Look Beyond The Headlines
After a good four year investment market and with Simplification, pensions have regained their respect in the minds of individual savers.
However, after the blue skies, clouds now approach with press speculation on a possible FSA investigation on the miss-selling of Self Invested Personal Pensions (SIPPs), where other simplified insured schemes may have been a better alternative. Another view might be, however, to look beyond the headlines.
At the time of writing, equity markets are retreating from their 2007 highs and Commercial Property funds, the safe haven of the past for many, are also seeing reductions and bleak prospects for the immediate future.
Whilst it may be a short term view, many pension investors are choosing to switch to cash to ride out the financial storm. One might think that an insurers low cost pension product, such as a Stakeholder Pension, perhaps with charges of some 1 to 1.5% , and using a Deposit Fund, might be the most economic vehicle and, for the smaller investors, this could well be the case. However, for the larger amounts, a surprising fact is often missed.
It is a paradox that the most economical of cash based investment strategies might be from a SIPP especially from one that is headlined as being expensive!
Dentons own SIPP has a standard annual administration charge of £485 + VAT. Given there are no other deductions taken from a cash invested asset, on a £100,000 fund, this amounts to an equivalent percentage charge of 0.57% - well under the normal charge of 1 to 1.5% - which would take £1,000 to £1,500 of the clients money.
Additionally, not all insurers are offering the top rates on their Deposit Accounts. Currently, Dentons are achieving an equivalent annual rate of 5.375% from the default Instant Access deposit account and 5.26% for a three month term deposit (rates are current at time of writing). Have a look at what YOU are getting sometimes it is important to look behind the headlines to find the truth.
Martin Tilley, Pension Consultant, at Dentons can be contacted on 01483 521521 or email enquiries@dentonspensions.co.uk. Please see our website for more information http://www.dentonspensions.co.uk/
Date: Jan 29 2008 2:40PM
Category: BUSINESS ADVERTORIAL