funds are the same risk but the L&G would need a platform. So add in around 0.3% and that makes it 0.54%. Add on 0.5% for IFA if you want ongoing and that makes it 0.94%. Vs the 1.69% on a like for like basis with SJP.

And performance wise, L&G has returned 34.12% since launch in Sept 13 vs SJP doing 12.57% in the same period. That was not cherry picking as I could find very many more funds that did better than L&G. I just picked a simple whole of market mainstream alternative.

If its a small pot, then 1% is typical. If its a larger pot, then 0.5% is the most dominant figure.

If you employ an IFA on transactional basis then they will operate on a transactional basis. You are not going to get ongoing reviews for free. However, you get lower costs instead. I, like most IFAs out there, have done plenty of transactional investments/pensions. More than ongoing servicing cases as it happens. One shot transactions are more than suitable for many people. They can get a pension at total annual costs of around 0.3% and dont need reviews in it.

With IFAs you get the choice of transactional or ongoing servicing. With SJP you do not. it is unfair to compare a transactional service that is not being paid for with ongoing servicing that is being paid for.

SJP are very slick on the marketing. They can afford to be with their charges. Some years back, I did a pension transfer from SJP that still holds the record for me as the effect of charges over the term was over £300,000 more than what I arranged. So, if you think birthday cards and Christmas cards are worth £300k because of charges then that is fine. It's a choice. I personally think that is bit expensive for a bit of glossy.

Thanks for the discussion and heads up, I have had a slight panic then so Ive had my parents email over their forms and it definitely shows an OCF of 0.9% made up of 05% for advice and 0.4% for the products (the 0.4% is an average of the underlying funds AXA Framlington at 0.46%, Schroder Managed at 0.29%, Global Equity at 0.31% etc) this is together with an early withdrawal charge of 1% in the first year and 0% thereafter.

So from what I can see, the advisers have flexibility?

They are in a 'Managed Funds' portfolio and has returned 64.2% over 5 years and 25.6% over 3 years, so they are happy.

P.S Both pots are 6 figure pots

happyandcontented · 7 March 2018 at 6:22PM

So, of the bigger well-known firms out there who would be a good bet for a DB transfer with ongoing management?

We are looking at Hargreaves Landsdown.

bostonerimus · 8 March 2018 at 12:23AM

Platform and management fees are going to come straight out of your retirement income. So if you are paying 1% in fees and are withdrawing 4% annually that ends up being a pretty high percentage of your income.

LTA taxed at 55% taken as lump sum, 25% as income

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free