Transfer SIPP from HL Options (Passive Investor)

jimmyjones_2

Hello,

I currently have approx £40k sitting in a SIPP with Hargreaves Lansdown. I am invested purely in a Vanguard LifeStrategy 80% fund. I add about £100 a month.

Most of my contributions go into a Company Stakeholder pension with Standard Life (Group Stakeholder Pension Plan) - I max the employer contributions then contribute the remainder into my SIPP.

The recent HL fee restructure will significantly increase my costs so I was wondering if anyone could advise on some options for me to move. I want to invest passively in a cheap global tracker. Some flexibility to add things like Property / Small Cap in the future would be good. These are the options I am thinking about:

1) Transfer my SIPP in specie to BestInvest and pay 0.3% on top of the Vanguard Lifestrategy OCF instead of 0.45% at Hargreaves Lansdown. As a bonus they will pay the HL transfer fee.

2) Forget about SIPPs for a while and transfer to a Stakeholder Pension. I want a cheap global tracker and I have heard that Friends Provident do one but I cant work it out from their website. Any other ideas?

3) Transfer to an execution only provider such as XO and replicate Vanguard Lifestrategy with a few ETFs. With this approach I would stop contributing to the SIPP and increase contributions to my company pension due to the dealing cost. I am concerned about the cost of re balancing and re-investing dividends.

4) Transfer the HL SIPP into my Standard Life Group Stakeholder Pension Plan. I am currently invested 100% in SL BlackRock Managed (50:50) Global Equity Pension (that was the default). There are a few tracker options but they dont seem particularly cheap - they are all 1%

I am currently leaning towards transferring to BestInvest but any advice on stakeholder pension alternatives would be appreciated because this is an area I am not familiar with.

Thanks for reading!

bigadaj

You probably want to look at a Personal pension rather than a stakeholder as stakeholders are generally basic and relatively expensive.

One option is to go through cavendish and utilise their personal pensions with a range of providers, the only thing that struck me was that it wasn't that cheap, particulalry if you don't follow the relevant insurers default fund.

It's often quoted that personal pensions are cheaper than SIPPS without the bellsa nd whistles of the latter, so if you don't want commercial property or individual shares and are happy to stick with funds then a pp should be cheaper but I'm not sure currently.

jimmyjones_2

Thanks for the idea of a personal pension through cavendish, I have a S+S ISA with them.

I am looking through the options and it looks like I can get a global tracker (BlackRock Aquila 50:50 Global Equity Index Tracker) with Aviva for 0.45%, reducing to 0.40% when the pot reached £50k. I would want to recreate something similar to the Vanguard Lifestrategy and would need to add bonds and emerging markets. Emerging Markets trackers cost a little extra.

Also, Cavendish charge £75 for a pension transfer.

I am wondering if it might be worth moving to BestInvest for a while since they refund the HL Transfer fee. I wont lose out on my Vanguard dilution levy and I will be getting my Lifestrategy for just over 0.6% in total. I cant currently find the BestInvest SIPP exit charges but hopefully they are similar to HL.

nicknameless

bigadaj wrote: »

It's often quoted that personal pensions are cheaper than SIPPS without the bellsa nd whistles of the latter, so if you don't want commercial property or individual shares and are happy to stick with funds then a pp should be cheaper but I'm not sure currently.

Yes this is consistently quoted but without examples to back it up. Having looked at a few personal pensions I cannot seem to find somewhere to invest in a personal pension in the equivalent of one of the life strategy funds as per the OP at a cost less than a SIPP. Admittedly I haven't looked exhaustively.

