Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • jsinc
    • By jsinc 14th May 18, 11:22 AM
    • 112Posts
    • 48Thanks
    jsinc
    Retirement options with a stakeholder pension
    • #1
    • 14th May 18, 11:22 AM
    Retirement options with a stakeholder pension 14th May 18 at 11:22 AM
    Mum planning to retire in next 5.5 years (currently 64), and asking for help with a Royal London 130k stakeholder pension, 100% invested in equities. Provider made a mistake in not transferring her pension into the disinvestment option although has worked out in her favour - but also forced a reassessment of choices.

    She's widowed and working, with an NHS pension and small Equitable pension. Her State Pension age is next year although may defer it for a few years.

    I know a little about investing basics and could build scenario models, but fundamentally not a financial adviser or tax expert. Have a few basic questions, if anyone can help:


    1) What's a normal fixed or % fee for advice in this situation?

    2) Do Stakeholder/PP/SIPP providers offer off-the-shelf draw down options tailored to risk profiles, or do these have to be self constructed and managed?

    3) Assume best annuity rates can be found via a broker. Is an 'annuity broker' the same person as the adviser in Q1?

    4) In taking a particular drawdown or annuity option, is the broker/IFA paid by the client or the providing company for this aspect?

    5) Is there any particular reason except tax planning/need the cash to take 25% as tax free cash upfront?


    Thanks
Page 1
    • xylophone
    • By xylophone 14th May 18, 12:11 PM
    • 26,488 Posts
    • 15,730 Thanks
    xylophone
    • #2
    • 14th May 18, 12:11 PM
    • #2
    • 14th May 18, 12:11 PM
    Has your mother obtained a state pension statement to help with planning?

    https://www.gov.uk/check-state-pension

    Your mother can book an appointment with Pensionwise to discuss her options but advice will not be provided - for that she will need to find an IFA and pay for it.

    https://www.moneyadviceservice.org.uk/en/articles/when-and-where-to-get-pensions-help-and-advice

    It is unlikely that an old stakeholder plan would offer drawdown options but your mother can check with RL.

    It would be possible to transfer to a provider offering drawdown - she would need to make her own investment choices.


    https://www.moneyadviceservice.org.uk/en/tools/annuities
    • dunstonh
    • By dunstonh 14th May 18, 12:17 PM
    • 94,498 Posts
    • 62,449 Thanks
    dunstonh
    • #3
    • 14th May 18, 12:17 PM
    • #3
    • 14th May 18, 12:17 PM
    1) What's a normal fixed or % fee for advice in this situation?
    Somewhere in the ballpark of 1500-2500
    2) Do Stakeholder/PP/SIPP providers offer off-the-shelf draw down options tailored to risk profiles, or do these have to be self constructed and managed?
    Stakeholder pensiond dont do drawdown.
    There are some cut down solutions for that scenario but the quality of them is not great and sometimes actually more expensive than the advised option.

    e.g. Royal London, who you mention, do an in-house option that is twice the annual cost of the adviser version. it has no advice fee like an adviser but within 4 years, the annual costs would exceed the intiail cost of advice.

    3) Assume best annuity rates can be found via a broker. Is an 'annuity broker' the same person as the adviser in Q1?
    Typically, best annuity rates are via an IFA. Not online so called annuity brokers. Especially on that amount. The online sites still take a commission as its non advised. the commission is higher than the adviser fee on advised cases. So, it creates a lower annuity rate. Plus, research has found that with enhanced annuities, adviser cases have been medical disclosure leading to better rates.

    4) In taking a particular drawdown or annuity option, is the broker/IFA paid by the client or the providing company for this aspect?
    IFA is paid a fee by the client but can be collected via the pension (the most tax efficient way). DIY options can take a commision and the commision is reflected in the product charges. It can vary depending on the company and who you approach and how you do it. DIY well and you can get cheaper. DIY badly and it will be more expensive.


    5) Is there any particular reason except tax planning/need the cash to take 25% as tax free cash upfront?
    With some annuity options yes. With other income options not necessarily.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • jsinc
    • By jsinc 14th May 18, 12:51 PM
    • 112 Posts
    • 48 Thanks
    jsinc
    • #4
    • 14th May 18, 12:51 PM
    • #4
    • 14th May 18, 12:51 PM
    Has your mother obtained a state pension statement to help with planning?

    https://www.gov.uk/check-state-pension

    Your mother can book an appointment with Pensionwise to discuss her options but advice will not be provided - for that she will need to find an IFA and pay for it.

    https://www.moneyadviceservice.org.uk/en/articles/when-and-where-to-get-pensions-help-and-advice

    It is unlikely that an old stakeholder plan would offer drawdown options but your mother can check with RL.

    It would be possible to transfer to a provider offering drawdown - she would need to make her own investment choices.

    https://www.moneyadviceservice.org.uk/en/tools/annuities
    Originally posted by xylophone
    Yes she has a state pension statement. Stakeholder was originally co-op and quite hard to find relevant info/unit prices - as I found out doing an analysis of their mistake on her pot.


    Will have a read through the links thanks.
    • jsinc
    • By jsinc 14th May 18, 1:11 PM
    • 112 Posts
    • 48 Thanks
    jsinc
    • #5
    • 14th May 18, 1:11 PM
    • #5
    • 14th May 18, 1:11 PM
    Somewhere in the ballpark of 1500-2500

    Stakeholder pensiond dont do drawdown.
    There are some cut down solutions for that scenario but the quality of them is not great and sometimes actually more expensive than the advised option.

    e.g. Royal London, who you mention, do an in-house option that is twice the annual cost of the adviser version. it has no advice fee like an adviser but within 4 years, the annual costs would exceed the intiail cost of advice.

