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JohnBarnard
27th March 2002, 14:43
Is it worth bothering to provide for a pension?

Annuity rates are so low at the moment that each £100,000 in your pension fund commonly buys a retirement income of about £5,000 to £6,000 per year. Of course, the actual amount depends upon factors like age at retirement, whether you want income to continue until death of spouse, and have inflationary increases. But you would probably want about half-a-million to buy a decent income.

Unfortunately, building this half-a-million is costly, even with the advantages of avoiding top-rate tax and NI when making contributions. Suppose it cost you £200,000 in actual contributions over 20 years; this is £10,000 per year you are spending. A worry to me is that funds typically charge 1% to 2% per year for management. Does this mean over 20 years that 20%+ will get nibbled away?

What are the alternatives? Can one do better investing take-home money? Do pension funds have to be used entirely for annuity purchase, or are there types of funds where some or all money can be taken as cash on retirement?

I have the questions, but no answers. I shall be interested to see how other contractors are planning for retirement.

Simon SJDaccountancy
27th March 2002, 15:26
ISA's are an alternative - chat it over with a decent IFA - they will be able to give you all the details.

Darren U
27th March 2002, 15:29
John......another alternative would be a SIPP. Have a number of clients who have these schemes, all of which are outstripping the values of a similar pension fund. They seem to be working as there are a number of bargains on the stock market at present (naturally you have to know where to find them), also you have more control over where your funds are being invested.

As Simon's stated previously, a decent IFA should beable to sort it out.

ededdandeddie
28th March 2002, 15:28
DarrenU

the points yoou make about a SIPP are valid, but a SIPP in itself does not address the concerns raised regarding pensions (cost/annuity purchase). In fact, with a lot of insurance company badged SIPPs the cost increases without necessarily providing a similar increase in benefit.

To throw in a couple of thoughts on the original post, one is that income drawdown has improved the position regarding annuities, if not solved it completely. The second is that, taking a personal pension viewpoint and a 40% taxpayer, the net cost of 60% of the contribution and the availability of 25% tax free cash, mean that the effective cost of each £1 being used ot purchase an annuity (ignoring any tax free growth) is 47p.

ISAs are good as a supplement, but the 7k limit is very restrictive and annual costs are not necessarily going to be better than an equivalent pension investment.

Of course, the situation becomes different if youo have gone down the EPP route with a genuine corporate set up so........... ask a decent IFA (and ignore the posts that will now crowd this forum about them all being commision hungry sharks blah blah only us contractors are decent people blah blah)

TheyThinkItsAllOver
28th March 2002, 17:53
I've been to see a couple of so called "independant" financial advisors about EPPs, SIPPs, etc. The whole pensions thing is so complicated it defies belief. I'm bottling out now because I don't like investing in something I don't understand 100%. Where's that mattress...

NeilW
30th March 2002, 09:19
<!--EZCODE QUOTE START--><blockquote>Quote:<hr> In fact, with a lot of insurance company badged SIPPs the cost increases without necessarily providing a similar increase in benefit.<hr></blockquote><!--EZCODE QUOTE END-->

Which is why you would instead use something like the nice cheap shell offered at SIPPdeal www.sippdeal.co.uk (http://www.sippdeal.co.uk).

<!--EZCODE QUOTE START--><blockquote>Quote:<hr> Of course, the situation becomes different if youo have gone down the EPP route with a genuine corporate set up so<hr></blockquote><!--EZCODE QUOTE END-->

Which would be idiotic for anybody contracting in an IR35 environment, precisely because the individual is likely to be dipping in and out of permanent work.

Any contractor on IR35 advised to take an occupational pension scheme out would in my opinion not have received best advice.

