Questions of cash: Advice cost exactly what it saved us


Q. My wife and I have a pension policy with Allied Dunbar. On the advice of our IFA, we made a fund switch within the policy and were charged almost £180 for this, despite 30 years of trouble-free and low-cost custom. This wipes out the advantage of switching funds.


MP, Staffordshire.

Q. My wife and I have a pension policy with Allied Dunbar. On the advice of our IFA, we made a fund switch within the policy and were charged almost £180 for this, despite 30 years of trouble-free and low-cost custom. This wipes out the advantage of switching funds.
MP, Staffordshire.

A. Zurich has confirmed its right to levy this charge and declines to waive it. Your IFA should either have checked whether the fund move would lead to a charge, or else warned you to check for this before you gave the instruction. You appear to have good grounds for asking the IFA to meet these costs, but as you have chosen not to give us the name of the IFA - because he is a friend - there is nothing more we can do.

Q. My son has taken up a teaching post in Austria for three years. What should he do about his teacher's pension? He has 18 years' service and his pension contributions are held in abeyance until he makes a decision - which he must do within six months. If he continues to make payments, he thinks he will have to cover the employer's contributions, but if he does not, this may cause problems if he returns later to teach in the UK.
CB, Hertford.

A. Donna Bradshaw, a pensions specialist at adviser IFG, says: "Your son can continue to pay contributions for up to six years while he is teaching outside the UK. He will have to pay both employee and employer contributions - known as combined contributions. The total current rate is 19.5 per cent of the notional salary notified by the former employer, or that estimated to have been the contributable salary if pensionable employment had continued.

"Whether he should take this option depends on whether he can afford to pay the contributions and if he has the option of joining a pension scheme in Austria. The UK teacher's pension is an excellent scheme, offering high levels of guaranteed benefits. If there is no scheme available or it can't match the benefits he would get from the UK, I would recommend he remain in the scheme.

"If he stays in the scheme and pays combined contributions, he should make an election on Form 160, which is contained in the Leaflet 721 or which can be downloaded from www.teacherspensions.co.uk."

Q. In 1989 I was sold a Scottish Widows endowment policy by estate agent Slater Hogg & Howison, which is now projected to produce a shortfall on my mortgage of £9,200. I complained of mis-selling - on the basis I was not informed of the risk of a shortfall - to Bradford & Bingley, which now owns Slater Hogg & Howison. While Bradford & Bingley agreed my complaint, it has only paid me £1,800, on the basis that I have other endowments which have over-performed. I am sure that if the other endowments had under-performed, they would not be offering to pay compensation.
JO, Glasgow.

A. The reduction in compensation is not related to your having held other endowments, but to the fact that you used the lump sums obtained on their maturity to reduce the amount owed on your mortgage. This reduces the amount of compensation to which you were entitled. This may seem unfair, but it is approved by the Financial Ombudsman Service. As you accepted the offer and have received payment, you are not in a position to appeal.

Q. I instructed Halifax's share dealing service to sell nearly 5,000 units in Standard Life's UK Equity High Income Trust. When I phoned I was quoted a price of 54.24p per unit, but on the contract note the price was 46.28p. I have lost £400 as a result.
MR, Stockton-on-Tees.

A. Unit trusts are settled at noon each day. Prices quoted are for guidance only, being the previous day's settling price. In your case, the price fell by the following noon and you lost as a result. If you had traded directly with Standard Life, it would have given you the prevailing price and you would have avoided the Halifax's fee.

* If you have any queries, write to: Questions of Cash, The Independent, 191 Marsh Wall, London E14 9RS, or e-mail: cash@independent.co.uk. Please send copies, not originals.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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