Employer contributions to SIPPs

epicurate

I know that it's possible for employers to make contributions direct into their employees' SIPP, but I would be interested to hear from anyone with practical experience (preferably as an employer) of implementing it. Is it complicated for the employer?

My own situation is that when I left my last job I transferred my pension pot into a SIPP with Youinvest and it's all generally been going very well. I asked my new employer if they were able to make contributions to my SIPP (rather than the personal pension set up through AEGON which is the default for their pension scheme). Our HR person basically said "No, it would make payroll too complicated if we allowed everyone to request that".

The response is annoying because:-

1. Having been sold on the idea of passive investing, it annoys me to see funds, the management of which I don't trust, gobbling up 1% pa in fees.
2. Although I could make regular transfers of value across to my SIPP, my experience of pension transfers to date is that they involve my money being out of the market for weeks. I suppose I could try to do regular in-specie transfers, but that's more hassle and dealing to be done on the other end (selling down the funds in order to buy what I want).

So I want to go back to my HR person with a reasoned argument for why this should be possible and (if it's true!) why it really shouldn't be that complicated for them to do. I can explain well enough why I want regular contributions to my SIPP rather than it all go into the Aegon funds. However I would be interested for input on the second bit. How easy is it to set up for employers?

Matt

Lokolo

I agree with the HR rep. Although yes, it is possible, what is the next person comes along and asks for HL SIPP? The next person asks for Provider C SIPP? It then gets very complicated and someone has to manage it.

My company do offer to put into a HL SIPP, but HL do make it easy for my employer, their system is set up for it. http://corporate.hl.co.uk/group-sipp they have a corporate section.

dunstonh

I know that it's possible for employers to make contributions direct into their employees' SIPP, but I would be interested to hear from anyone with practical experience (preferably as an employer) of implementing it. Is it complicated for the employer?

employer contributions to personal pensions have been available for nearly 30 years. Its easy from the pension company point of view. Not so easy from an employer point of view. A handful of employees is easy but go beyond that and it starts to be unworkable for most.

1. Having been sold on the idea of passive investing, it annoys me to see funds, the management of which I don't trust, gobbling up 1% pa in fees.

use trackers on the aegon plan then.

2. Although I could make regular transfers of value across to my SIPP, my experience of pension transfers to date is that they involve my money being out of the market for weeks.

That does not match reality. Typically about 3-4 days.

I suppose I could try to do regular in-specie transfers

You wont be able to do that.

So I want to go back to my HR person with a reasoned argument for why this should be possible and (if it's true!) why it really shouldn't be that complicated for them to do.

You effectively want to be classed as an opt out, create more work for the HR department. If they offer it to you, then they must do it for all. 30 employees each paying individual direct debits and all being opted out. Now make it 300 or 3000.

gadgetmind

epicurate wrote: »

I would be interested to hear from anyone with practical experience (preferably as an employer) of implementing it. Is it complicated for the employer?

Pretty much no employer will do that as it's a *huge* amount of work.

1. Having been sold on the idea of passive investing, it annoys me to see funds, the management of which I don't trust, gobbling up 1% pa in fees.

I passively invest my own SIPP and also have a Friends Life Group Personal Pension to which my employer contributes. My fees with FL are sub 0.5% and I use a fund of funds that does active asset allocation on top of (mostly) passive funds.

Are you sure it's 1% fees with Aegon? Nothing cheaper available? Either your employer should be negotiating that down as it'll have to come below 0.75% soon anyway.

SlightlySmart

gadgetmind wrote: »

Are you sure it's 1% fees with Aegon? Nothing cheaper available? Either your employer should be negotiating that down as it'll have to come below 0.75% soon anyway.

The Aegon offering I got was 1.5% AMC plus fund charges.

Devil's advocate here but why would an employer have an interest in negotiating the fee down? It's paid for the employee not the employer, and if high fees cause more employees to opt out of the scheme it reduces the amount of contributions that the employer has to make.

gadgetmind

SlightlySmart wrote: »

Devil's advocate here but why would an employer have an interest in negotiating the fee down?

Maybe because CEO, CFO and company secretarial department are also in the pension scheme.

jimjames

Sorry to say it is unlikely that the company would want to do it unless they are very small.

The admin for the company to make payments into multiple different SIPPs would be a nightmare and time consuming which is why they arrange group schemes. We are in the process of moving to a group pension with FL as final salary closing and unfortunately same situation of company not prepared to have the admin burden of payments to different companies.

Fortunately FL does allow trackers though I'm still trying to find out what the fees are. Their info so far seems very opaque and not at all easy to determine. If it is hard for someone who is financially aware then it must be virtually impossible for people who don't understand finance.

Sobryma

SlightlySmart wrote: »

The Aegon offering I got was 1.5% AMC plus fund charges.

Devil's advocate here but why would an employer have an interest in negotiating the fee down? It's paid for the employee not the employer, and if high fees cause more employees to opt out of the scheme it reduces the amount of contributions that the employer has to make.

We have an Aegon plan at work - platform charge is 0.34% and there are lots of no load fund options just on the insured plan. If you can access the SIPP option (we are allowed to) you will have access to Blackrock, Vanguard and Dimensional (if advised).

http://www.aegon.co.uk/funds/fund-prices-and-performance/pension-funds/index.htm

You should have loads of fund choices.

Unlikely most employers with a critical mass will offer multiple pensions to staff, but at the end of the day even if more expensive you are getting free money (employers contribution) so its a no brainer.

Sobryma

It also can be incredibly frustrating and a general pain to administer a staff pension scheme - I don't know how general it is but certainly ours is far more difficult than it should be (indeed more so than old PP schemes) - might just be Aegon though.

gadgetmind

jimjames wrote: »

Fortunately FL does allow trackers though I'm still trying to find out what the fees are.

We pay 0.4% for all of their internal funds including FL Enhanced Index FoF.

We used to pay north of 0.5% but I made a stink and observed that I could get cheaper via Cavendish. Our IFA company claimed to provide value-add but our nominated bod had significant gaps in his knowledge of pension legislation. He also said I was weird for knowing some of the basic rules and regulations, and went so far as to use the W word when speaking to our company secretary about me.

We now use a different IFA company. I have yet to stress test them.

smnberryman

Just having a browse of the available funds

http://www.aegonse.co.uk/funds/downloads/client-pen-bgieuroequity100.pdf

Says 1% yearly charge, can't be right surely?