Pensions

[glashIFA@Paramount]

He has now confirmed this is paid by the pension group i.e. Scottish Life, they pay him the money to manage it for them. Between he and I we can make decisions on where to put my money in funds etc.

"this is not paid through your fund or personally. 100% of your contributions are invested in the scheme from day one and no set-up costs or fee's need to be paid.

The commission figure quoted is paid to us by the insurance company (Scottish Life) and is based on a assumption of monthly amount and term of contract. in essence It pays the bills for us and covers the costs of administering the scheme.

"

Be clear on this, and there's nothing wrong with the way your adviser is remunerated, but it IS paid for via the fund. Each year Scottish Life will charge an AMC (Annual Management Charge) on your fund, currently set at 1.0%. So, if the fund grows by 7% they will add 6% to your fund. The retained 1.0% is kept by Scottish Life for administering the policy and out of the 1.0% they also pay the adviser.
Now, they indemnify this commission i.e.give it to the adviser all upfront instead of a little bit of the 1.0% each year otherwise the payment for the adviser would be pennies each month and with the best will in the world you're not going to get a service for that.

The pension provider, in this case Scottish Life, actually lose money on stakeholder pensions for a good number of yrs and are dependant on you continuing to contribute for a LONG time - that's why when stakeholders were first muted every pension provider was happy to "launch" one and that's also why most pension providers pulled out of the market very quickly!!!
So, from your point of view, you've had the advice, the advisers been remunerated and the only people out of pocket at this stage is Scottish Life.