Pension Fees

[red_slr]

With a lot of discussion about pensions in the last few days its got me thinking how do I find out what fees I am paying to my pension provider?
I have no documentation other than each year I get a letter saying my payment is going up by 10%. The letter does not even tell me my balance. I have to ask my IFA for that.

Is it just a case of ringing the pension provider and they will tell me over the phone?

Once I have the fees, which I presume they will present in the most complex way possible, whats the best way to work out what I will pay over the lifetime of the pension?

[Ginge R]

If you have an adviser, ask him for the overall costs and charges of the pension over its intended life - the figure should be presented to you as a reduction in yield, taking into account fund/platform/advice/management costs. Ask him too, if you have online access to check your fund value 24/7.

[mickv]

Hi OP. When you say "that my payment is going up by 10%" that sounds an odd thing to say about a pension policy. With a pension, you normally decide how much to pay in - either as a monetary amount or, if it's a company scheme, a % of salary.

To me, what you are describing sounds a bit more like some form of life assurance product or perhaps permanent health insurance. Any annual statement from a pension provider will almost certainly include a fund value. The other two products mentioned above will not have fund value, because they are insurances.

Hope this helps.

[red_slr]

My IFA insists on it going up by 10% PA. Its a personal pension, no company contribution (well that's not strictly true as my company pays it - but its still my money IYSWIM).

We actually refused to put it up last year as performance has been so bad and we had better things to spend the money on (we were buying a property).

[Ginge R]

If it's a defined contribution pension, unless the adviser visited you by TARDIS, there's no way he can tell you by how much it's going to be going up by.

[red_slr]

Its not its a personal pension - I can put £40k in this year and zero next year etc..

[Ginge R]

Gotcha, same thing. A personal pension is a defined contribution one. It's defined by what you contribute and how well it performs based on fund selection, market performance etc. Only if your adviser could see the future, could he/she be able to tell you how much it'll make.

[sidicks]

Ginge R said:

Gotcha, same thing. A personal pension is a defined contribution one. It's defined by what you contribute and how well it performs based on fund selection, market performance etc. Only if your adviser could see the future, could he/she be able to tell you how much it'll make.

I assume he has arranged an automatic premium increase of 10 per annum.

[Ginge R]

You're absolutely right, I misread that completely.

Red, apologies.

[mickv]

Ok, it's a personal pension. Just ask your adviser for full details of all charges relating to the contract then. He should give you chapter and verse.

Which provider is the contract with and what fund(s) are you invested in? You could probably go straight to them if you don't like what your IFA is telling you and they should definitely be sending you an annual statement which covers fund value and projected benefits - maybe your IFA is sitting on those? Ask him straight for a cope of the latest one.

Depending upon what level of contribution you started at, 10% increase in cont a year is a steep curve, so it's perhaps not surprising that you have hit affordability issues (or equivalently, are sometimes feeling like you have better use for the money).

It also sounds like you are self employed. If you run a business and have employees you will likely be caught be auto enrolment soon. As well as being a bit of a PITA administratively, that could give you a sensible opportunity to look at what alternative arrangements are out there. Concentrate on getting charges down as low as you can, whilst maintaining a decent range of fund choice.

[red_slr]

So my fees are...

Platform 0.40%
Provider 0.82%
Adviser Charge 0.75%

Does this sound reasonable?

[sidicks]

red_slr said:

So my fees are...

Platform 0.40%
Provider 0.82%
Adviser Charge 0.75%

Does this sound reasonable?

It very much depends!

Platform fee - probably in the right ballpark depending on the size of your assets and how good the platform is!
Provider fee - very much depends on the nature of assets being managed - 0.82% would be high for cash / passive bonds etc, but cheap for specialist funds
Adviser fee - depends on what you get for your money. If the adviser monitors your portfolio daily, gives you weekly updates and comes round to cook for you at weekends then it's a bargain. If he sends you a fund bskuation once a year then it's probably a rip-off!

[Ginge R]

red_slr said:

So my fees are...

Platform 0.40%
Provider 0.82%
Adviser Charge 0.75%

Does this sound reasonable?

What Sidicks said. If your needs are simple, if your fund and provider can be had for somewhere in the region of .5%, then an advised service should cost you somewhere in the region of 1.3-1.5% all in. Again, it goes back to what's fair. Find a good adviser that fits what you want, look on it as a long term two way arrangement and not a transactional one, and 0.75% is an absolute billy bargain. If he adds benefit!!

Edited by Ginge R on Friday 28th October 07:36