PensionsApr 2 2014

Rowanmoor defends higher-than-AMC transfer-out charge

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Rowanmoor Group has defended its transfer out charges that are a third higher than its annual administration charges, as questions continue to mount over fees that many claim are designed to prevent clients from moving business.

The firm said its £625 fixed fee to move in-specie assets to another self-invested pension provider - which is 32 per cent higher than its £475 annual management charge - is competitive as it is all-inclusive, compared to others that increase according to the number of assets being transfered.

Ian Hammond, managing director at Rowanmoor, stressed that the company should be compared only to other ‘bespoke’ Sipp firms and not less comprehensive online operators, and that the fee was in line with its rivals and would not prohibit transfers.

He said: “The fee of £625 applies no matter the size, or the number of the holdings, or the administration time spent.

“Having reviewed the fee schedules of other full/bespoke Sipp operators, we note that some charge on a ‘time spent’ basis, which, if the administration involved is complex, can be substantial. Equally, a scheme with a large number of investments, which charges on a ‘per investment’ basis, can result in substantial fees.

“We don’t believe that we are widely out of line with others the market. We certainly don’t believe our fees would prohibit a member who had chosen to move to another provider from completing this transaction.”

Last month, Sipp providers highlighted frustration over some firms’ charges to transfer out, which they claimed are so high - and have been recently hiked - to discourage clients from transferring out of their existing scheme.

An investigation by FTAdviser into Sipp transfer charges at 14 of the largest companies operating in the space found that none of the surveyed firms charged fixed transfer out fees in the same way as Rowanmoor.

One firm that does is @Sipp, which applies a charges of £400 on its standard Sipp, more than a third less than Rowanmoor. Another is James Hay, which levies a fee of £150.

Among the firms that were cited for high charges was Hornbuckle Mitchell, which charges £250 per holding for a standard in-specie transfer out, meaning its fees could be far higher than Rowanmoor for transfers involving a number of holdings. According to Money Management figures, Hornbuckle charges a minimum AMC of £250.

Other firms with similar charges include Alliance Trust Savings (£150-£200 per asset) and Suffolk Life (£150 per asset). Standard Life charges on a per asset basis but caps charges at £350 per year.

AJ Bell, Dentons Pensions and Barnett Waddingham charge on a time-cost basis.

As an example of rates, Dentons charges an hourly rate for administration at £100 plus VAT. Martin Tilley, director of technical services, emphasises that he does not think an asset transfer would take more than five hours meaning charges would not exceed £500 plus VAT.

Five firms do not charge anything to transfer a standard asset in or out: Aegon, Aviva, LV, Fidelity and Scottish Widows.

John Moret, Sipp expert and principal of consultancy business MoretoSipps, told FTAdviser: “There is always a lot of work involved for in-specie transfers, one can understand charges need to be set at a realistic level but these figures [for Rowanmoor] seem on the high side.

“There is a huge variation [in charges] and whilst one can see the merits from a provider for charge on asset business, I don’t think this has been taken into account [by an adviser] when choosing a provider and it needs to be taken into account as you don’t know when you will move assets.”

A spokesperson for @Sipp said: “We favour an ‘all inclusive’ standard transfer out charge. Some other Sipp operators prefer to apply additional fees, per asset transferred. Others prefer to levy a time cost. Any meaningful analysis should not focus on merely headline fees.

“With the existence pensions liberations schemes, transfer out requests are increasingly requiring greater scrutiny. This can mean a transfer out can be a more labour intensive process, than a transfer in.”

* Update 3 April

The article has been corrected to amend the reference to James Hay’s charges, which are all-inclusive and not as originally stated per asset.