Any way to force your company to pay into a SIPP?

Pangolin

I have a defined contribution company pension scheme. My company pays a contribution in addition to mine each month.

The scheme is with Standard Life, which means:

1) a limited number of funds (40 or so, most being from SL)
2) poor returns
3) narrow investment strategy
4) lack of motivation from fund managers (as the annual fee is capped)
5) no real clue what these funds invest in as little information is provided and there is very limited scope to research the funds

I would rather invest in a SIPP to take advantage of a much wider range of funds. For example, I don't mind paying an extra 0.5% to get a 50% better return on my investments.

My company says that if I want to do this I can, but I loose my employers contribution and have to set it up myself - OUCH. Most people in the company don't really know, or care, about the performance of their pension fund, but as the risk is on me - shouldn't I have the option to manage my own pension fund in detail if I want?

Is there any way to force my company pay into a SIPP instead of the SL pension scheme?

I understand that paying into a SIPP is no more complicated than getting my SIPP account details, giving it to the company and telling them to set up an automated BACS (similar to a payroll account).

Thanks in advance.

Alex

whiteflag_3

Pangolin wrote: »

1) a limited number of funds (40 or so, most being from SL)

only 40 !!!

2

) poor returns

obviously the global meltdown is limited to only Standard Life Funds.

3) narrow investment strategy

Eh?

4) lack of motivation from fund managers (as the annual fee is capped)

Eh?

5) no real clue what these funds invest in as little information is provided and there is very limited scope to research the funds

Try here

http://www.trustnet.com/Investments/Perf.aspx?univ=P&Pf_Manager=STAN

I would rather invest in a SIPP to take advantage of a much wider range of funds. For example, I don't mind paying an extra 0.5% to get a 50% better return on my investments.

Given that you didnt know how to access info on Standard Life funds how do you propose to carry out robust research on investments available through a SIPP?

My company says that if I want to do this I can, but I loose my employers contribution and have to set it up myself - OUCH. Most people in the company don't really know, or care, about the performance of their pension fund, but as the risk is on me - shouldn't I have the option to manage my own pension fund in detail if I want?

yes same option you have to do your own car servicing, plumbing etc but do you or do you leave it to experts

Is there any way to force my company pay into a SIPP instead of the SL pension scheme?

NO

I understand that paying into a SIPP is no more complicated than getting my SIPP account details, giving it to the company and telling them to set up an automated BACS (similar to a payroll account).

So what happens if every member of staff asks them to do the same, dont you think it might increase their admin overheads?

Pangolin

Forgot to mention, the only ways I've been told I can use a SIPP is to pay in myself (either instead of my company pension or in addition to it) or to close my company scheme and transfer the lump sum, after which I would need to re-open my pension scheme, potentially losing a month or so's contributions.

dunstonh

2) poor returns

With 40 funds, poor returns in relation to their sector is unlikely. A good number are likely to be trackers as well. You are not going to get the specialist range or more niche areas conventional areas should be fine.

5) no real clue what these funds invest in as little information is provided and there is very limited scope to research the funds

I disagree. Virtually all the Std Life funds have data published. Its only on COMP/CIMP schemes where you may not get the exact match. However, they are usually versions (at a lower cost) than the retail fund.

I don't mind paying an extra 0.5% to get a 50% better return on my investments.

If its a GPPP you have then it may be only 0.5% exta. If its a COMP/CIMP then its likely to be more than that as most COMP/CIMP schemes have lower AMCs.

shouldn't I have the option to manage my own pension fund in detail if I want?

It would be nice. You could offer to pay an extra £2000 a year to your employer to cover their costs for you to be different to everyone else and the extra work it will create them.

Is there any way to force my company pay into a SIPP instead of the SL pension scheme?

None at all.

I understand that paying into a SIPP is no more complicated than getting my SIPP account details, giving it to the company and telling them to set up an automated BACS (similar to a payroll account).

It will require extra time for processing it manually compared to the bulk scheme that is probably automated. It will involve the company accountant having a bit more work. It will require the staff involved in pensions being aware that there are two schemes running and if they offer it to you then they have to offer it to everyone. Depending on the number of employers it could be chaos. 500 individual direct debits going out each month (each incurring a bank charge), each requiring individual management.....

Many small employers will use individual schemes but its not practical for large employers to do it.

One potential option for you is that you only pay the minimum into the scheme to get the maximum employer contribution. Any extra you then decide to pay you can put in your own individual scheme. Use the employer scheme for the conventional investment areas and use your own scheme for the areas not covered in the employer scheme.

Pangolin

That's a pretty harsh first rebuttal!

40 Funds isn't a lot. There are over 2000 funds included in the HL SIPP alone, along with options to invest in ETFs, gold, and own shares directly in companies. Given that most of the 40 funds are also from the same company, that's not so great.

