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  • FIRST POST
    • Fatbritabroad
    • By Fatbritabroad 8th Oct 17, 8:03 PM
    • 194Posts
    • 95Thanks
    Fatbritabroad
    Should I move work pension to a sipp
    • #1
    • 8th Oct 17, 8:03 PM
    Should I move work pension to a sipp 8th Oct 17 at 8:03 PM
    Having been edumacated by this site and others I'm thinking of changing how I save for retirement.

    I'm 36 and have built up a reasonable amount in my workplace pension about 120k. This is invested with aegon i their equity lifestyle tracker which is 100% equities but switches to safer investments as you get closer to retirement. w
    We have a reasonable charge (according to my statement its about 0.65% as long as I have more than 50k in it. However I know I can reduce the cost by opening a sipp and sweeping 70k of this into say a n other tracker fund

    I just wanted to sense check is there any downside to doing this and is there anything else other than charges I should consider (obviously picking the right platform!) my ISA is with charles stanley direct. Anyone who's done this and can say whether it's easy would be much appreciated
Page 1
    • TARDIS
    • By TARDIS 8th Oct 17, 8:24 PM
    • 51 Posts
    • 33 Thanks
    TARDIS
    • #2
    • 8th Oct 17, 8:24 PM
    • #2
    • 8th Oct 17, 8:24 PM
    Is it paid via salary sacrifice? In which case you will be saving NI as well as income tax
    Does your employer contribute?
    I don't know about that specific pension, but 0.65% all in? Doesn't sound too bad if the fund is reasonable.
    You're not going to get a lot cheaper pension than that and probably will cost more when you add in the extra NI contributions
    Sounds like a lot of faffing for minor potential benefit to me, but I'm a novice in these things, so hopefully someone wiser will comment too!
    • pip895
    • By pip895 8th Oct 17, 8:32 PM
    • 445 Posts
    • 254 Thanks
    pip895
    • #3
    • 8th Oct 17, 8:32 PM
    • #3
    • 8th Oct 17, 8:32 PM
    The savings would be pretty marginal - by the time you have added platform charges to the fund charges - a saving of < 0.18%. I might be tempted to wait until I had a bit more to move or changed jobs??
    • Alexland
    • By Alexland 9th Oct 17, 8:18 AM
    • 782 Posts
    • 476 Thanks
    Alexland
    • #4
    • 9th Oct 17, 8:18 AM
    • #4
    • 9th Oct 17, 8:18 AM
    I am a similar age and moved a proportion of my employer pot when it was £200k into a SIPP to reduce my £50k FSCS compensation risk. I am now spread across Fidelity DC with Blackrock funds and a Halifax SIPP with Vanguard funds. The fees are similar (as my employer scheme was cheap to start with) but in you case you should be able to make a small saving.

    Check first if your scheme allows partial transfers and that you would not be giving up any additional benefits (larger tax free sum, earlier retirement date, guaranteed annuity rates etc). You will want to remain a member to continue making new employee and employer contributions. On my scheme I get additional life insurance from being an active member.

    Consider how long you are likely to stay with the employer and the additional extra contributions you are likely to make in future then determine a percentage to move such that when you leave the pots will be reasonably balanced. But remember the pot you move will grow more than the pot you keep due to the higher value. I moved 60% so my pots should be balanced in the next 18 - 24 months.

    Assuming I stay longer then I might let the employer pot grow a bit more then partially transfer out again into a 3rd pension (sorry Fidelity - you have been good to me...) possibly an Interactive Investor SIPP with L&G or HSBC funds. I don't intend to retire for 25 years so the 3 pots will have plenty of time to accumulate. I have limited my contributions to only those necessary to avoid tax and child benefit claw back but if I hit LTA issues I might retire earlier.

    Also if you move enough it might be worth getting a fixed price SIPP. I like the fact my fixed fee becomes a cheaper percentage as it grows. Think about if you will be investing in shares, ETFs or funds in advance as it will affect your SIPP provider choice. It's worth getting this right first time as it can be expensive to move again.

    Finally if you are changing the funds or unable to do an in specie transfer then remember the risk that asset values change while your providers are transferring a cash balance. I'm my case it was about 2 weeks and was able to buy back in after prices had dropped which boosted the SIPP by about 0.5%.

    Good luck,
    Alex.
    Last edited by Alexland; 09-10-2017 at 12:49 PM.
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