<!--EZCODE QUOTE START--><blockquote>Quote:<hr> ISAs are good as a supplement, but the 7k limit is very restrictive and annual costs are not necessarily going to be better than an equivalent pension investment.<hr></blockquote><!--EZCODE QUOTE END-->

But the money coming out at the end is tax free and not limited by the annuity problem. Self-select ISAs are available at a cost of only £20 per year over and above the normal cost of investment. With many funds the wrapper comes free.

And of course we always forget that there are usually two people in a household (£14K limit on ISAs), and that there is this wonderful thing called the Capital Gains Tax allowance which everybody seems to ignore. By my estimates a couple need a portfolio of abour £250K before you would start to run out of CGT allowance.

MidnightOil
30th March 2002, 14:02
I couldn't agree more with you Neil.

I'm not a financial expert by any means, but the way this government (and previous) treat Joe Public, I would never leave my retirement fund in their hands. However, you should take a cautious approach to your alternative investment strategy. I keep, and view, my "pension" fund totally separate from my investment fund and only take higher risks with the investments.

Who hows whether this is the right approach, but it's got to be better than the 50K I used to have with Equitable Life from my permie days. The trustees decided not to transfer the fund when the sh*t hit the fan and my fund is now worth significantly less !!! It hurts too tell you how much its now worth ;-(

stitchedup
24th April 2002, 17:49
as mentioned, typical contractors pay 47p to invest £1 in a pension.

The income tax charged when you draw the annuity depends where you live. In Cyprus it's 6% or so. I can think of worse places to retire than Cyprus (ermmm Berkshire?)

As far as I know, all the other investment techniques are after income tax has been paid now, so you invest half of what you can in a pension.

Clearly, few people will pay 40% tax on their annuity, but you'd pay 50%+ on money to put in PEPs etc now

Oh yeah: Friends provident do an online stakeholders that charges 0.8% p.a. - but the funds are a bit limited, and you can only contribute £3600 gross at the minute (to make their admin easier this year).

IR35 Avoider
24th April 2002, 18:14
Doesn't the UK government still charge UK tax rates on a British pension even if you live abroad? Presumably double taxation treaties will ensure that you don't pay more than the higher of the two rates, but if it's possible to pay less than UK rates I'd like to know.

stitchedup
24th April 2002, 20:49
my mate's dad was on a 40k pension,
and emigrated with his wife to Cyprus,
and he was very sure about what tax he was paying:
40% is very different to 6% !!!!!!!!!!!

BTW only a few places do this low tax, but Cyprus is a good one:
except for 3 facts:
the number of Turkish tanks on the other side of the island
The heat in the summer
the number of nouveau riche Russians with wealth of doubtful provenance (and I don't mean lottery winners)

MarillionFan
30th April 2002, 16:47
Ive looked into this recently - and whereas i am not a fan of pensions I have decided to take out one in addition to other investments.

I would recommend to all that a pension should be used in conjunction with a mixture of savings,premium bonds, buy to let property, shares and ISA's and that in the long-term you hope that only a couple of these get screwed up

Tonecontrol
30th April 2002, 18:31
As a variation on the theme, look at www.sippdeal.co.uk/ (http://www.sippdeal.co.uk/)
I haven't tried it yet, you can invest in shares, or anything, but inside a pension wrapper

ContractorAlchemist
9th May 2002, 20:08
John,
You mentioned annuity rates being low as a downside to funding for retirement via a pension- and are quite right- annuity rates are based primarily on long-dated gilt yields which have been steadily declining.
Consequently, the Life & Pensions industry has developed Income Drawdown and Phased retirement which allow you to defer an annuity purchase until age 75,
whilst drawing down an income from the fund between maximum and minimum Govt limits- re-assessed each year by the Government's Actuary Dept but based on
between 35% and 100% of equivalent benefits from an annuity.
Not all of your pension needs to go to purchase an annuity- with a Personal Pension or Self Invested Personal Pension, up to 25% of the fund can be paid out as a lump sum at retirement as Tax Free Cash. For an Executive Personal
Pension (EPP), the formula for max TFC is 3n/80ths x final salary (based on the best 3 consecutive years ending within the last 13) and where n is the number of years of service accrued with your Ltd Co.
Under certain conditions it is possible to fund an EPP for 100% TFC.
Alternatively, there are Funded Unapproved Retirement Benefits which can return the fund as 100% TFC- but there is no tax relief on contributions.

