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Frank Mason

Iaccount - Low Fee Pensions...

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Hi all,

I heard about this recently Iaccount - low fee pensions

Not found much more about it, anyone know more?

Regards to all

Frank

I saw in on Channel 4 news.

It's called theiaccount and it's from a company called Intelligent Money. I've been on their website an it's basically a 10 year deposit account that pays interest on half of your money equal to 140% of any rise in the Halifax house price index and 140% of any rise in the FTSE on the other half.

If either fall your money is safe in cash and the government add £10 to your account for every £35 you do. All growth is tax free.

It sounded to good to be true but it checks out. Intelligent Money are authorised by the FSA and the iaccount is approved by HM Revenue and backed by Royal Bank of Scotland. They say it's a no risk low cost alternative to pension plans and you can move your pension fund into the account.

The news article said that the pension industry takes out more money in fund management charges each year than we put in and this account doen't have fund charges, just the £35 fee.

It seems to have got Standard Life's knickers in a twist at least so it sounds interesting to me (as I have a terrible pension with them that I can move into it).

There is more on the Telegraph website and at www.intelligentmoney.com

Regards

Tom

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I saw in on Channel 4 news.

It's called theiaccount and it's from a company called Intelligent Money. I've been on their website an it's basically a 10 year deposit account that pays interest on half of your money equal to 140% of any rise in the Halifax house price index and 140% of any rise in the FTSE on the other half.

If either fall your money is safe in cash and the government add £10 to your account for every £35 you do. All growth is tax free.

It sounded to good to be true but it checks out. Intelligent Money are authorised by the FSA and the iaccount is approved by HM Revenue and backed by Royal Bank of Scotland. They say it's a no risk low cost alternative to pension plans and you can move your pension fund into the account.

The news article said that the pension industry takes out more money in fund management charges each year than we put in and this account doen't have fund charges, just the £35 fee.

It seems to have got Standard Life's knickers in a twist at least so it sounds interesting to me (as I have a terrible pension with them that I can move into it).

There is more on the Telegraph website and at www.intelligentmoney.com

Regards

Tom

Wot so its like a FTSE100 tracker combined with House price Index tracker but they give you 140% instead of 100% ? Am I missing something here ?

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Wot so its like a FTSE100 tracker combined with House price Index tracker but they give you 140% instead of 100% ? Am I missing something here ?

Thats is exactly it. The extra 40% is because you lock your money away in the account for a fixed ten years. Seeing as you can't get at your money until you retire anyway (the website says you have to be at least 55) that's not a problem as long as you aren't planning on retiring in the next ten years.

There is one drawback though, because your money is in cash your don't get dividends or rental income. I wouldn't have expected rental income anyway but dividends are about 3% a year from the FTSE.

I called them about this and they were very open about it and pointed out that my pension currently charges me 1.5% a year on EVERYTHING IN IT (not just my contributions). If you take the dividend tax and 1.5% charge away the dividend return drops to 0.8% a year in my pension fund!!!

I'm going to find out more but I'd rather have half my pension tracking house prices at 40% extra than have it all in the stock market. And I'll swap the 0.8% that I end up getting from the FTSE dividend for 40% out perfromance any day (not to mention the capital guarantee).

Does anyone know if there are any other drawbacks?

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Thats is exactly it. The extra 40% is because you lock your money away in the account for a fixed ten years. Seeing as you can't get at your money until you retire anyway (the website says you have to be at least 55) that's not a problem as long as you aren't planning on retiring in the next ten years.

There is one drawback though, because your money is in cash your don't get dividends or rental income. I wouldn't have expected rental income anyway but dividends are about 3% a year from the FTSE.

I called them about this and they were very open about it and pointed out that my pension currently charges me 1.5% a year on EVERYTHING IN IT (not just my contributions). If you take the dividend tax and 1.5% charge away the dividend return drops to 0.8% a year in my pension fund!!!

I'm going to find out more but I'd rather have half my pension tracking house prices at 40% extra than have it all in the stock market. And I'll swap the 0.8% that I end up getting from the FTSE dividend for 40% out perfromance any day (not to mention the capital guarantee).

Does anyone know if there are any other drawbacks?

No the website says you must be 55 or younger. Still dificult to understand how they can make their money and afford to pay 140%. They have no idea how many people will sign up for it. I think your pension fund performance figure are after charges deducted but still I dont see why an active fund is any better than an index tracker that usually only has about half a percent annual fee. Pity you cant choose the ratio of FTSE100 to House price index you want.

Edited by penbat1

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No the website says you must be 55 or younger. Still dificult to understand how they can make their money and afford to pay 140%. They have no idea how many people will sign up for it. I think your pension fund performance figure are after charges deducted but still I dont see why an active fund is any better than an index tracker that usually only has about half a percent annual fee. Pity you cant choose the ratio of FTSE100 to House price index you want.

I've looked again, it's 65 or younger to open an account, but you still have to hold it for ten years and can't access it until you reach 55. They charge £35 a year and RBS pay the 140%. I've just found out that over the last 10 years my Standard Life pension has grown by 78% after charges - but the FTSE has grown by 107%!!!!! They say that the iaccount would have paid 146% interest over the same period (not that you could have put money into it then).

I agree about choosing the ratio, this would be a good idea but I suppose your hedging your bets by having equal to both.

Is there anybody else doing anything like this?

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I've looked again, it's 65 or younger to open an account, but you still have to hold it for ten years and can't access it until you reach 55. They charge £35 a year and RBS pay the 140%. I've just found out that over the last 10 years my Standard Life pension has grown by 78% after charges - but the FTSE has grown by 107%!!!!! They say that the iaccount would have paid 146% interest over the same period (not that you could have put money into it then).

I agree about choosing the ratio, this would be a good idea but I suppose your hedging your bets by having equal to both.

Is there anybody else doing anything like this?

Standard Life sounds really bad. If you had invested in a FTSE tracker fund you would have had about half of one percent management fees and you get dividends reinvested so you would have got way over 107%.

Edited by penbat1

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Standard Life sounds really bad. If you had invested in a FTSE tracker fund you would have had about half of one percent management fees and you get dividends reinvested so you would have got way over 107%.

Standard Life is terrible, but still better than others. I'm not sure about what your saying about trackers though. I agree totally with you that they are usually better than managed funds, but they still have charges. So if the FTSE itself returned 107% over ten years (including reinvested dividends) then even a 0.5% management fee would have reduced this return, not added to it.

If you have £20,000 (that's about what my Standard Life pension is worth) in a tracker charging 0.5% a year you will still pay £100 a year in charges on this money (£20,000 x 0.5%) and have your growth reduced by 0.5% a year. So with the best will in the world you will lose £1,000 in charges to your capital over ten years and your investment return will be reduced by at least 5% (0.5% x 10 years).

So over the last ten years I would have still lost 5% of the FTSEs growth to a 0.5% management fee (that's £1,000) PLUS another £1,000 in charges on my capital meaning £2,000 paid in charges. That's 10% of my original investment!

So even then a 107% FTSE return would be effectively be reduced to 97%.

Also, whilst you can pay 0.5% for a tracker, you can't get a tracker in a pension for less than 1%. The whole thing seems wrong to me, that's why I'm interested in this new account.

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  • 332 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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