Where to switch closing Skandia pension fund?
|Retirement | Investment Choice
Asked by CWatters, submitted
17 September 2010.
Skandia are closing a pension fund and the defaut/do nothing option is to switch to the "Skandia Prof. Fidelity Flexible Managed Fund" which carries higher charges (TER 1.3% vs 0.9%).
Problen is I've been unable to find out anything about the recommended fund. Nothing on the Skandia or Fidelity web sites or on Trustnet. Fidelity don't appear to have a fund of that name (yet?). Skandia say in the letter that the new flexible fund (actually they don't call it a new fund) will be managed more "flexibly" but "without the oversight from Skandia".
Q1: This sounds awfully like a 44% increase in fees for doing less work? Who is getting the extra fee money, Skandia or Fidelity?
Q2: Should we be concerned about the lack of oversight Skandia mention or are all pension companies doing that these days?
Q3: Should we be looking at other Skandia funds instead? or even transferring to another provider?
The holder is a 50 year old unemployed or rather early retired woman living on other investment income. She isn't contributing to this fund anymore nor is she drawing from it. However she may need to draw some income from it when she reaches 55 (help with school fees). Basically she isn't critically dependant on this fund but obviously wants it to do well and not go on high fees.
Answered by Justin on 20 September 2010
Skandia Professional has closed around 20 funds over the last couple of months, so I'm not sure which fund the holder owned. Nevertheless, it should be possible to find some cost effective alternatives, despite Skandia Professional pensions not having as a wide a fund choice as other Skandia pensions.
To answer your first two questions: any extra fee is very likely going to Fidelity and it's rare for pension providers to oversee funds except for those they manage themselves. In any case, while ok, I wouldn't rank Skandia amongst the best fund managers so their lack of oversight is probably inconsequential.
The Fidelity Managed fund (listed under flexible funds in the following list http://www.skandia.co.uk/funds/pdfs/fundrange_pdfs/aug10_Professional.pdf) has actually performed very well and the Skandia Professional fund list suggests its TER is 0.9%. There are other decent managed fund alternatives to consider too, including Professional Blackrock Managed (TER 0.85%) and Professional Newton Managed (TER 0.5%). There are also a few index trackers with TERs of around 0.2-0.25%, although being stockmarket based these would likely to be too risky held on their own.
So staying with Skandia Professional is likely to be the most straightforward and cost effective option, perhaps spreading the pension across a few managed funds to spread risk.
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Comment by CWatters at 10:56pm on 21 Sep 2010:
Many thanks for the reply. Much appreciated.