The funds that Standard Life pension funds use in this pension plan have to have a capped annual fee by law to 1% or less. So, which fund manager is going to try harder with your money, the one that gets 1% or 2%. This is reflected by the fact that nearly all standard life funds in the scheme are in the bottom 50% of fund performance tables in their category.

I think chosing where to put your money is very important considering the global meltdown.

I've seen trustnet and it's good, but there are other sources which I would use to research funds.

If I felt qualified to do my own plumbing then I would do my own plumbing. I feel qualified to be able to discern a good fund form a not so good fund, so why shouldn't I be allowed to? I believe I can either maintain my capital in bad times or increase it with high risk investments in good times. But my investment ability isn't the issue here, it's my option to invest as I want.

As for admin costs, well, I'm not sure this should be a limiting factor to how i'm going to invest for my retirement (even though I don't think there is much more of an admin burden). I know this likely to be an excuse for a limiting factor.

dunstonh

The funds that Standard Life pension funds use in this pension plan have to have a capped annual fee by law to 1% or less

What law is that? The only rule on charges applies to stakeholders and that's FSA's rule RU64. You said that the pension is a defined contribution company scheme. That makes it a COMP or a CIMP. Not a stakeholder. So there is no law on charges on your funds.

Many of the funds are likely to be passive managed or trackers. So you would expect around mid table for those. However, the bulk of returns is not by individual fund but by sector allocation. Yes you may want certain investments and its a shame you dont get them but the free money more than makes up for that.

As for admin costs, well, I'm not sure this should be a limiting factor to how i'm going to invest for my retirement (even though I don't think there is much more of an admin burden). I know this likely to be an excuse for a limiting factor.

How many employees are there?

jem16

Pangolin wrote: »

If I felt qualified to do my own plumbing then I would do my own plumbing. I feel qualified to be able to discern a good fund form a not so good fund, so why shouldn't I be allowed to? I believe I can either maintain my capital in bad times or increase it with high risk investments in good times. But my investment ability isn't the issue here, it's my option to invest as I want.

You are allowed to invest where you want to - just not with the company's money though. They don't have to pay anything so you are better off than others who don't have company contributions at all.

There is nothing stopping you taking out your own SIPP in addition to the company pension.

In the ideal world your company would contribute to the pension of your choice. However most people don't have a clue about pensions and would not know where to start so having it done for them is what they want.

Pangolin

dunstonh wrote: »

What law is that? The only rule on charges applies to stakeholders and that's FSA's rule RU64. You said that the pension is a defined contribution company scheme. That makes it a COMP or a CIMP. Not a stakeholder. So there is no law on charges on your funds.

Many of the funds are likely to be passive managed or trackers. So you would expect around mid table for those. However, the bulk of returns is not by individual fund but by sector allocation. Yes you may want certain investments and its a shame you dont get them but the free money more than makes up for that.

How many employees are there?

We were quoted 1% in the blurb that came with the pension. I will confirm this point. Perhaps it's the corporate stakeholder scheme instead. Whether it's law or intent by SL, it still means that the fund options are funds which can afford their AMC to be cut down. I'm still sure that most of these funds in the wrapper are below middle of the road, with the exception of one or two low return funds.

The free money argument is the dealbreaker. I can't retire without it, but I would like to invest it myself to get better returns.

I work for a pretty big company. No specifics here though, I'm affraid.

I guess I can't get my head around a company paying all their employees different amounts into different bank accounts, but are unable to pay different pension amounts into different pension plans. Surely the amounts are calculated automatically by your pension option %age multiplied by salary (which they already calculate for SL) and then it's just a case of paying it wherever. It would end up being a couple of extra lines on your computerised HR record.

I know this might take a while to set up, but once it's going, surely it would take nominal management.

whiteflag_3

Pangolin wrote: »

That's a pretty harsh first rebuttal!

Well this is a forum, so whats the point of asking for an opinion if you cant cope with people being honest with you?

In your posts you give the impression of someone with pretty limited knowledge so IMHO a SIPP would be of no benefit to you.

Pangolin

whiteflag wrote: »

Well this is a forum, so whats the point of asking for an opinion if you cant cope with people being honest with you?

In your posts you give the impression of someone with pretty limited knowledge so IMHO a SIPP would be of no benefit to you.

There's honest factual advise and then there's being unnecessarily unkind. Let's not flame one another in this post please, I would like to keep it on topic.

Pangolin

Pangolin wrote: »

We were quoted 1% in the blurb that came with the pension. I will confirm this point. Perhaps it's the corporate stakeholder scheme instead.

The scheme is a corporate stakeholder scheme, so I guess the cap does apply.