Many people enquiring to The Pensions Office express a dissatisfaction with the level of charges levied by their current pension providers. Indeed, a significant number cite this as one of the main reasons they would like to transfer out (or at least consider transferring out) to an alternative pension arrangement.

In fact, our enquiries often reveal that the charges under their existing policy are around 1% per annum, or perhaps even less. Perfectly reasonable. Sometimes we even receive requests to transfer, primarily because of perceived high charges, where the existing benefits are held within a group money purchase arrangement with annual charges of less than 0.5%.

The Pensions Office fully understands the desire to restrict charges to an acceptable level. Low or reasonable charges are, naturally, one of the important features when we consider which providers and funds to recommend. But low charges shouldn’t be considered in isolation, of course.

Many pension providers offer products with charges lower than 1% but the range of funds is often restricted to a single fund (e.g. a with profits fund) or only a small number of funds. Usually this small range is restricted to internal funds and, frequently, these funds have a consistent record of poor past performance against their benchmark or sector average.

This severely diminishes the potential for structured portfolio planning and may lead the investor into funds which under-perform their respective sector average by a much greater percentage than the relatively small saving in charges.

Thus The Pensions Office doesn’t shirk or apologise for the fact that many of our clients could reduce their pension contract charges. Instead, The Pensions Office are justly proud of the net effect of highly competitive charges and bespoke portfolio planning and fund selection.

If you see the logic and sense behind this approach, please contact The Pensions Office to discuss how we might be able to work together to the benefit of your clients.