New Jet2 Pension Scheme - expert advice please!
Would someone who knows about pension schemes please comment?
From 1st June we at Jet2 have a new pension scheme. Scottish Widows is the provider with Hargreaves Lansdown acting as broker. Scottish Widows allows you to put your pension money into a range of their own funds plus numerous others. The Company (technically the Dart Group) puts in 8%, the individual anything from 2% upwards.
My query is about fees and commissions. The administration of the scheme seems to be paid for by Scottish Widows deducting an annual commission of approx 1% to 2%, depending on the fund. This money goes to the broker. My guess is that the Company is paying little or nothing towards the costs, Hargreaves Lansdown being happy just to have the commission. This of course comes from the employee's pension pot.
Historically I always thought that company pension schemes were good value because the company carried much of the administrative burden. In this case it may be that all of the costs are actually been borne by the employee.
Obviously it's worth putting in 2% to get the 8%. If some of the costs are being borne by the Company then it would make a lot of sense to put in far more than 2%, maybe right up to 100% if you have a windfall to dispose of. But if the costs are no better than outside the scheme, there's no point in necessarily putting in more than 2%. Anything extra can go elsewhere.
I hope I'm wrong, and that Jet2 is helping us out with costs. But maybe they aren't, and this is just the normal way that things are done these cost-paring days.
Any comments and advice would be much appreciated by many of us, I'm sure. Thank you!