# Pension Charges



## anny (5 Jun 2011)

I have just retired and the fees being charged for my pension fund is as follows.. is this the norm.. please advise.. I am completely a novice to handling pension issues. 


"In the case of all of these policies above X receives an annual renewal commission of 0.50% of the fund value at the anniversary date under these policy arrangements.

There are annual management charges payable in the following amounts based on the funds selected within the 3 different policies:

1. Aviva Irl Cash Fund: 1% Annual Fund Management Charge (deducted monthly)
2. Standard Life Rabo Direct Demand Deposit: 1% Annual Fund Management Charge (deducted monthly)
3. Standard Life UK Nationwide Demand Deposit: 1% Annual Fund Management Charge (deducted monthly)"

Thanks


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## LDFerguson (6 Jun 2011)

anny said:


> "In the case of all of these policies above X receives an annual renewal commission of 0.50% of the fund value at the anniversary date under these policy arrangements."


 
I presume that X is your broker. S/he is receiving a commission of 0.5% of your fund per year, which is being deducted from your fund in addition to the 1% you quote below, which goes to the pension companies e.g. Aviva. I presume you agreed this deduction with the broker before signing up and that you are clear on what service the broker is going to provide to you each year in return for this 0.5%. 

I note that all three funds are cash or deposit funds. I presume that you specifically instructed your broker to invest your funds in very low-risk, low-return funds. Given that there's 1.5% per year being deducted from your funds, such a choice may not keep up with inflation over time and the funds may not even achieve the 1.5% per year, which would result in them standing still or even going backwards very slowly. 

As a very general rule, if you have monies within your pension fund as well as monies outside of your pension fund, and can tolerate a certain level of risk, it's preferable to hold the risk assets in your pension fund. You can hold monies on deposit with no charges and can generally get a better deposit rate as an individual than through a pension fund. But I cannot give specific advice without knowing your full financial circumstances, attitude to risk etc.


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## anny (6 Jun 2011)

Thank you Liam. Those are the fees for the 'broker/financial advisor' 

The funds are the schemes... 

1. Aviva Life & Pensions  Approved Minimum Retirement Fund (must remain in place until age 75)
2. Aviva Life & Pensions Approved Retirement Fund (subject to annual withdrawals of 5% of fund)
3. Standard Life  Approved Retirement Fund (subject to annual withdrawals of 5% of fund)
I am restricted in what I can do with them?  Do they have to be 'managed by a broker'.. the emphasis is on cash and low risk as I have just retired.. I am concerned that the  fund will fritter away on fees ..
Thanks

Anny


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## LDFerguson (7 Jun 2011)

Hi Anny, 

The additional 0.5% per year is a fee that's going to your broker.  It's discretionary in that it should only be charged to you if you have agreed to it. Which goes back to my original point - if you have agreed with your broker that the broker will receive an ongoing fee of 0.5% of your funds per year, are you clear on what service s/he will provide for this fee?

The funds you have chosen will be managed by Aviva and Standard Life and that's part of what their 1% pays for.


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## anny (7 Jun 2011)

Thanks again LD
If funds are in cash what management is necessary ie  the funds distributed into cash funds by Aviva to various banks?


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## LDFerguson (7 Jun 2011)

Aviva and the other insurance companies providing ARFs will always take a percentage, regardless of which fund you choose, even though, as you suggest, cash funds should require less active management than others.  

There's a thread here about self-administered ARFs on a flat fee basis.
http://www.askaboutmoney.com/showthread.php?t=155333


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