Hope this helps!

ededdandeddie
22nd May 2002, 12:45
Thank you ContractorAlchemist - BTW, I feel that you should maybe declare the financial services company that you work for (especially in regard to your initiated posts) as the accountants do.

Re content, it is 3 or more consecutive years so long as at least 1 is within the 10 years prior to retirement.
Also there are major NI implications on FURBS contributions now.
Also don't forget the 2.25 x annuity alternative to the 3n/80ths if it produces a larger figure so long as the 1.5 x final remuneration is not breached.

Enjoy

starchaser1234
7th June 2002, 16:11
Buy gold - its what the japanese are doing anyway.

And with the American financial markets looking like a increasingly like a house of cards post-Enron, it might be a safe , yet old-fashioned, bet.

The pensions crisis in the UK is frightening. I'm amazed that the government has virtually gotten away with it so far.

Furbster
24th June 2002, 21:39
I have been thinking about pensions recently (turned 30, and the clock is ticking!!)

Very Worried about annutity rates, and am keen to start a non-pension fund.

My idea is to save against my mortgage which is about to be with the woolwich (or similar to IF or Virgin), where savings are offset against the interest. This means that I get the equivalent of the 5% interest, but as it is tax free (and also yearly charge free) I can add 40% to this. In total then I get the equivalent of 7 to 8% growth.

Now that isn't bad rate, as well as being guaranteed. The other benifit is that if interest rates go, so does the return.

Can anyone see any problems with this?

Steve

mikethebike
25th June 2002, 10:27
There is no mention a SSAS here. I was told that investing using one of these, and then getting a loan against the money in the SSAS for a business property is where you really start ramping up your fund.
The rent you charge for the business property can be put straight back into the SSAS (minus the loan repayments of course). Have I been sold down the river here?

JoelHarding
26th June 2002, 16:22
Furbster

One of my clients uses an Open Plan Woolwich account to offset VAT, Corporation Tax, etc which is lying around in the company bank accounts.

The beauty of using the Woolwich is that they will offset the funds in an account under a different name (ie they will offset funds in the company's bank account against your personal mortgage). This means that the company never needs to transfer the cash into your personal name and therefore the director never has an overdrawn current account with the associated tax liabilities.

I don't know whether the Halifax or Virgin One would be prepared to do this.

Karl1
26th June 2002, 16:41
Interesting....
My manager at barclays would n't offset the company accounts - I shall take it up with him.

spevans
2nd July 2002, 22:02
Hi Joel,

I rang the Woolwich to ask about this and they said they only offset against Woolwich personal accounts but suggested I ring their parent co Barclays.

Barclays say they are not allowed to offset a personal mortgage against one of their business accounts due to tax reasons.

So I'm wondering how one of your clients can manage what Woolwich and Barclays say is not possible - maybe they put the mortgage into the name of their Ltd company??

Just curious.

cheers,
Simon.

blurr
5th July 2002, 15:18
Anyone managed to get more than one personal current account offset against a woolwich open-plan mortgage?

They told me only one current account could be associated with the mortgage.

Freelancer Financials
24th October 2009, 16:04
Anyone managed to get more than one personal current account offset against a woolwich open-plan mortgage?

They told me only one current account could be associated with the mortgage.

Yes you can have more than one linked account associated with a Barclays Woolwich Offset Mortgage. We normally set-up our clients with a minimum of two. One current account and another called savings.

