Independent Pension Reviews
Here at Fairfield, we have a wealth of experience in Guernsey and UK Pensions and Pension Schemes. If you want independent advice or a review of your plan we can do this for you.
Part of being independent is that we are not tied to particular product providers, there are many aspects to costs and charges that are not always immediately clear so to help you understand the costs here is a simple guide to the activities that give rise to the costs in your plan.
Self Directed Investments
Some trustees enforce the requirements in different ways and to different levels in the way that you (the Member) direct the investments in the RATS. You should have to evidence some experience in what you are investing in and understand how the markets work and that you understand the risks that your investment decisions hold.
Do remember that this is a retirement vehicle, it shouldn't hold highly speculative investments like CryptoCurrency. By the product's own design it is supposed to be a long horizon investment with lower volatility. It isn't like we have Capital Gains Tax in Guernsey so why would you use this vehicle.
You will need a stockbroker and a custodian
[Costs = Execution only dealing + Custody)]
Investment Adviser or Investment Manager
We at Fairfield are Investment Advisers, we make recommendations to you the Member recommendations as to what you should hold based on your needs and expectations. Refer to Investment Advisory as to how the process actually works, at Fairfield we commonly use an investment platform to make the recommendations.
[Costs = Investment Advisor + Platform(includes dealing and custody)]
This is the activity of an Investment House, of which we have a few here on the island, and the investment manager has the role of an investment adviser as well as full discretion over the investments of the plan. An Investment Manager will deal directly into the market and you will incur dealing and custodian costs. You have a much wider range of what the Manager can invest in and potentially tailor this to any particular sector that you favour. This is by far the most expensive route but gives the widest choices of investments.
[Costs = Investment Adviser + Investment Manager + Dealing + Custody]
Trustees Investment Monitoring Costs (Applies to all above)
All trustees have a duty to monitor and will be expected to monitor investment volatility and diversification, this applies to all of the above. We at Fairfield have an understanding with our Trustees that we deal with and this service is included in our investment advisory cost. This is not the case with all Trustees and they may also use an external benchmarking service to identify how the investments are performing in comparison to the rest of the market. This can cost up to £250 per quarter as a guide (complexity plays a big part in this cost).
[Cost = circa £400 to £1,000 per annum]
These do cost time and money to administer, try to make arrangements but one key point is that your Plan needs to have a bank account. That means more work and therefore more expenses. To keep costs down why not suggest that you pay the interest once a year by standing order. Don't start repaying the loan capital unless you repay the whole lot, the rule of thumb is to keep the transaction numbers down.
Loans require that security is taken, this can also be a costly exercise, and as such the Trustee may want to register a charge against property for example. This is very much driven by the risk appetite of the Trustee.
[Cost = transactions + annual interest + annual reviews]
Again certain plans are able to hold these, there are limits in respect of companies that you hold a controlling interest in. This may be part of your retirement strategy but it has limitations as you can only hold 15% of the company.
[Cost = securing title + annual accounts + oversight ]
It is inadvisable to hold property directly in a Trust and should be enveloped in a company for this purpose providing that the company has no other activities. Properties must be 100% owned by the RATS and split interests are not permitted. You are allowed to mortgage these properties.
[Cost = securing title + managing agent + bank account + directors + incorporation/annual fees + insurance]
If you are not resident in the Bailiwick of Guernsey the Trustee will have to file annual tax information to the Guernsey Revenue Service, this is under Common Reporting Standards ('CRS') or for US persons ('FATCA'). There are some schemes that are exempt but generally, these are large employer schemes.
Whilst we are not tax advisers, elements of the advice may be reliant on current tax law. We also work with tax advisers, so can help in ensuring that you get the advice you need.