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Pensions

ProssPross Posts: 23,923
edited November 2013 in The cake stop
So today's big rip off Britain news story is pension fees with claims that a 1% fee could take £170,000 off a pension pot. Now to me a 1% fee doesn't sound extortionate but I'm trying to work out how big a pot you would need for it to wipe £170,000 off your fund. Obviously it sounds like it would be worth £17 million but there must be some clever maths on things like compound interest in there. It still sounds like BS to me given that my own pension pot is unlikely to be worth much more than that fee total!

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  • mudsuckermudsucker Posts: 703
    What's a pension?
    Fuelled by cake!

    2008 Specialized Stumpjumper FSR Comp for playing in the mud.
    2013 Trek 1.2
    1982 Holdsworth Elan.
    1987 Peugeot Tour 10
  • guineaguinea Posts: 1,177
    It's a yearly charge, not a one off.

    If you have 40 years of charges you have 40%* of your overall contribution wiped out, regardless of pension performance.

    *not accurate due to investments going up and down and compound interest, but close enough for government work
  • ProssPross Posts: 23,923
    So is the charge a percentage of your pot at that time rather than a percentage of your payments? If so I can see why that's an issue.
  • guineaguinea Posts: 1,177
    Yup, and has nothing to do with the performance.

    They can lose all your cash and still charge you.

    Effectively, if they don't make you more money in a year than their charge + inflation they are costing you money.
  • my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine
  • davieseedaviesee Posts: 6,473
    I am with Skandia.
    I manage my own funds.
    This means:-
    1. Lower fees.
    2 No one else to blame if it goes pear shaped.

    Batting above average so far.
    None of the above should be taken seriously, and certainly not personally.
  • KajjalKajjal Posts: 3,404
    Pensions really benefit you if you are paying 40% or higher tax. That way rather than losing 40% through tax it goes into your pension fund.
  • no sh it :roll: :idea: :lol:
  • davieseedaviesee Posts: 6,473
    Arent they a way of milking the system then? :twisted:
    None of the above should be taken seriously, and certainly not personally.
  • skandia? didn't they turn into old mutual?

    how can you manage your funds if your with a asset manager? do you mean you choose the funds and actively move between them?

    used to do quite a bit of work on skandia pension funds until the 'unpleasantness' and their business dried up!
  • davieseedaviesee Posts: 6,473
    This one, not as far as I know - http://www.skandia.co.uk/funds/fundinfo/
    Pick, choose & move.
    None of the above should be taken seriously, and certainly not personally.
  • drlodgedrlodge Posts: 4,824
    Fees are only part of the picture. You need to look at the return after fees are deducted. I'd rather pay 2% fees with a return of 4% than 1% fees with a return of 3%. I pay about 2% fees, but the returns on the funds I use (after fees are deducted) are higher than the funds with lower fees. Obviously if you have a boring type fund that tracks the FTSE 100 or something, then you want low fees as there's no management of the funds involved, and returns are more modest.

    To make an analogy...if you drive a high performance car, then you need to pay more for servicing the car and perhaps more often too.
    WyndyMilla Massive Attack | Rourke 953 | Condor Italia 531 Pro | Boardman CX Pro | DT Swiss RR440 Tubeless Wheels
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  • Wirral_paulWirral_paul Posts: 2,476
    This is a subject that is really disgusting me about our government - constantly trying to legislate us all into their latest idea to win votes by scaremongering.

    As drlodge says - it's the return after fees that is the important issue as to how big your pension pot ends up at retirement, but yet all that is being reported is how fees can wipe £xx off your pension pot. The government are considering limiting fees - probably to 0.75% or 1%. Well if you want low fees then there are plenty of pensions that will give you that already - but i spend my day showing how a higher cost pension will produce typically much higher returns (yes even after you get "fleeced" for the charges).

    My own pension is going into funds that have a 1.69% charge, but gave growth of 27.1% over the 12 months to August. Net result is over 25% growth to my pension pot over that 12 months - so i'm not about to worry that i've been "fleeced" for paying nearly 1.7% in charges.
  • I don't think using the past 12 months as a example of returns and fees is particularly useful given the markets are still recovering from one of the biggest crashes ever, it shouldn't be difficult for a fund manager to have found growth in the last few years, the sector average for a UK fund for example is around 24% in the last year.
  • Wirral_paulWirral_paul Posts: 2,476
    This is true ^^ - it was just an example. I could give you 20 years of data that shows how my own portfolio has outperformed any current stakeholder plan (charging at 1% or less) ....... but wont ;)

    There are certainly examples of pensions where the charges are at levels completely out of scale to the fund size - but that's often because people take zero responsibility for their own finances. It doesn't require legislation for someone to actually have their pensions reviewed by a qualified adviser and get them out of some of the old style plans where the charging structure simply doesnt suit the plan. I was looking at one guy's plans last week where he had 6 different plans - one of which was only worth about £600 but had a £3pm or so plan charge (so about £40 per year) in addition to the fund management charges. Given the charges level - his plan was projected to reduce to about £300 by the time he retired!! Clearly this is a completely unsatisfactory situation to be in, but resolved by him finally taking advice and consolidating into a single pension with clear charges (and which he should have done 15 years ago!!).

    Maybe its just me but I don't want legislation forcing me into a potentially worse position with my own pension funds because big brother feels he has to legislate to help protect those who take no responsibility for anything themselves. I want a choice in my own finances - and actually believe the pension reforms wont be anywhere near as drastic as they are trying to make out at present. It happened with Stakeholders years ago - they tried to cap charges at a lower level but relented in the end.

    I'm MD of my own Financial Services company and spend my day reviewing pensions and investments - so know a little about this subject.
  • Which plan is that? And whats your company?
  • mpattsmpatts Posts: 962
    my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine

    I am investing in steel - specifically vintage cycles.
    Insert bike here:
  • ballysmateballysmate Posts: 14,163
    mpatts wrote:
    my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine

    I am investing in steel - specifically vintage cycles.


    Wrong commodity. I have it on good authority that wine is the way to go. Huge potential rewards. :wink:
  • davieseedaviesee Posts: 6,473
    ballysmate wrote:
    mpatts wrote:
    my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine

    I am investing in steel - specifically vintage cycles.


    Wrong commodity. I have it on good authority that wine is the way to go. Huge potential rewards. :wink:
    Plus, I think the cycle retail bubble is about to burst.
    Anyone who will get into cycling is now into it and probably made most of there near term purchases.
    But you were just messing. Obviously.
    None of the above should be taken seriously, and certainly not personally.
  • mpattsmpatts Posts: 962
    daviesee wrote:
    ballysmate wrote:
    mpatts wrote:
    my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine

    I am investing in steel - specifically vintage cycles.


    Wrong commodity. I have it on good authority that wine is the way to go. Huge potential rewards. :wink:
    Plus, I think the cycle retail bubble is about to burst.
    Anyone who will get into cycling is now into it and probably made most of there near term purchases.
    But you were just messing. Obviously.

    I disagree - massive untapped potential in vintage bikes I think. A team Raleigh Banana makes anyone my age go weak at the knees.
    Insert bike here:
  • ballysmateballysmate Posts: 14,163
    mpatts wrote:
    daviesee wrote:
    ballysmate wrote:
    mpatts wrote:
    my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine

    I am investing in steel - specifically vintage cycles.


    Wrong commodity. I have it on good authority that wine is the way to go. Huge potential rewards. :wink:
    Plus, I think the cycle retail bubble is about to burst.
    Anyone who will get into cycling is now into it and probably made most of there near term purchases.
    But you were just messing. Obviously.

    I disagree - massive untapped potential in vintage bikes I think. A team Raleigh Banana makes anyone my age go weak at the knees.


    I get the same effect from drinking a couple of bottles of fine red.
  • ProssPross Posts: 23,923
    mpatts wrote:
    I disagree - massive untapped potential in vintage bikes I think. A team Raleigh Banana makes anyone my age go weak at the knees.

    F**k, wish I'd known that before I dumped my first 'proper' bike in a skip. Sit down before viewing!

    1990cyclocross_zps0e5ae90f.jpg
  • davieseedaviesee Posts: 6,473
    mpatts wrote:
    I disagree - massive untapped potential in vintage bikes I think. A team Raleigh Banana makes anyone my age go weak at the knees.
    censored !
    I gave mine away to my stepson.
    For free.
    None of the above should be taken seriously, and certainly not personally.
  • ballysmate wrote:
    mpatts wrote:
    my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine

    I am investing in steel - specifically vintage cycles.


    Wrong commodity. I have it on good authority that wine is the way to go. Huge potential rewards. :wink:

    If only there was an oenophile here to advise...
  • ProssPross Posts: 23,923
    ballysmate wrote:
    mpatts wrote:
    my pension pot is a disaster. truly shocking. can anyone recommend a fund (s) to invest in. i think swip or whoever own them now are managing mine

    I am investing in steel - specifically vintage cycles.


    Wrong commodity. I have it on good authority that wine is the way to go. Huge potential rewards. :wink:

    If only there was an oenophile here to advise...

    Surely they wouldn't admit to that for fear of lynching by Sun readers?
  • Well one actively searches others out on here!. Where is he anyways, he didn't respond to my holiday questions!
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