Transfer to SIPP now or wait a year for drawdown

Algie

I will be 55 in just over a year from now and have quite a large (>600k) pension pot in my former employer's money purchase pension scheme. I will probably need to take income from this fund when I turn 55 as I am no longer working. In the meantime, the investments are not performing well and there is a limited choice of investments anyway. There are no restrictions on what I can transfer out of the scheme, so I am considering moving it all into a SIPP (possibly Hargreaves Lansdown), but I was wondering whether anyone had a view on whether to hang on for another year when I can move directly into a drawdown arrangement or whether to do it now. I guess the point of the exercise is to avoid being charged twice, assuming there will be charges for each transaction.

CannySaver_2

Hi

Very simple.

Speak to HL and ask them what the additional charges will be, from memory their charges are low so if you are going to do the transfer I'd get it done now, spend a year unvested in the funds you want to be in, and then move to Income Drawdown.

The Canny Saver

jamesd

You do know that HL have high charges for their SIPP particularly for funds where they charge the full, undiscounted annual charge with no rebate at all? That'll cost you at least £3,000 a year compared to buying something else on execution only fee basis via an IFA. The HL GAD calculation charges are relatively low.

Why a SIPP rather than one of the other forms of pension? Want to use something other than funds for investing?

It's too soon to know what the Retail Distribution Review will do to the pricing models of HL or others but it is clear that we can expect to see some substantial changes from many providers being announced over the next year.

Algie

Thanks for the comments.
I have only recently started to look at my options, not having a solid understanding of pensions. My initial thoughts were to do some high-level research and reach a decision fairly rapidly. After all, how hard could it be, I reasoned... how naive!
I think my next step will be to find an IFA and get some professional help...

gadgetmind

I chose BestInvest for my SIPP as they are better for funds (rebate some trail), better for trackers (single annual fee rather than per tracker), and no/lower fee for equities/ETFs/ITs.

I haven't compared drawdown costs.

Loughton_Monkey

To consider "moving it to a SIPP" is putting the cart before the horse, surely?

Forget this particular acronym for the moment, and consider the real question. The real question is (a) with which provider and in which funds should I invest my £600K for the next year until I require drawdown, and (b) when I require drawdown, which supplier will provide the best all round performance of fund charges, drawdown costs, and ongoing fund choice?

The solution may, or may not be a SIPP - which, after all, is simply a modern, buzz-word-flavour of pension arrangement.

Wherever you go on a retail basis, you should shop around for fund choice and charges. With a £600K fund, these will be substantial. Armed with this information, you will probably be better off going to an IFA and getting a quote for his fixed fee, and the likely annual charges of his proposed solution. If this is better, then go with it.

If the answer happens to be a SIPP, fine. If it isn't, then does it matter?

[If I wanted a new mobile phone, I would not go to the shop and ask for the best Android deal. I would want a phone that meets all my needs at the best costs. This may, or may not be an Android.]