    Typically, best annuity rates are via an IFA. Not online so called annuity brokers. Especially on that amount. The online sites still take a commission as its non advised. the commission is higher than the adviser fee on advised cases. So, it creates a lower annuity rate. Plus, research has found that with enhanced annuities, adviser cases have been medical disclosure leading to better rates.

    IFA is paid a fee by the client but can be collected via the pension (the most tax efficient way). DIY options can take a commision and the commision is reflected in the product charges. It can vary depending on the company and who you approach and how you do it. DIY well and you can get cheaper. DIY badly and it will be more expensive.

    With some annuity options yes. With other income options not necessarily.
    Originally posted by dunstonh
    That's very helpful thank you.

    If she's able to decide for herself on drawdown vs annuity (assuming she doesn't favour just leaving it invested for longer) -

    - I assume adviser version + arrangement cost for implementing her chosen retirement option is lower than cost including overall situation assessment? Are IFAs willing to arrange this without overall advice - and a good tart would be unbiased/vouchedfor enquiries? (apologies if that's a stupid question; I imagine this is bread and butter for IFAs but would like to check).
    • dunstonh
    • By dunstonh 14th May 18, 1:23 PM
    • 94,498 Posts
    • 62,449 Thanks
    dunstonh
    • #6
    • 14th May 18, 1:23 PM
    • #6
    • 14th May 18, 1:23 PM
    That's very helpful thank you.

    If she's able to decide for herself on drawdown vs annuity (assuming she doesn't favour just leaving it invested for longer) -

    - I assume adviser version + arrangement cost for implementing her chosen retirement option is lower than cost including overall situation assessment? Are IFAs willing to arrange this without overall advice - and a good tart would be unbiased/vouchedfor enquiries? (apologies if that's a stupid question; I imagine this is bread and butter for IFAs but would like to check).
    Originally posted by jsinc
    Regardless of what she decides, the adviser will have to cover off all suitable options and do filtering. So, nothing will be saved by doing bits herself and the charges wont be any lower.

    Also, I have found many times that with new clients that have approached us by saying what they want, they have ended up with something different because they were not fully aware of the options or the consequences of each of the options.

    I have no faith in vouchedfor given their high costs. They tried to get us to sign up with them a few years back and they actually wanted to take a significant cut of the adviser fee for any case referred over that went to business. We would have had to put our charges up to cover that and we didnt want multiple charging schemes. Unbiased has gone more lead based too Not as expensive as vouchedfor. Most of the local firms where i know the directors dont pay for sites like that any more. This can mean the best value local firms dont appear on those types of sites.

    adviser book is a new one that looks good and is currently free to advisers. They check adviser status. There is also the PFS directory that costs advisers nothing to be listed on. As a professional body, they also have qualifications verfiied.
    http://www.thepfs.org/yourmoney/find-an-adviser/
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • jsinc
    • By jsinc 14th May 18, 1:41 PM
    • 112 Posts
    • 48 Thanks
    jsinc
    • #7
    • 14th May 18, 1:41 PM
    • #7
    • 14th May 18, 1:41 PM
    Regardless of what she decides, the adviser will have to cover off all suitable options and do filtering. So, nothing will be saved by doing bits herself and the charges wont be any lower.

    Also, I have found many times that with new clients that have approached us by saying what they want, they have ended up with something different because they were not fully aware of the options or the consequences of each of the options.

    I have no faith in vouchedfor given their high costs. They tried to get us to sign up with them a few years back and they actually wanted to take a significant cut of the adviser fee for any case referred over that went to business. We would have had to put our charges up to cover that and we didnt want multiple charging schemes. Unbiased has gone more lead based too Not as expensive as vouchedfor. Most of the local firms where i know the directors dont pay for sites like that any more. This can mean the best value local firms dont appear on those types of sites.

    adviser book is a new one that looks good and is currently free to advisers. They check adviser status. There is also the PFS directory that costs advisers nothing to be listed on. As a professional body, they also have qualifications verfiied.
    http://www.thepfs.org/yourmoney/find-an-adviser/
    Originally posted by dunstonh
    That makes sense. Thanks again, and for the info on the sites.
    • xylophone
    • By xylophone 14th May 18, 2:24 PM
    • 26,488 Posts
    • 15,730 Thanks
    xylophone
    • #8
    • 14th May 18, 2:24 PM
    • #8
    • 14th May 18, 2:24 PM
    and a good tart would be unbiased/vouchedfor enquiries?
    This is not that kind of site.....
    • jsinc
    • By jsinc 14th May 18, 4:54 PM
    • 112 Posts
    • 48 Thanks
    jsinc
    • #9
    • 14th May 18, 4:54 PM
    • #9
    • 14th May 18, 4:54 PM
    Another basic question:

    Royal London charges are 1% pa on the 3 constituent funds (UK, Euro, US growth). If she opts to leave funds invested for a later decision, do other Stakeholder providers offer equity or mixed investment pensions with lower charges that are simple to transfer to?

    (Appreciate it's also possible to structure a SIPP with lower charges than her Stakeholder, particularly on 130k. But I don't think she'll be keen on a more regular and direct risk management option although I will discuss it).


    Thanks
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,476Posts Today

6,811Users online

Martin's Twitter