Charges

It can be extremely difficult to find out and compare the charging structures of different pensions, as companies have over the years developed a multitude of charges and scenarios to which they may or may not apply. These can typically include bid/offer spread, annual management charge and a policy fee, but may also include early transfer penalties and an addition of a loyalty bonus to counteract the effect of charges on larger sized funds.

Overall, a simplistic view of charges dictates that the further away you are from retirement, the less likely that the costs will have a significant impact on whether you should transfer, as time will dilute any initial costs and penalties associated with transferring.

Transfer analysis
Probably, the easiest way to make a charge comparison is to ask your provider for a current Valuation and Transfer Value of your pension, this will enable you to see what the costs are in moving away from your current provider. A financial adviser should automatically do this in preparing a pension transfer analysis for you.

Viewing the impact of deductions
Additionally, a financial adviserís transfer analysis will incorporate a projection from your pension provider to your chosen retirement age, allowing you and your adviser to see the immediate impact of charges in a new contract versus your old contract through to retirement.

Knowledge is power
Good financial advice is about simplifying the process and enabling you to understand the important factors in making a decision without spending days going back and forth with the pension providers trying to understand the process and pitfalls. Whilst the FSA has spent years simplifying product provider illustrations and projections of charges, it can still be very daunting for you to do. Financial Advisers do this automatically as part of their duty of care, taking advantage of this service is an easy way to save you the time and make sure youíre doing the best thing.