# Is 7.2% administration fee excessive.



## dubguy45 (23 Jun 2011)

Hello.
I am in shock following a pensions meeting in work where it was noticed that the administration fee charged was 7.2% of each individuals total annual pension input.
Can somebody please list the fees charged to them to see if i am correct in thinking 7.2% is disgraceful.
Thanks.


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## LDFerguson (24 Jun 2011)

At first glance, 7.2% certainly seems excessive.  Fees for pension arrangements tend to be broken into two types - a charge per contribution and an annual charge on the fund.  Do you know what the annual charge on your fund is?

By way of context, our group pension offering (groups of two employees or more) offers 100% allocation (no charge per contribution), no policy fees, no bid/offer spreads and annual fund management charges starting at 0.8% depending on the funds chosen. This includes the ongoing services of a professional trustee and online access for employer and employees.

Liam D. Ferguson


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## Protocol (24 Jun 2011)

This is yet another example of the massive fees being charged by many in the pensions industry.

And yet they complain about a Govt 0.6% tax on pension funds.

Their charges are a multiple of the tax.


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## Sunny (24 Jun 2011)

Protocol said:


> This is yet another example of the massive fees being charged by many in the pensions industry.
> 
> And yet they complain about a Govt 0.6% tax on pension funds.
> 
> Their charges are a multiple of the tax.


 
I have never heard of a 7.2% fee for a standard pension. The fees mentioned above by Liam above are much more standard and they are hardly extortionate.

There is a cost in providing pensions and people can shop around. People can't do that with the 0.6% tax on pension funds.


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## colm5 (24 Jun 2011)

I would be shocked if the pension performed better than that per year over a decade. So, you are pretty much guaranteed to have less money than you put in over a long period of time, if you are lucky.


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## Protocol (24 Jun 2011)

Sunny said:


> I have never heard of a 7.2% fee for a standard pension. The fees mentioned above by Liam above are much more standard and they are hardly extortionate.


 
Unfortunately fees like this are all too common.  Thousands of people are paying them, mostly unknowingly.

I got a pension from a Hibernian branch, thinking I was cutting out the middleman broker.

The branch sales rep got *8% of each and every premium*.

I eventually got wise to these massive fees.


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## JoeRoberts (25 Jun 2011)

I reckon it is made up of a bid/offer spread of 5% ( which for some reason never seems to be classed as a charge) plus the annual management charge.
I always say to people who buy a pension - ask the provider what would the withdrawal value of the fund ( in a therotical situation) be after one year if there was no change in the fund price during the year. 

Is this a "low cost" company PRSA by any chance - there are a lot of them out there that would equate to the figures you quote. Even some company DC and AVC schemes have similar charges because nobody bothered to challange them. As a trustee, I pushed our providers for full allocation within our DC and AVC fund and achieved it. Too many trustees bow to the power of the big players or just don't get involved.

If people don't have a net allocation rate of 100%, then they are probably paying more charges than they realise. Nothing wrong with this as long as it's made clear to them, but it's not. Documentation has improved in recent yrs but it's still not good enough.


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