The Lemon Fool

Hello all,

My wife and I have been contributing directly into a Aviva stakeholder pensions for some years.

I now see Cavendish Online does a wrapper for exactly the same pension.

The difference?

Investing directly with Aviva incurs charges of 1%. Investing via Cavendish incurs charges of 0.45%.

OK there are a few initial one-off charges with Cavendish amounting to about £100 but is it really as simple as that? This would amount to a saving of about £900/year in charges for my wife and I.

Thanks,
Mike

Yes, but you could probably get pretty much the same investments for even less if you went for a flat fee SIPP.
What investments are you holding in the Aviva pensions?
And roughly how much in each?
With some further information I’m sure we could point you in the direction of a cheaper option.
One thing to check. Is 1% with Aviva the total cost, including the ongoing charges for the funds you are invested in? (Not always easy to work out). And with Cavendish, is that 0.45% platform charge with fund charges on top?

Thank you for the reply.
The money is invested in a single fund, Aviva Pensions Liontrust Sustainable Future Global Growth S2.
About £120,000 in mine, £60,000 for OH.
Charges:
Aviva - says re its stakeholder: "There’s just one clear fund charge – our annual fund charge, capped at 1%." (There's a relatively limited fund choice of around 40 as a result but more than enough to cover the kinds of things we're looking at.)
Cavendish - well that 0.45% is described as the "annual management charge", there's no mention of fund charges on top but of course that doesn't mean
there wouldn't be any.
Mike

Just to update this. The Aviva charge is 0.45% as it was rebated via an IFA, so not so bad as the 1% I originally thought.

So not much point shifting to the Cavendish 0.45% Aviva plan.

The fund is worth about £110,000 (after last week!). I'm mulling whether a low-charging flat rate SIPP might be better. I don't intend to trade really, I just want to have it sitting there purring away

Interactive Investor would charge me a flat rate of £210 a year for this, if I've understood right. Versus about £495 annual charge with Aviva.

OK not a king's ransom but it's money, and it shouldn't be difficult to replicate the Aviva fund I have (called the Aviva Liontrust Sustainable Future Global Growth S2) elsewhere.

Will mull on.

johnsm13 wrote:Interactive Investor would charge me a flat rate of £210 a year for this

That would be 4*22.50 for dealing and 100 + VAT for the SIPP.

There are a couple of offsets. If you have more than one account, a Dealing Account or ISA as well as the SIPP, the £ 22.50 is across all accounts. Their trading cost is £ 10 a time, so a small amount of trading recoups the £ 90.

Yes I was thinking of bringing a S&S ISA under the Interactive Investor roof too.

I've done a quick calc that I'm paying a total of about £655/year for the Aviva stakeholder pension and my Cavendish/Fidelity S&S ISA.

If I kept my gun in my holster and didn't trade much that could fall to £210/year for the two under Interactive Investor.

When you mention the trading costs of £10 a throw, alongside the £90/year trading fee, are you suggesting your "allowance" would pretty soon run out and that it could get pricey?

johnsm13 wrote:When you mention the trading costs of £10 a throw, alongside the £90/year trading fee, are you suggesting your "allowance" would pretty soon run out and that it could get pricey?

Rather more that even a "no trading" strategy runs up a few deals every year, such as the harvesting of gains in the taxed portion to finance the new tax year ISA and SIPP contributions. There's reinvestment of dividends and takeover proceeds as well. So 9 free deals are likely to be utilised.

Are you a fan of an alternative to II?

Other options include iWeb and alliance Trust savings (the latter is more expensive )
Have a browse of monevator.com broker comparison table and tool. You’re getting to the size where moving away from a percentage based charging system will be worthwhile.
Are you wedded to that particular fund? Do you know how much it’s ongoing charges are, when held via another broker/platform?
I personally only invest in index funds, which generally charge around 0.1-0.25% (on top of the platform charge).
I think your Aviva deal isn’t bad, but at some point you should think about a change to a flat fee based broker. You do need to work out the total costs carefully though, for your specific situation, including the platform fee, the fund management fee, and the dealing fees. And also any fees to transfer out, if you don’t like the new home.

Provided you avoid open ended funds Youinvest would be a good value option for you. Quarterly charge capped at £25 and you can use their "regular" dealing fee to invest for a flat £1.50. Regular dealing is very flexible. You set up an order to invest a certain amount of money in 1 or more securities and this is executed once per month. You are entirely free to alter, cancel or set up new orders whenever you want, so if you just want to invest once per year that is fine.

Not so good for OEICS as there is an additional charge for holding them, but no additional charges for ETFs and ITs.

johnsm13 wrote:Just to update this. The Aviva charge is 0.45% as it was rebated via an IFA, so not so bad as the 1% I originally thought.

So not much point shifting to the Cavendish 0.45% Aviva plan.

