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Clarity disparity on pension fund fees

Personal pension and Sipp charges to invest in the same external fund differ by up to 1 per cent depending on provider.

Norwich Union charges 0.8 per cent to invest in BlackRock UK absolute alpha while Standard Life charges 1.8 per cent for the same fund. For Fidelity’s worldwide special situations fund, Standard charges 0.22 per cent while NU charges 0.9 per cent. For the Investec managed pension fund, Scottish Widows charges 0.89 per cent and NU charges 0.25 per cent.

Informed Choice joint managing director Martin Bamford says this makes it difficult to compare products. He believes advisers will begin to favour bespoke Sipps because the charging structure is generally more explicit.

He says: “It is a challenge. I guess that is one of the reasons proper Sipps are becoming more popular because you know you pay for the cost of the fund and the wrapper charge should be explicit and separate. Clarity is really important but the way of the traditional life company is to make things as opaque as possible.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “Often, by the time you add external fund charges to internal fund charges, the cost becomes extortionate. It does not help when things are not abundantly clear but some companies are better than others.”

NU head of marketing for corporate and pensions Paul Goodwin says: “We put things over in a way which we believe everyone can understand so when advisers are building investment portfolios they can do it in a way which gives them the confidence that they are seeing all the charges the customer is going to end up paying.”

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