However, where are these very cheap personal pensions for those who want to invest in something like VLS I wonder?

grey_gym_sock

jimmyjones wrote: »

I am wondering if it might be worth moving to BestInvest for a while since they refund the HL Transfer fee. I wont lose out on my Vanguard dilution levy and I will be getting my Lifestrategy for just over 0.6% in total. I cant currently find the BestInvest SIPP exit charges but hopefully they are similar to HL.

bestinvest's exit fees are higher than HL's - £25 per investment + £150 for account closure.

why not keep it simple, and decide whether bestinvest or cavendish/aviva (or somewhere else) is the best place to move to, and then move there?

dunstonh

Yes this is consistently quoted but without examples to back it up.

I can back it up. Any adviser with access to the market can. Many of them give charges of 0.4% by around £20k of fund value. Below that you are moving towards 1%.

Having looked at a few personal pensions I cannot seem to find somewhere to invest in a personal pension in the equivalent of one of the life strategy funds as per the OP at a cost less than a SIPP. Admittedly I haven't looked exhaustively.

Virtually all of them will offer in-house multi-asset funds. Some of them also have decent ranges of single sector index trackers.

bigadaj

dunstonh wrote: »

I can back it up. Any adviser with access to the market can. Many of them give charges of 0.4% by around £20k of fund value. Below that you are moving towards 1%.



Virtually all of them will offer in-house multi-asset funds. Some of them also have decent ranges of single sector index trackers.

Just for confirmation are you saying that you can definitely get multi asset, global coverage with rebalancing for that fee, as I couldn't see it myself.

jimmyjones_2

Thanks for all your replies.

My current plan is to stick with HL until they change their SIPP exit fee in a few months which will save me £50 or £75 depending on whether I transfer in specie or not.

I will probably transfer to Aviva via Cavendish if there are no better SIPP options for me. I like the Vanguard lifestrategy fund a lot but I am willing to build something similar and rebalance to save on fees.

Drp8713

jimmyjones wrote: »

Thanks for all your replies.

My current plan is to stick with HL until they change their SIPP exit fee in a few months which will save me £50 or £75 depending on whether I transfer in specie or not.

I will probably transfer to Aviva via Cavendish if there are no better SIPP options for me. I like the Vanguard lifestrategy fund a lot but I am willing to build something similar and rebalance to save on fees.

For a pot of your size Aviva via Cavendish will cost you 0.45%, exactly the same as HL.

Plus you will pay HL exit fees and Cavendish entry fee to move.

You could easily be worse off, especially as in two weeks HL are releasing information of their tracker funds from Blackrock and L&G from 0.06%. If one of those funds is say the Blackrock Consensus 85 that's offering you a very similar product to the VLS80 for a TER of 0.51%

Even Dunston above said an IFA would only get you 0.4%, that's only a difference of £40 odd a year, which if less than you would lose in transfer fee if you go to a PP DIY or IFA fees if you go down that route.

dunstonh

Just for confirmation are you saying that you can definitely get multi asset, global coverage with rebalancing for that fee, as I couldn't see it myself.

Yes. Most, if not all, will offer multi-asset funds. Typically under the mixed equity 20-60% or 40-85% title.

The Aviva mixed investment (40-85% shares) has returned 22.89% after charges on a single premium invested on launch. Vanguard 60% 22.95%. So, add in the platform charge and you have some catching up to do with Vanguard. Also, that performance assumed 1% charging by Aviva. The fund based discounts bringing that down would increase the return. its not a perfect match but it does go to show that you shouldnt ignore the old fashioned pension mixed investment funds. Many of which are almost closet trackers which used to be a disadvantage when paying 1.5% p.a. for them (and initial charges) but now works in their favour when pricing is down to 0.4% with no initial charges.

Also, if you are buying monthly. you need to factor in the dilution levy with Vangaurd compared to none with pension funds.

jimmyjones_2

Drp8713 wrote: »

For a pot of your size Aviva via Cavendish will cost you 0.45%, exactly the same as HL.

Many funds at Aviva including Blackrock trackers dont incur and additional fees so it wouldnt cost exactly the same as HL AFAIK.

It will be interesting to see the super cheap tracker announcements from HL, especially if they are available on other more competitive platforms.