The fund is worth about £110,000 (after last week!). I'm mulling whether a low-charging flat rate SIPP might be better. I don't intend to trade really, I just want to have it sitting there purring away

Interactive Investor would charge me a flat rate of £210 a year for this, if I've understood right. Versus about £495 annual charge with Aviva.

This 0.45% Aviva fee - is that a fee you're paying them (via a reduction of units held), on top of an internally-charged fund management fee imposed by Lionheart?

ie. are their two separate fees, being charged via different methods, or is that 0.45% fee the entirety of charges imposed?

RececaDron wrote:
This 0.45% Aviva fee - is that a fee you're paying them (via a reduction of units held), on top of an internally-charged fund management fee imposed by Lionheart?

I assume the fund management fee is separate. Not obvious from the paperwork I have. Wouldn't it be nice if in their annual statements companies like Aviva just gave you a pounds and pence figure for how much you have been charged over the past year?

Jabd2001 wrote:Are you wedded to that particular fund? .

Not especially, though I like Liontrust and I like its global focus.

Jabd2001 wrote: moving away from a percentage based charging system will be worthwhile.

Agreed. Though it is devilishly complicated figuring out which one. Yesterday I thought I'd narrowed it it down to iWeb (at least I think it was iWeb) then, d'oh, the whole delicate calculus came crashing down when I discovered they don't cater for people who want to make regular contributions.

Why would you not cater for people who want to make regular contributions? Into a pension?

johnsm13 wrote:
Agreed. Though it is devilishly complicated figuring out which one. Yesterday I thought I'd narrowed it it down to iWeb (at least I think it was iWeb) then, d'oh, the whole delicate calculus came crashing down when I discovered they don't cater for people who want to make regular contributions.

Why would you not cater for people who want to make regular contributions? Into a pension?

Hi john,

I have an iweb SIPP and make a regular monthly contribution. As far as I can see they don't have an automatic investment option which other pensions I had in the past had. It is a slight pain to have to log on each month and make a decision about which find to buy. Is that what you meant?

johnsm13 wrote:

RececaDron wrote:
This 0.45% Aviva fee - is that a fee you're paying them (via a reduction of units held), on top of an internally-charged fund management fee imposed by Lionheart?

I assume the fund management fee is separate. Not obvious from the paperwork I have.

It must be possible to establish this - whether the Aviva fee is an additional one, on top of the Liontrust fund management fee - and it's essential you do so.

If you don't know what you're currently paying you cannot make any comparisons with other options.

NB for portfolios requiring regular investments rather than one-off additions, Halifax is an alternative to IWeb. It's the same company and platform, just different pricing models (and colours). Whether it'd be suitable for you comes down to working through the numbers.

The Liontrust fund management fee is 0.6%, and is paid on top of the Aviva fee of 0.45%. So total charges 1.05%.

As you were. Aviva has just got back to me to say that, after all, "This fund does not have additional yearly fund charges or fund manager expense charges."

So it's just 0.45%. Over the past 12 months I paid £522.18 in charges on a fund which was worth on average around £120,000 during that time.

Conclusion: I could probably save a few hundred a year by switching to a fixed-fee SIPP platform.

johnsm13 wrote:As you were. Aviva has just got back to me to say that, after all, "This fund does not have additional yearly fund charges or fund manager expense charges."

So it's just 0.45%. Over the past 12 months I paid £522.18 in charges on a fund which was worth on average around £120,000 during that time.

Conclusion: I could probably save a few hundred a year by switching to a fixed-fee SIPP platform.

If the only fees you are paying for the Liontrust fund are the 0.45% mentioned, as you've been advised (and as this Cavendish page suggests: https://www.cavendishonline.co.uk/pensi ... ons/aviva/ ) then this works out as a pretty low total cost for a pension savings product: "low cost" considering it's an active fund and you have no other charges (platform, SIPP annual fee or purchase transaction costs) to pay.

You may be able to find a cheaper SIPP setup if you were to buy very low (or no) cost index funds on one of the cheapest platforms. But note, you certainly won't be able to hold your current Liontrust active fund more cheaply within a SIPP, if that's what you'd been hoping to do, because the normal AMC you'll pay for this fund when held in a SIPP account will itself easily exceed your current discounted all-in charge. And then you'd face a load of other charges on top of that...

Therefore, you'd need to look very carefully at the specific funds or securities you were intending to purchase and take into account all of the various charges you'd face: SIPP setup fees, SIPP management fees, platform fees (if present), transaction costs (if present), fund management charges. There are tools out there to help you figure these things out.

It's important to go through the numbers so that the entire picture is made clear, then you can make an informed decision.

If you do this diligently, you may be surprised to discover quite how low your current all-in costs actually are compared to what you might face with some of the other some options.