Offset mortgages are a hybrid flexible mortgage which allow you to use the balance of linked savings and current accounts to reduce what you pay in interest on your mortgage. On a daily basis the total of these credit balances is swept across your mortgage debt and you only pay interest on the balance between the two. These schemes are great for contractors who often have money on hand throughout the year, but don't want to lock it away by formally paying off a lump sum of the mortgage.

You may have some cash savings for personal or tax, or just declared a dividend to last a few months. All this extra cash in your accounts can be used to offset against your mortgage instead of gathering dust in poor performing accounts elsewhere.

Can you use money in business accounts to offset your mortgage?

Barclays Woolwich will not allow you to use your business accounts directly to offset a mortgage. The only feasible way of using the money would be to move it into your current account.

John Yerou
FreelancerFinancials

fckvwls
24th October 2009, 17:36
wibble

He asked the question 7.5 frigging years ago. I appreciate your attempt at helpfulness and perhaps drumming up some business for yourself but I think the horse may have bolted as far blurr is concerned.
:rolleyes:

Freelancer Financials
24th October 2009, 18:28
He asked the question 7.5 frigging years ago. I appreciate your attempt at helpfulness and perhaps drumming up some business for yourself but I think the horse may have bolted as far blurr is concerned.
:rolleyes:

The advice is still helpful to contractors considering Offset mortgages today.

downsouth
24th October 2009, 18:38
The advice is still helpful to contractors considering Offset mortgages today.

Have you considered then writing some up to date guides on what us contractros can do with our cash?

sure to be of use on here I bet.

Freelancer Financials
25th October 2009, 01:04
Have you considered then writing some up to date guides on what us contractros can do with our cash?

sure to be of use on here I bet.

Everyone is unique. It depends on personal circumstances, age and how much cash you have?

Contractors can make use of a number of tax breaks available. The two most commonly used are ISA's and Pensions:

ISA's:
Rather than hold cash on savings accounts that will then generate taxable interest our clients have been able to build up a substantial 'nest egg', by using all or part of their Individual Savings Account (ISA) allowance. Each tax year ending April 5th, contractors can invest up to £7,200 into this tax efficient 'wrapper'. 'ISA allowances cannot be carried forward to the next tax year and so it's a case of use it or lose it.

Pensions:
Pensions are a great way for contractors to invest due to the significant tax breaks available. Pension investments can be invested from gross income (before tax) and thus attract tax relief at your highest marginal rate of tax.

[B]Invest in a BTL Property[/B
Good time to invest in a BTL property if you have a minimum deposit of 25%.

If you really want to know what to do with your hard earned cash then make an appointment with a financial advisor to conduct a financial review.

centurian
25th October 2009, 08:33
Invest in a BTL Property
Good time to invest in a BTL property if you have a minimum deposit of 25%.

Can you get a decent BTL mortgage on a 25% deposit while being self-employed.

Easily got enough for that, but looking at building up the pot and buying outright at auction. Just got to make sure I get enough cash before the train leaves the station.

kaiser78
25th October 2009, 08:48
Pensions:
Pensions are a great way for contractors to invest due to the significant tax breaks available. Pension investments can be invested from gross income (before tax) and thus attract tax relief at your highest marginal rate of tax.

[B]Invest in a BTL Property[/B
Good time to invest in a BTL property if you have a minimum deposit of 25%.

If you really want to know what to do with your hard earned cash then make an appointment with a financial advisor to conduct a financial review.

My FA has suggested to invest in equity ISAs instead of pensions, as the tax breaks cancel each other out - one taxed on entry the other on exit, but I can still access the funds if I need them in the future in the ISA route. Is this a recommendable way to proceed ?

Also why is now a good time to invest in BTL even with IR being low but a saturation of BTL properties remaining empty from what is read ?

Thanks.

Fred Bloggs
25th October 2009, 10:42
Contractors can make use of a number of tax breaks available. The two most commonly used are ISA's and Pensions:lief at your highest marginal rate of tax.Let's get things straight here- They are NOT "tax breaks that contractors can make use of". They are tax breaks ANYONE can make use of.

