Pension management- what costs are usual?

[comewhinewith]

I'm having a well-overdue pensions review.

In the initial meeting I was told that their fees are 3% of the total value to move money into different pensions etc and then 1% annual charge for active management of pension investments.

That seems like a lot of money, but I have no idea if it's normal/competitive or not. Can anyone give me some insight please?

1% for active management isn't unusual (but check - is there an extra platform fee, trading fees, fund fees etc) but it is more than you need to pay.

The 3% to move seems excessive. I've moved all mine free.

Thanks. I thought 3% was a lot too.

Maybe I need to try to do this myself...

I'm sure I saw in a paper recently that if you're paying more than 1.5% you're paying too much . I was paying £10-£12k per year and saw the light and moved the lot to vanguard. It was the thought that in 10 yrs I'd pay over £100k + and that seemed ridiculous so that was what galvanised me to move .

I pay 0.55% per annum, plus the usual dealing costs. I do not buy funds, only direct public equity, which will make a difference. Even so, those costs you quote are high.

Just to add, an associate does invest only though funds or investment trusts and pays 0.92% all in.

I would prefer someone who pays a set fee rather than a % of the fund (though depends on the value)

Depends if you REALLY need to pay 1% per annum for an annual service. It you ar wa way off retiring and don't have particularly complex needs, I would manage myself

Thanks all - I've asked for pension advice as I'm a bit clueless & one of my existing pensions doesn't appear to be doing very well so need to change it.
But I don't think I really need regular management & the 3% just to transfer is eye watering!

The fees sound high, especially because the 1% annual charge may not be all-in. The “active management” might just mean choosing funds.

Then each fund may have its own separate annual charge of up to 1% or sometimes more, and there may be custody fees, sometimes called “platform fees” or “account fees”, on top of that.

I personally think that 1% all-in charges, or maybe 1.5% tops if you are buying something amore esoteric than broad market stock funds plus some bonds or bond funds, should be enough to cover everything . And anybody who is going to gain your assets as part of their AUM should be happy enough with the new assets to not charge any sort of one-off fee for turning up.

See below for an example of platform fees.

https://www.fidelity.co.uk/services/sipp/fees-and-charges/#tab-link

If your underlying investments are then in ETFs then the cost for holding them should be zero / negligible and investment management fees for the ETF no more than c. 0.2%

3% to move is outrageous - money for nothing. 1% to manage is pretty normal and can be worth it if you're closer to retirement and your employer pensions are stuck in lifestyle funds (that automatically take less risk but therefore do worse as you get closer to retirement. Some IFAs will just charge a one off fee to review your arrangements and advise (£3-£5k ish) which could be all you need. But hard no on 3% to move and if you do move your pot look out for exit fees (St James Place v bad for this). Not an IFA myself but have seen 2 recently as I'm in similar position to you.