Transfering Existing Pension into a SIPP?

Edw65

Hi! I have a pension with Zurich with a fund of about £37k accumilated over 20yrs..and face an early exit fee of £2.6k..I want to have more control over what I invest in..I am educated and reasonably well read and am up for making looking after my pension investments a bit of a hobby..as opposed to no contact from Zurich for the 20yrs I have been coughing up!!

I am 45yrs old Self employed with income reduced to about £35k due to recession etc..and would like more flexibility in terms of what and when i pay in..currently paying in about £180 per month. Am considering swapping to SIPP and reducing monthly investment into pension and overpaying on mortage instead..or putting the balance into an ISA so I have more option and could dip into it if work doesnt pick up etc!!

Any thoughts??

dunstonh

I want to have more control over what I invest in.

in what way?

as opposed to no contact from Zurich for the 20yrs I have been coughing up!!

If its like many of the Zurich contracts there are no annual management charges when paid up and they have quite a good range. So, what makes you think you can do better with a selection elsewhere that will not only have to see you beat Zurich's funds but also recover the transfer charge?

would like more flexibility in terms of what and when i pay in..currently paying in about £180 per month.

Stakeholder is most flexible on monthly contributions. £180 isnt much for self employed person. Do you plan to increase that?

Am considering swapping to SIPP and reducing monthly investment into pension and overpaying on mortage instead

And what has led you to that decision that makes you think thats the best option?

or putting the balance into an ISA so I have more option and could dip into it if work doesnt pick up etc!!

Certainly an option with an ISA but you would effectively be robbing your retirement if you did that. As you wont be get the full state pensions as you are self employed, could you afford to do that?

Edw65

Thanks for comments.. More control ??only in the sense of believeing that I could do just as well as Zurich have done..I have had 50% in managed funds and 25% in Far East and Europe (which i chose 20yrs ago) and these have outperformed the managed fund..so who says I couldnt pick a better portfolio?? No I agree £180 isnt much to have been paying in but my income has fluctuated alot and I have 2 teenage kids to support etc.. Hope to be able to increase dramatically in about 5yrs time or so and would invest any inheritence etc in pension...

I havent 100% decided SIPP is best option..but can see it looks like a low running costs option..But of course I am not keen to face charges of swapping out of Zurich policy if it makes more sense not to...Is freezin payments into that and only paying the life assurance element worth considering??

The ISA thought was that it would be used to pay off chunks of mortgage..yes it would be robbing my retirement...but only in the short term and other funds from inheritence and hopefully improved work etc would compensate...??

No hard decisions made yet..happy to hear ideas and thoughts!!Ed

dunstonh

More control ??only in the sense of believeing that I could do just as well as Zurich have done

Is that realistic though? I am pretty good on investing but I tend to leave Zurich plans where they are and utilise the investments within them as any alternative would have to be a lot better and you cant really guarantee that. The justification for transferring is very weak assuming yours is a version that has no annual management charges when paid up.

I have had 50% in managed funds and 25% in Far East and Europe (which i chose 20yrs ago) and these have outperformed the managed fund..

You would expect the long term performance of the Far East and European fund to be better than the managed fund. The managed fund is lower risk and less volatile investments within its make up.

I havent 100% decided SIPP is best option..but can see it looks like a low running costs option.

For funds, SIPPs are typically the most expensive option. Dont fall for the SIPP providers marketing hype that they are cheap. They are not. If your Zurich plan has no charges once paid up then nothing is going to be cheaper than that.

Is freezin payments into that and only paying the life assurance element worth considering??

Making it paid up is probably the best option as that is when the charges usually become less. However, there are different versions over the years so its really difficult to say without a proper analysis of the facts.

Assuming it is a nil AMC version when paid up, then leaving that with Zurich but picking the investments within it would be the best option. Then redirect your contribution into ISA or Pension or both would be most likely options to be best.

Pension term assurance is no longer available for new business. Only those that already have it can keep it. However, Zurich's pricing on pension term assurance was not great. So, if you are in good health, it may be sensible to see if you can rebroke the life assurance using a modern plan and that may come in cheaper, even without the tax relief.

Edw65

Thanks again!
From your comments I intend to have a good look at the Zurich policy detail before transferring and check the AMC status as I am not sure..Perhaps stopping paying into it but tweaking the investments etc..and in the meantime gettting ISA up to the max each year until I have any sizeable chunks to stick in to pension.. I think you are right about the Zurich term assurance rates not being great having done a bit of sniffing around...

I hear what you saying about SIPP costs but there are some relatively low cost ones out there...if you could put say a Buy to Let in one...I would be very tempted as that is my other plan for generating a pension pot over the next 20yrs! Cheers!

sortingoutamess

dunstonh wrote: »

in what way?


If its like many of the Zurich contracts there are no annual management charges when paid up and they have quite a good range. So, what makes you think you can do better with a selection elsewhere that will not only have to see you beat Zurich's funds but also recover the transfer charge?


Stakeholder is most flexible on monthly contributions. £180 isnt much for self employed person. Do you plan to increase that?



And what has led you to that decision that makes you think thats the best option?



Certainly an option with an ISA but you would effectively be robbing your retirement if you did that. As you wont be get the full state pensions as you are self employed, could you afford to do that?

Hi - Did you make the switch in the end? If so to which SIPP provider? What has your experience been? I ask as I'm planning to do the same as you for the same reasons. Thanks

sortingoutamess

Edw65 wrote: »

Thanks again!
From your comments I intend to have a good look at the Zurich policy detail before transferring and check the AMC status as I am not sure..Perhaps stopping paying into it but tweaking the investments etc..and in the meantime gettting ISA up to the max each year until I have any sizeable chunks to stick in to pension.. I think you are right about the Zurich term assurance rates not being great having done a bit of sniffing around...

I hear what you saying about SIPP costs but there are some relatively low cost ones out there...if you could put say a Buy to Let in one...I would be very tempted as that is my other plan for generating a pension pot over the next 20yrs! Cheers!

Hi - Did you make the switch in the end? If so to which SIPP provider? What has your experience been? I ask as I'm planning to do the same as you for the same reasons. Thanks

dunstonh

Hi - Did you make the switch in the end? If so to which SIPP provider? What has your experience been? I ask as I'm planning to do the same as you for the same reasons. Thanks

I didnt make any switch. I wouldn't have in the position of the OP (unless it was one that had an AMC - although I still wouldn't use a SIPP).

You say you are doing the same for the same reasons. Has your Zurich pension got any AMCs when you are not paying into it? If not, why do you think that using a SIPP is going to be better for you?