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Pension Set Up Costs Explained

Pension Set Up Costs Explained

What are the fees?

There are many myths surrounding set up and ongoing costs of the various pension types available on the market and the effect that these charges have on an individuals final pension fund and therefore the income that would receive in retirement.

 

Traditional pension

There are a number of different charges involved in traditional pension schemes, with differing fees and charging structures from different providers which can be confusing for most investors and which makes it difficult to get a true cost comparison when deciding which provider to use. That is not to say that the cheapest provider is necessarily the best as no one can accurately predict what the performance of the stock market, where the vast majority of these funds will be invested.

In general the fees involved will include an Annual Management Charge (AMC) which depending on the provider and the funds can range from 0.25% to 1.8% as a percentage of the fund. As an example a pension fund of £150,000 would attract an AMC of between £375 and £2700 per annum, this would be charged regardless of the fund performance. There are other charges which can be levied on top of the AMC, such as a service or policy fee which could be up to £15 per month, an underlying fund fee, which could see investors pay an additional 20% charge on gains above a certain predetermined level at outset of the plan, a temporary additional AMC of 0.2% for plans under £15,000 value and an external funds AMC of an additional 0.15% if an investor decides to use a fund or investment, such as a property fund which is not on the scheme providers fund list.

As you can see there are a lot of potential charges which can both confuse an investor and impact on the real growth of a fund even before we take the uncertainty and volatility of an equity based investment into account or indeed the IFA charge for the advice and service provided by them, which on average can cost between £50 and £250 per hour.

 

SSAS Pensions

Many people have taken the decision to exercise more control over their retirement planning and move away from the traditional pension schemes and the uncertainty of stocks and shares investments and look at a plan that will allow them to invest their pension in property in one way, shape or form. This could be done through property crowd funding or peer to peer lending to gain fixed returns over a fixed term with the underlying security of a legal charge on physical property, through the purchase of commercial property or land or indeed through a pension loan to the investors company.

With all of the flexibility and opportunity that this type of pension offers some might be forgiven for thinking that this would be a higher cost option, this simply is not the case.

At The Landlords Pension we have been helping people take control of their retirement plans for over 12 years and at a cost from as little as a one off £500 initial fixed set up fee and a fixed annual administration fee of £500 regardless of the pension fund size.

 

What do you get for your money?

The service for the initial set up fee and the annual administration fee include:

  • Preparation of the Trust Deed and Scheme Rules
  • Opening of the scheme bank account
  • Appointment and provision of the Professional Trustee
  • Corresponding with HMRC
  • Handling day to day general correspondence
  • Provision of online facilities for clients and advisers
  • Dealing with alterations to the Scheme Rules following legislative changes
  • Maintenance of records including correspondence
  • Provision of annual statements
  • Submission of Event Reports, Accounting for Tax Returns and Registered Pension Scheme Returns to HMRC
  • An initial and subsequent annual Trustee meetings
  • Liaising with the Pensions Regulator and Information Commissioner

 

Summary

If you are looking to take control of your own pension fund and want the flexibility to make your own investment decisions then a SSAS pension could provide the answer and as has been established this can be done at a cost which is potentially much lower than many peoples existing pension schemes.

If you’d like to find out more about how The Landlords Pension could help you grow your retirement fund Click Here to arrange to speak with one of our experienced consultants.

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