Liberty and their simple, transparent and RDR ready fees
With RDR looming advisers need to be sure that they are spelling out all the fees and charges on a product they are recommending.
With Liberty as the product provider this is such a simple process as our fee schedule is so easily understood, meaning no hidden fees, basis points or fees based on percentiles. Hence all of our clients pay our set annual administration fees and receive 100% of the interest rate that we have agreed with the bank.
We take a fee for general administration of the SIPP and also for investments that the client wishes to go into. Other than that we don’t really charge for anything else. This means contributions are free to make and also capped and flexible drawdown can be taken without incurring any fees whatsoever. As an industry we are always trying to encourage people to save more for retirement therefore when they come to make additional contributions they shouldn’t be charged for the pleasure. Along with this, the principal reason someone has a SIPP or any pension product is to one day take an income from it. At Liberty we don’t want to charge our clients for this which is why we don’t have any drawdown fees.
People are expected to live a lot longer these days and could be in retirement for around 30, 35 years so fees for drawdown can really mount up over this period with reviews every 3 years and an annual drawdown fee plus additional fees for recalculations. Of course not everyone will go into drawdown and if they do they might only take it for a certain amount of time until they purchase an annuity, however these fees can help to cushion the burden of recent pension changes and falling GAD rates. Plus with the second round of quantitative easing looking to push inflation up even further, pensioners are looking to make use of every penny.
From market research we found that a member of a Liberty SIPP could be saving up to £10,000 through retirement over a 20 year period. Of course if this individual was in drawdown over the expected 30 year period the savings would be even higher. When clients open up a SIPP they are very interested in what the initial burden is financially, transfer in and transfer out fees, but not many look much further than this. It would be like buying a car without thinking about the tax, insurance and fuel implications. If you got a great deal on a car but it then cost you an arm and leg every time you took it off the drive, would it really be that good of a deal?