Scottish Widows Legacy Pension - Options given charges?

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michaels
michaels Posts: 28,005 Forumite
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MY company DC pension is with Scottish Widows. It has had 2 incarnations, one I call 'legacy' as it is no longer active for new payments and then the current one. The legacy pension is 'series 1'

Currently I have all my money in the legacy pension in a fund called 'international' and I was considering diversifying.

So far I have been charged a bid offer spread of 5% in that if I cash out of the fund it will be at the offer price. I am also being charged 1% pa.

There is a choice of about 30 funds I could move to by all charge a minimum of 1% if they are SW managed and 1.5-2.5% if they are with other managers. They also all seem to have a 5% bid - offer spread so it looks like it would cost me 5% to make any switch - surely this can not be right?

Obviously I would prefer to pay Vanguard style charges on a passive tracker fund than pay these sort of amounts for 'management' but I am no idea if it is possible to move the funds to somewhere cheaper. The company I work for does not deal with SW directly but through some sort of financial intermediary although this relationship doe snot appear to include any sort of advice.
I think....

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  • dunstonh
    dunstonh Posts: 116,379 Forumite
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    So far I have been charged a bid offer spread of 5% in that if I cash out of the fund it will be at the offer price. I am also being charged 1% pa.

    Are you sure you were actually charged the 5% spread?
    Most Scot Wid legacy plans were altered post 2001 to bring them closer to stakeholder. I have seen some of these with bid/offer spreads on the funds but they had increased allocations to cancel out the bid/offer spread.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • TrickyDicky101
    TrickyDicky101 Posts: 3,513 Forumite
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    If for Switch purposes only you are being allowed to cash out your investments at the Offer price and then reinvest in alternative funds at their Offer price then the switch itself has not cost you any money surely?

    Your current funds are only worth the Bid value eg were you to transfer the funds out to another provider.
  • michaels
    michaels Posts: 28,005 Forumite
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    dunstonh wrote: »
    Are you sure you were actually charged the 5% spread?
    Most Scot Wid legacy plans were altered post 2001 to bring them closer to stakeholder. I have seen some of these with bid/offer spreads on the funds but they had increased allocations to cancel out the bid/offer spread.
    TrickyDicky101 wrote: »
    If for Switch purposes only you are being allowed to cash out your investments at the Offer price and then reinvest in alternative funds at their Offer price then the switch itself has not cost you any money surely?

    Your current funds are only worth the Bid value eg were you to transfer the funds out to another provider.

    I hope you are both correct and that it will not cost me the bid-offer spread simply to switch between funds - at least that solves part one of the cost issue.

    However it doesn't solve the 1%-2.5% pa minimum annual fund charge issue when I just want something like a passive index tracker....
    I think....
  • MallyGirl
    MallyGirl Posts: 6,626 Senior Ambassador
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    Maybe look at opening a SIPP and transferring the legacy one in there - you can do what you like with it then (after some research).
    I am gradually doing this with my trail of old company/personal pensions - I started with the Sun Life of Canada one as the charges were pretty high and it was only worth £6k.
    It has been educational so far.
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
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    All views are my own and not the official line of MoneySavingExpert.
  • dunstonh
    dunstonh Posts: 116,379 Forumite
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    You need to ask SW for a policy details summary. They issue a couple of pages of policy terms. These will confirm the current position on the charges.

    Unless you had reduced terms at the start, I would expect the pricing to be about double modern alternatives.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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