Small pension funds

Seems a good idea, however why does Tom McPhail feel that enhancements or changes to commission structures is relevant, has he not hear IFAs will be charging fees. Start speaking about fees and maybe the public will catch on as well

Posted by: Guest

Small Pension Funds vs Fees

Good idea. However no matter what alternatives are considered, the fees will always be a sticking point. Having offered the commission and fee alternatives to my clients for many years, I can count on the fingers of one hand how many clients have selected the fee option. Come 2012, the majority of small pension funds will remain in the hands of the pension providers and their poor annuty rates!

Posted by: Anon

Consider the costings

Let's look at a specimen transaction, and assume a fee rate of £100 per hour. Pension Fund £50,000; Annuity Portion £37,500. General commission rate 1%: £375. Fact Find Meeting 1 hr £100; Research 30 mins £50; Report 2hr £200 Total Cost £350 Administration time getting money from A to B 4hr £400. Based on the above it would theoretically be possible to provide compliant advice at the £50,000 level without reverting to Charitable Status. Were it breaks down is dealing with the respective insurance companies. A complaint that is now decades old and which the Regulators and the commentators refuse to acknowledge or do anything about. For example, I am now 1 year down the road trying to get the Pru to do a transfer. And one last point is that if a fee is charged then there is the cost on invoicing, chasing and the occasional leg breaking. If the FSA and Advisers would like a more professional business then the FSA have to tackle the gross incompetence of the major of Insurance Companies which makes a mockery of all the other efforts to control costs and increase efficiency.

Posted by: Glen McKeown