Olly
25th October 2009, 10:57
Let's get things straight here- They are NOT "tax breaks that contractors can make use of". They are tax breaks ANYONE can make use of.

hear hear...a tax break contractors can make use of is their company making chunky pension contributions ....but you all knew that already and you definitely knew about the cutting edge advice above!

p.s. I'm in the sod pensions group - relying on drawing down dividends from ltd until nowt left....whilst 21% is corporation tax saving is nothing to scoff at the downsides of tying up your cash in possibly poorly performing fund and then having restricted options what to do with it at retirement plus essentially not being able to touch it until then all add it to a pension not being as attractive is the headline tax saving. IMHO

Fred Bloggs
25th October 2009, 12:20
hear hear...a tax break contractors can make use of is their company making chunky pension contributions ....but you all knew that already and you definitely knew about the cutting edge advice above!

p.s. I'm in the sod pensions group - relying on drawing down dividends from ltd until nowt left....whilst 21% is corporation tax saving is nothing to scoff at the downsides of tying up your cash in possibly poorly performing fund and then having restricted options what to do with it at retirement plus essentially not being able to touch it until then all add it to a pension not being as attractive is the headline tax saving. IMHO
I'm in the "Ltd Co funded SIPP" camp myself. There is no need to go into funds run by poor managers. It has never been easier to invest in funds run by managers who are in the premier league over short, medium and long terms. Look up some of these guys- Philip Gibbs, Neil Woodford, Robin Geffin, Richard Buxton etc.......... Putting your money in the hands of a bunch of these people is certainly NOT putting your money in a poor performing SIPP. And it's dead easy.

Freelancer Financials
25th October 2009, 13:56
My FA has suggested to invest in equity ISAs instead of pensions, as the tax breaks cancel each other out - one taxed on entry the other on exit, but I can still access the funds if I need them in the future in the ISA route. Is this a recommendable way to proceed ?

Thanks.

Once again it all depends on your personal circumstances.

ISAs unlike pensions, don't attract the same upfront tax boost but as you pointed out are far more flexible in the way you can take out your money.

You can invest up to £7,200 every year in ISAs and the total amount saved can build quickly. ISAs are offered by most major financial institutions and you can choose which option suits you best, although it is generally best to seek the advice of an independent financial adviser.

However, ISAs are funded by your post-tax income, whereas pensions can be funded using limited company income. But again as you rightly pointed out there is no tax payable on the income received from ISA investments.

ISA's are great if you start them young and take a long term view. The one drawback is that you are limited to a maximum investment of £7200 in any given year.

With a pension you can contribute 'pre-taxed' company income from your limited company. If you are a higher rate tax payer, instead of declaring the income as company profit and taking the income as a dividend, you can put the same sum straight into a pension.

For example: You have £100 worth of company income, and you are a higher rate tax payer, not caught by IR35. You can either put the £100 into a pension, or you can declare it as profit and take it as a dividend.

But if you choose the latter option and take a dividend payment, you pay:

1. £21 in corporate tax on your £100, leaving £79
2. 22.5% personal income tax on the dividend, which takes another £17.78
3. Your total take home is £61.

Choosing the pensions option means that the whole £100 goes into a pension fund and then has an opportunity to grow in a tax efficient environment. In reality £25 of your contribution represents the part of the pension fund which you can draw tax free when you are retired. £36 of your money also goes into the pension fund, together with the £39 that would have gone to the taxman (quite a decent initial 'return' on your £36). This £75 can also grow and be used to skim off an income at a later date, or buy an annuity.

I can not tell you which way to proceed as I do not know enough about your personal circumstances. Hopefully the above information will give you enough information to help you make the right choice.

John Yerou

moorfield
25th October 2009, 14:02
I'm in the "Ltd Co funded SIPP" camp myself. There is no need to go into funds run by poor managers.

