Pensions, annuities and financial advisers

[RogerS]

Random jottings and thoughts...as been mithering about this over the weekend.

Well the time is coming to think about what to do re the 'small' pension pot.

Where have I got to in my thinking? We're not risk averse....indeed, LOML seems pretty good at share dealing and outperforms most funds. Annuity rates are lousy and they aren't going to get any better in the short/medium or even long term from what I can see. We have no kids to leave anything to.

I like the idea of a drawdown pension. Seems to have a lot of upsides (if you are not risk averse). Shame you can't administer it yourself..you have to spend money with a SIPP provider. Who actually do nothing much for their fees. Certainly they won't tell you where to invest your money. Well, they might but only if it is advantageous to them and they get a commission. Well, they already do seem to get that via fund rebates. Some will keep all the rebate for themselves. Others make a big thing about giving you some back into your pot. Only it's peanuts. As in 0.1% of the rebate as far as I can see. So seems to me you want a SIPP provider who charges the least and lets you get on with deciding online where you want to invest your pot.

Different SIPP providers charge differently. Some usurious bas*ards will charge you for bringing IN your pension pot to them! How does that work then? Oh boy, am I going to have fun tomorrow asking questions like 'How do you justify charging me for bringing in my own money".... :twisted:

Doing your own share dealing in your SIPP is kinda dumb and defeats the whole object by the Govt (now or then) or FSA or Bank of England whoever insistedg that you have to put your pot with a SIPP provider....you can simply go and invest in some God awful share and lose the lot. But Hey....nanny state knows best...I just have to waste money for the privilege. Lots of salami slicing going on of your pension pot, it seems to me.

IFA's...who needs them? They won't make any specific recommendations as to which shares to buy these days as far as I can see. They will chunter on about risk etc ...stuff anyone with a bit of grey matter can suss out for themselves. And charge you for the privilege.

How am I doing so far ? :?

 

[devonwoody]

Roger, dont talk to me about pensions, I had the best pension provider in the country until they kind of went bust courtesy of the House of Lords. (Equitable)

Fortunately I did start drawing my annuity at age 54 and got ten good years in before those f&^%$&*$ got their bit guaranteed.

 

[Peter T]

Retired earlier this year and I'm taking a drawdown pension.

The GAD rates could be better but at least it's better than an anuity at the moment.

 

[RogerS]

..... 'How do you justify charging me for bringing in my own money".......

"So let me get this straight. In Year One, you charge me £125 to bring in my money into your SIPP?"

"Yes, that's right"

"And £150 to set up the initial drawdown pension?"

"Yes, that's right"

"And another charge for managing the SIPP of £550?"

"Yes, that's right"

"And another £550 the next year and each year thereafter?"

"Yes, that's right"

"So can you please tell me what I get for spending nearly £1000 with you in Year One when others charge £100?"

Silence. How do they get away with it? Fools and money.

 

[Sheffield Tony]

I don't believe that's a genuine transcript.. Financial advisors never answer in such a clear and concise manner.

I often think I would have been better stuffing my pension pot under the matress instead of taking out a SIPP. At least then there would only have been a chance of some thieving lowlife getting their hands on my money, rather than a certainty of it :wink:

 

[RogerS]

I could take umbrage but I won't. I did record it as I do all my financial telephone conversations and can send you a copy if you don't believe me.

Their charges are up there for all to see on their website.

I never said that they were financial advisers.

My current pension provider has increased my pot by 10% this year. I can't complain about that.

 

[devonwoody]

My recollection of the industry (in which I worked for some years)was that the provider received commission on the financial instrument and the client did not pay any costs for the pension provision.

That led to problems because sometimes the pension was provided by the company that paid the highest commission to the adviser.

So now you pay (most probably about the same amount as previously) as a fee yourself to the adviser.

The adviser has to make a living, and he expects more than £15 per hour :wink:

 

[RogerS]

It's different now, dw.

If you take the case of a SIPP. Unfortunately you have to have a SIPP provider who holds your 'pension' in trust. Mandated by Govt/FSA/Bank of England/any of the above to prevent us blowing all out pension pot on wine, women and song. But there compulsion ends. You have a complete spectrum available to you. At one extreme, you can pay for an Independent Financial Adviser. You don't have to. You can make the decisions as to where your pot is invested. You could tell your SIPP provider to stick all the money in an investment fund of your own choosing if you so wished. However that investment fund will make a charge. It varies from fund to fund.

Or you might entrust the SIPP provider to invest your money where it thinks best.....not the best solution IMO. Slight upside in that the SIPP provider gets a fund rebate back and some SIPP providers will re-invest part of that rebate back into your pot. You have to look at the small print. It is usually peanuts.

Or you can take the route that we are doing which is to choose a SIPP provider with minimum charges. Hargreaves Lansdown seem to win hands down for us. They might not for anyone else. Over a three year period, their charges (excluding any dealing charges which are totally under our control) amount to £75. A bargain. The other sharks (EBS SIPP) mentioned above charge nearly £2k for the same service. It is then down to us to decide where we invest the pot. Obviously cognisant of charges etc.

One thing we won't do is burn money by going to an IFA who, at the end of the day, won't actually recommend any specific shares or fund. You still have to make the decision yourself based on their shortlist.

Going back to my comment in para 2. It is somewhat crazy that with a SIPP, one could have stuck ones entire pot into RBS shares. As of today, your pot would be worthless and you'd be no better off then if you'd had the money all in your grubby mitt from Day One. Only you'd not have had the benefit of wine, women and song.

 

[devonwoody]

Roger, I sympathise with anyone these days at the moment who have got to negotiate a pension with there immediate retirement in mind.

Mind you I thought I was fire proof when I put my pot into the Equitable Life. But our Lordships did not look after me.

 

[Losos]

IFA's...who needs them?

Here here to that Roger - Do it all myself now, have everything in one nominee account, get a good income and some capital gain, pay less than £10 per deal and feel happy. Mind you I've been a PI for more than thirty years and have had a couple of firms go down on me but they were AIM shares which I avoid like the plague now :lol: