Any pension experts here?

I’m pretty clued up about investments but unsure about pensions. I have a SIPP and am trying to understand how my company scheme compares. Trouble is the SIPP is clear regarding fees but the company scheme less so – Aviva.

So if I put £1000 into a unit trust I know that there is a commission, likely to be around 5%, and an annual management charge (AMC). Some pension schemes rebate some of these charges – so maybe don’t take the up front commission and maybe give you some of the AMC back.

There may also be a fee from the pension scheme. I know that my company scheme has a 0.6% annual charge. Am I right in assuming that this is on top of the Unit Trusts’ AMCs and they’ll also take the up front commission? Given that they don’t say anything to the contrary I assume this is the case – the SIPP provider tells me clearly how much of the up front charge they rebate and also the AMC.

Morning bump. Pensions are so opaque….

Unless it is a fund set up specifically for Aviva it is unlikely any of the AMC will be refunded ie Invesco Perpetual run funds for St James’s Place wealth (spit) that mirror their other funds and have a lower amc, but you have to be a client of SJP to access them. I would also be disappointed to get charged the upfront fee (the 5% you mention) going through a large pension provider. If the provider is buying units on a large scale, as Aviva would be, then they typically have an agreement with the fund manager to waive the upfront fee.

The fee for your pension scheme will be separate those associated with the funds.

I spoke to Aviva and looks like you are right about external AMCs. The entire holding attracts 0.6% charge and external funds also have the fund AMC on top. I was also told that the upfront fee isn’t charged so that’s good.

You don’t like St James’s Place? I have been to one of their presentations.

No, i don’t, but its a very cleverly structured company. It is a very effective sales machine that is backed up by sensible research guys who are well worth listening to. However once you become a client they stick you into very generic outsourced fund strategies whilst charging you a fairly lumpy amc for almost no effort on their part. It’s a lazy way to manage money and i’d be happy to bet that you would get better performance for the same risk profile in one of the smaller more bespoke wealth managers.

That’s interesting. I met a guy on a club ride who wanted me to become a client and that’s when I went to a presentation; I decided it wasn’t for me as happy to manage my own investments. I do wonder if I’d do better paying someone – the best tips I’ve had came from wealth manager I used to know.