Hear hear.

And IMO there is no need to go into funds at all, I now choose to buy shares directly via both SIPP and ISA wrappers. I also believe the t'internet is the best and cheapest IFA one can find.

moorfield
25th October 2009, 14:05
Hopefully the above information will give you enough information to help you make the right choice.

John Yerou

I think you're off your target audience a little, many on here know all that already.

Freelancer Financials
25th October 2009, 14:25
Also why is now a good time to invest in BTL even with IR being low but a saturation of BTL properties remaining empty from what is read ?

Thanks.

I read the following report recently on UK investment properties -

"Good news for property investors as rental figures rise again.

There has been a rise in rental figures for the second consecutive month this year according to figures released by Belvoir, the independent specialist letting agency."

“Belvoir has over 140 franchises nationwide and the Belvoir rental index figures for September 2009 shows that the small but significant upturn in rental figures we noted in August has continued for a second month,” confirmed Mike Goddard, CEO of Belvoir. “Our latest figures show a 0.6 percent rise on a month by month basis, which equates to a 7 percent annual increase.

After months of slow decline in rents, totalling about 6 percent, the September figures confirm that the trend does now appear to have reversed and we are cautiously optimistic that this signifies the end of the ‘reluctant landlord’ and a return to normality in the rental market.”

It all depends on what you read. The above report is positive but tomorrow you could read another report saying something different.

The only way to really know what is going on in the BTL market is speak to friends and family who are landlords.

My personal opinion is that this is a good time to invest in a BTL property as long as you have a minimum deposit of 25 to 30 percent.

John

Fred Bloggs
25th October 2009, 16:42
Hear hear.

And IMO there is no need to go into funds at all, I now choose to buy shares directly via both SIPP and ISA wrappers. I also believe the t'internet is the best and cheapest IFA one can find.
You can possibly make more money that way. However, I have lost certainly more that way. So now, I just buy into proven premier league fund managers. I have had just one real dog of a fund that I had to cut my losses on, so I feel not too badly about it.

Olly
25th October 2009, 16:55
just a quicky....you know you can take 25% tax free from pension fund when you reach a certain age....
can you remind me what the age is and if it's due to change?
...also I seem to remember you don't have to buy an annuity and can continue to take out tax free amounts from the fund - does that sound right?

thanks

centurian
25th October 2009, 17:39
just a quicky....you know you can take 25% tax free from pension fund when you reach a certain age....
can you remind me what the age is and if it's due to change?
...also I seem to remember you don't have to buy an annuity and can continue to take out tax free amounts from the fund - does that sound right?

thanks

Age 55. It's tax free at the moment... But recently, they changed the term to "Pension Commencement Lump Sum" :eek

And yes, you can take the lump sum, but don't have to take an annuity. You can let it grow, put more in, or take a drawdown (which is taxable and limited in each year)

Freelancer Financials
25th October 2009, 20:46
just a quicky....you know you can take 25% tax free from pension fund when you reach a certain age....
can you remind me what the age is and if it's due to change?
...also I seem to remember you don't have to buy an annuity and can continue to take out tax free amounts from the fund - does that sound right?

thanks

Some facts about pensions:

1. Pensions aren't all about saving money to buy an annuity. 25% of your funds can be drawn tax-free from age 50 (55 for younger investors). And rather than buying a rigid annuity, you can leave funds invested and simply skim an income from the pension pot each year.

2. You no longer pay large portions of your payments in commissions to an IFA - commissions are negligible - comparable to buying a tracker fund.

3. Your savings can be passed on to your family if you die before age 75 - provided you've not bought an annuity. The money will not be subject to inheritance tax.

4. Your funds are perfectly safe as pensions funds cannot become
insolvent. A private pension fund is carefully protected by law.

When you retire, if you wish, you can take 25% of the money as a lump sum completely tax free. With the rest of the money there are various options:

* Skimming: you can take income from your fund based on specific limits
each year relative to the size of the fund.

