Fund choices and costs

[StepOne]

Hi all,

I'm looking for some views on my current pension choices, as I did minimal research when setting them up.

Having become a contractor a couple of years ago, I got in touch with Cavendish Online, who I had used in the past. Their only offering was a Fidelity FundsNetwork pension, so I went ahead and set it up, and transferred my previous work pension into it. I split the investments between 2 funds - Fidelity Index Europe ex UK Accumulation, and Fidelity Index US Accumulation. Both funds charge 0.25% Service Fee annually, plus "Ongoing Charge/Total Expense Ratio" of 0.1% for the EU fund and 0.07% for the US fund. I pay approx 10% of my gross earnings into this currently.

I've also got a Standard Life Stakeholder Pension Plan setup in 2004 which I no longer pay into. It's invested in the Standard Life FTSE Tracker Pension Fund, which (I found out today) invests primarily in the Vanguard FTSE U.K. All Share Index Unit Trust Fund. The fact-sheet mentions an Annual Management Charge of 1.0% and Additional Expenses of 0.01% for a total Fund Charge of 1.01%

By sheer fluke, at the moment, the 3 funds (UK, EU and US) are almost identical in size, although that will change as I no longer pay into the UK one. However, I do have UK shareholdings in ISAs, mainly in HYP-style shares, in the same ball-park valuation as each of the pension funds, and I am still saving into this as well as the pension.

I'm not really concerned with asset allocation at the moment (but am happy to receive any comments on it), but I do wonder whether I could be doing things more cheaply. For example, could I open up a SIPP, investing in Vanguard ETFs which could give me similar investments for a lower cost. Just starting to look at all this tells me that I probably should change the Standard Life fund for something cheaper, and I wonder whether I should just go ahead and combine the 2 pensions, or is there something to be said for having separate providers.

Any thoughts?

Thanks,
StepOne

[Urbandreamer]

I'm not really concerned with asset allocation at the moment (but am happy to receive any comments on it), but I do wonder whether I could be doing things more cheaply. For example, could I open up a SIPP, investing in Vanguard ETFs which could give me similar investments for a lower cost. Just starting to look at all this tells me that I probably should change the Standard Life fund for something cheaper, and I wonder whether I should just go ahead and combine the 2 pensions, or is there something to be said for having separate providers.

Any thoughts?

Thanks,
StepOne

In my opinion there are advantages to having more than one provider, but you often pay for it. It depends upon charging structures and fund sizes.

Re SL, as a shareholder I'm very glad that you have chosen to use them. As a fellow Fool I do feel that I should point out that Stakeholder pensions are expensive. Ironically this is due to lack of demand/interest and a government cap on charges. Without that cap charges would have increased that much that stekeholder pensions would be consigned to history.

Another thing you might want to consider is charges once you start drawing your pension. Different providers have different charging structures. If each of your providers has a fixed charge for taking money (and not all do) then having more than one provider increases your costs.

FWIW I contribute to a company DC scheme with Aveva and my own SIPP with A J Bell. The company scheme has many financial advantages but I enjoy the flexibility to buy individual shares or speciality ITs in my SIPP.

[JohnnyCyclops]

I think the Standard Life FTSE Tracker might be this one, from Trustnet.

https://www.trustnet.com/Factsheets/Fac ... PTA&univ=P

So I started to write this post from the point of view of the fund's performance, but pretty quickly realised SL is just a wrapper for the underlying Vanguard fund, much as you said, so comparing the SL fund to the Trustnet sector of "UK All Companies" and saying 'hey, it's underperforming!', is pretty meaningless.

I think you answered your own question re cutting out SL's "middleman" fees take.

I was looking at Trustnet earlier today for Mrs C's pension, invested in a Baillie Gifford fund, and was suprised with the number of times it was also listed but with a wrapper from someone else (Friends Life, to name just one) and each time the returns were just slightly lower for being contained in someone else's wrapper rather than with BG direct.

[StepOne]

I think you answered your own question re cutting out SL's "middleman" fees take.

Yes, I think I have but I'm still not sure about the best way to do it. I guess I am looking for the cheapest way to get a pension with the same underlying investment - a UK tracker.

Looking into it in a bit more detail, my Standard Life Pension is a Stakeholder pension. I could actually open when Standard Life call a 'DIY Pension' and buy the same fund, but with lower charges (0.5%), still through Standard Life. I could also transfer that scheme into my Fidelity Fundsnetwork pension and get a UK tracker with them which I'm sure would be cheaper, but I quite like having separate providers. I've never really looked at SIPPs in any great detail - maybe it's time to do that.

StepOne