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Family Suntrust will have select appeal

Axa Winterthur Wealth Management

Family Suntrust

Type: Group self-invested personal pension

Minimum group size: One

Minimum investment: £200,000 for each scheme

Investment choice: Pooled fund providing access to offshore and onshore bonds, stocks and shares and trustee investment plans, discretionary fund manager, Axa Isle of Man premier invest offshore bond providing access to onshore and offshore funds and stocks and shares , UK commercial property

Options: Unsecured pension, alternatively secured pension, lifetime annuity option, scheme pension

Charges: Initial set-up fee £500, annual management fee £675 plus £100 for each participant except those below age 18, annual investment fee 0.25% for investments up to £1, plus 0.15 per cent of the funds above £1m excluding investments in Axa Winterthur offshore bonds and trustee investment plans, unsecured pension and alternatively secured pension set up fee £100 each person, review fee £100 each review, scheme pension set-up fee £250 each person, review fee £200 each review, ad hoc work £100 an hour, additional charges for commercial property

Commission: Subject to negotiation

Tel: 0845 129 9993

Family Suntrust is a group self-invested personal pension that offers a range of retirement and investment options to groups of people who want to invest together, such as a family.

Looking at the useful features of this product, Informed Choice managing director Martin Bamford regards this as a useful retirement planning tool for families or company directors.

“It is a flexible product with the full range of investment options usually available through a self-invested personal pension. It is also flexible when it comes to taking benefits, with scheme pension available in addition to more traditional retirement options such as unsecured pension, alternatively secured and annuity purchase,” he says.

There is a requirement for an IFA to be in place at all times, which Bamford finds interesting. He points out that if the adviser retires or resign from the scheme, it will be wound-up unless a new adviser is appointed. “This is a positive feature which recognises the importance of professional advice when using complex pension schemes like this for retirement planning,” says Bamford.

He looks at the scheme pension option in more detail, observing that the minimum fund value to use this option is £100,000.

“The income available from scheme pension is likely to be higher than the equivalent level from an alternatively secured pension. The additional flexibility might appeal to some investors. Once you have taken a scheme pension it is not possible to move back into unsecured pension or alternatively secured pension, but you can move in the other direction.”

He adds that individual scheme underwriting is offered with the scheme pension option, which can increase the income level on offer. “This is especially useful if a client is in poor health,” he says.

Turning to the potential drawbacks, Bamford says: “The product requires members to pool their funds and have a single investment mandate. Some clients might face difficulties reaching agreement with their family members or colleagues over the direction of an investment strategy, particularly when they have differing investment objectives or benefit requirements.”

Bamford looks at the charges. He thinks the set-up costs are broadly equivalent with a full Sipp, but the running costs are higher. “Of course these running costs would be applied to the pooled fund, so effectively the cost is spread across members. In addition to the explicit annual charge there is also a 0.25 per cent annual charge on investments under £1m, excluding those in Axa investment products,” he says.

Discussing the potential competitors, Bamford says: “This is a niche market place. The main competition is probably provided by Rowanmoor Pensions with its family pension trust, which is a very similar product. Rowanmoor does not automatically pool funds within this product but you can pool funds to raise the capital to purchase a property.”

Summing up, Bamford says: “This is not a mainstream pension product but it is well constructed and will appeal to advisers working with select retirement planning cases.”

BROKER RATINGS

Suitability to market: Good
Flexibility: Good
Charges: Average
Adviser remuneration: Good

Overall 7/10

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