* Annuities: You must purchase these at age 75, but you need not before
that age.

* Inheritance: You can leave your pension to your heirs--it is not subject to
inheritance tax if you die before you retire.

(If you die after retirement age, but before you take an annuity, you can still leave the funds to your heirs but there are taxes to pay.)

Your Options At Age 50 (or 55 after 2010)

You may, if you choose, start enjoying pension benefits from the age of 50, but from 2010, this will rise to 55. Nonetheless, you will have access to your money at a relatively young age and lots of time to enjoy it. You can take 25% of your money in a tax-free lump at this age (or later if you wish). It doesn't matter whether or not you have actually retired or are still working.

At Age 75

At age 75, you must use your pension funds to buy an annuity, or enter something called an alternatively secured pension.

An annuity is a policy that provides a regular income in exchange for a lump sum. It's not a high rate-paying investment and usually returns around 5%.

But it does ensure you a regular income as you mature. You should explore other tax and inheritance options at that point with an accountant or tax lawyer, but you will have many more lower-tax possibilities thanks to your pension investment.

I hope that helps.

John

Olly
25th October 2009, 22:04
Some facts about pensions:
When you retire, if you wish, you can take 25% of the money as a lump sum completely tax free. With the rest of the money there are various options:

* Skimming: you can take income from your fund based on specific limits
each year relative to the size of the fund.
John

Thanks for reply,
ok so 25% at 55....what are the rules on skimming? Does it attract personal income tax at normal rates?

Don't really see a need to go down the winding up company and paying 10% - captial gains allowance unless u really have to. May as well just continue to drain about 36K per yr in salary and dividends.
Ta Oliver

Freelancer Financials
26th October 2009, 00:37
Hear hear.

And IMO there is no need to go into funds at all, I now choose to buy shares directly via both SIPP and ISA wrappers. I also believe the t'internet is the best and cheapest IFA one can find.

If you have the time and the skills you may net a significant return, although there is also a significant risk of losing your cash, particularly if you are inexperienced in share dealing.

Freelancer Financials
26th October 2009, 00:48
I think you're off your target audience a little, many on here know all that already.

What about the influx of new blood? New freelance contractors that might want financial guidance? It's great that you know all this already, but that doesn't mean others won't benefit.

kaiser78
26th October 2009, 22:18
Some useful info on here from Freelancer Financials.
I have a related query to this discussion which maybe FF can give their view;

I have been running a Skandia funds MultiISA for the past couple of years. However the charges/commisison fees every time I make a contribution is 3% to my IFA and 1.5% to Skandia.

Now, my IFA does monitor the funds every 6 months and investment changes where necessary, but paying 4.5% charges/commisisons each time I make a payment sees excessively high ? Is it ?

Thanks

Fred Bloggs
27th October 2009, 07:42
Some useful info on here from Freelancer Financials.
I have a related query to this discussion which maybe FF can give their view;

I have been running a Skandia funds MultiISA for the past couple of years. However the charges/commisison fees every time I make a contribution is 3% to my IFA and 1.5% to Skandia.

Now, my IFA does monitor the funds every 6 months and investment changes where necessary, but paying 4.5% charges/commisisons each time I make a payment sees excessively high ? Is it ?

ThanksIf you don't mind, I can answer that. Yes it is high compared to my SIPP, but you are paying for advice, it seems. I have a SIPP with HL and apart from the underlying annual charge in the unit trusts (some of which is rebated anyway) there is no charge for running a SIPP invested in unit trusts. When buying unit trusts all (or the vast majority of) the buying/selling spread is discounted to you also. Holding individual stocks or investment trusts does incur extra charges. However, I am quite happy with the vast range of unit trusts open to me. Ofcourse, this only applies if you make your own investment decisions. If you want HL to decide where to put the money, they charge you just like any other IFA will. HTH.