Im transferring 2 older pensions into a new scheme recommended to me by a financial advisor

That percentage certainly seems excessively high, but it depends on the size of the fund being transferred.

This is because there are some fixed costs involved in giving the advice and doing the transfer in the first place. However, I would not expect these fixed costs to amount to more that £500 to £1,000.

Then there are the variable costs to do with the size of the fund and the level of complexity and the service being provided. The point being that the larger the pension fund the greater the risk to the adviser and his professional indemnity insurers if the advice is deemed to be wrong in the future, but this should be covered by the fact that the percentage fee is of a larger amount, not by having a larger percentage.

Having said all that, I would say that 3% of the fund value with a minimum of £500 to £1,000 would be a much more reasonable figure and I am sure that, like us, many efficient advisers could do it for less.

Unless your two existing pensions are in old style contracts and only have capital units, I do not see how the fund value in the new pension could ever catch up with and then exceed the fund values in the existing plans when the new plan is starting with 17% less money in it.

The adviser is only doing the transfer once so I don't see why the fixed fee is "for the transfer every month". If the fixed monthly fee is for something else, then it may or may not be reasonable depending on the fee and the service that you are getting for it.

Perhaps you could tell us what the fixed fee is?

I hope this helps.

Hi Martin, what company has he transferred you to, and what funds is he recommending.
Did he use a comparison system to see which were the most competitive companies with regards charges? Also what is the value of the two plans you are transferring? What will you be getting for the 0.5% per annum?