Over the years I have done what I can to avoid being hit by charges when making pension contributions to personal pensions. For example, I have avoided long-term regular monthly commitments with consequent higher charges and searched for companies offering low annual management charges and even then have only paid in lump sums thereby saving commission outlay.
So far so good.
Now I want to think about cashing in the various pension pots and getting an annuity. The whole annuity type issue is worthy of discussion elsewhere and at length rivaling War & Peace. Best not talked about now. The point I want to make is the further rip-off we suffer at this stage. Please read on.......
My IFA wanted £750 + VAT to contact my pension funds and get quotes for the values of current lump sums and details of any bonuses and conditions. I phoned my 6 pension funds myself in one morning and after two weeks have detailed quotes from them all easy-peasy. It's the work of an admin clerk. I have then made preliminary enquiries from companies (on the open market) about likely annual incomes and have some initial figures. That was another 2 hours on the web.
The IFA now wants 1.5% of the funds value to arrange an annuity. I could do this in a couple of mornings at no cost! The IFA still refuses to refund anything.
The rip-off: I have asked pensions / insurance companies if they will deal with me direct and they say they'd be happy to do so,... BUT....they keep the 1.5% commission to themselves and pay no-one.
Do I get any of it, I asked. No chance.
I need an IFA who's feet are on the ground and who wants to make a deal with me.
The pensions industry is one big con and rip-off from start to finish.
Rant over. Advice welcome.
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5 seconds with google came up with this link.
www.mypersonalfinances.co.uk/annuityMain.asp?nav=annuities
They claim to rebate the commission to you.
Sure there are others around like this www.pension-annuity-help.co.uk/pension_annuity_execution_only.htm
Don't think you've tried very hard! ;)
Last edited by: Mapmaker on Fri 5 Nov 10 at 15:34
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Try calling Hargreaves Lansdown. Might be worth considering transferring all your funds to them or a similar funds supermarket (others are available).
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MM.
Thanks, but I need better. The second link offering an execution only service does offer cash back..but... the commission on a £250k pot is £3750 and they will give back only £1350. For this charge of £2400, I fill in the forms, I find the best annuity for my purposes and simply tell the execution only company to post off the form on my behalf.
Alas, the rip-off continues.
I fancy a part-time job. How difficult is it to jump through the hoops to be able to set up an annuity service? Doing only one a month would suit me.
Last edited by: Dulwich Estate on Fri 5 Nov 10 at 15:50
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>>Try calling Hargreaves Lansdown.
I dealt with a company I shan't name when attempting to purchase an annuity. Their representative initially gave very good figures, but their paperwork was dire. I had to correct several errors and when I came to purchase the annuity the figures changed - I stalled it.
The figures quoted then dramatically improved!
I ended up doing everything myself.
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any hint who you're dealing with? Wouldn't want to name and shame but maybe a subtle hint? So we never darken their door.
John
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Tooslow,
Top Cat would be initially correct.
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www.bppfinancialservices.com/ifa/qualifications.htm
Once you've passed the exams you'll need to pay your annual membership fee, and you'll need to take out PII. And you'll have to have the contracts drawn up by a hot lawyer to ensure that you're minimising your risk of beig sued for misselling.
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OK, maybe a step too far, MM.
Thanks again for the links. My google searching didn't get me your results at all.
I have phoned the first link and they are looking at a rate of 0.75% or maybe a fixed £1500 (once they've seen the precise details of my funds) with the balance as cash-back. That's looking much better.
Another thing I've learned: if you go for an impaired health annuity (high blood pressure, smoker, diabetes etc. etc. ) then a commission of the order 2.5% might even be payable.
It all shows that the industry is a minefield for those who aren't aware and can't do any maths.
Last edited by: Dulwich Estate on Fri 5 Nov 10 at 16:21
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>> The rip-off: I have asked pensions / insurance companies if they will deal with me
>> direct and they say they'd be happy to do so,... BUT....they keep the 1.5% commission
>> to themselves and pay no-one.
That's a pensions/insurance co. rip-off, isn't it, not an IFA one?
The same happened to me during a mortgage application. I avoided the issue.
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"That's a pensions/insurance co. rip-off, isn't it, not an IFA one?"
Yes, FT in that specific example.
But the IFA rip-off is alive and well. They wanted £750 + VAT from me to find the current value of my (& SWMBO) funds from the various providers. I did it myself, and learned a great deal, by phoning each in turn myself. Most had 0800 free numbers to call and the whole thing took no more than few hours. Much of the time was spent finding my paperwork in any case - something the IFA was never going to do. I bet some work experience clerk would have been given the task by the IFA.
I appreciate that they need to earn money to pay their own bills and so on but I think it's a parasitic and in my opinion odius way of making money. Even double glazing salesmen, after giving you a 75% discount "just for you today if you sign now" - ho, ho - eventually arrange for some real work to be done and improve your existence. Heaven forbid, I find myself putting car salesmen higher up the pecking order - at least you get a car at the end of it. What do you get extra from an IFA?.....FA.
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But isn't the whole financial sector riddled with with sharp suits trying to make their very large cut on the back of the 'worker', then expect those workers to bail them out due to their own greed?
Last edited by: Fullchat on Fri 5 Nov 10 at 18:30
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I don't understand why you are are dealing with this guy? It seems you dont need him, so why not just wave him bye bye?
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Thanks for the robust advice Zero.
I am not dealing with him. As you know, as a youngster, you start out with little knowledge and slowly gain more. I ditched greedy people early on but found my current IFA when I learned they would give me a refund of commission on unit trusts, ISAs and so on. The initial 5% fund fee was say reduced to 2% with the refund and I was happy enough with this.
After a gap of maybe 10 years I approached them about the pension business and asked for figures. Expecting some form of rebate, I was stunned by the amount they wanted and thought it would be good to give a blow by blow account to educate, amuse and generally inform the top quality readership of this site.
If my comments have saved even one poor soul from the clutches of greedy IFAs and frankly the entire financial services industry I will feel well rewarded.
I'm still looking.
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One thing you are right about is the almost universal rip off. There's a reason why city financial services salaries are so high - very large amounts of client money being churned with costs at every turn.
I haven't got to the annuity stage yet. I'm seriously thinking about income drawdown - never mind the visible charges, the annuity rates are dreadful.
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Pensions and Financial Advisor rip-off - Mapmaker
