Transfer pension to SIPP?

Faraday_Cage

I've long been tempted to switch my pension with Skandia to a SIPP with my existing online broker (TD) but have refrained from doing so because the consensus always seems to be that a PP is cheaper.


On the face of it, this appears not to be the case: TD's SIPP charge is 0.25%pa and I'm currently paying 0.75% with Skandia. Am I overlooking something here? Am I getting discounted rates on the funds with Skandia that I won't get with TD? Why is a SIPP said to be dearer?


The reasons for wanting to switch in the first place are the simplicity of having all my investments under one roof and also better choice - no investment trusts with Skandia and limited choice of tracker funds.

zagfles

Are you paying any additional charges for the funds with Skandia? PP's often have in-house funds "free", ie no additional charge - check this.

With a SIPP, the fund charge will be additional to the platform charge - though you can get very cheap trackers in a SIPP (as low as 0.1% or less) so you could pay less in a SIPP than you're paying now.

dunstonh

On the face of it, this appears not to be the case: TD's SIPP charge is 0.25%pa and I'm currently paying 0.75% with Skandia. Am I overlooking something here? Am I getting discounted rates on the funds with Skandia that I won't get with TD? Why is a SIPP said to be dearer?

If you are paying 0.75% with Skandia then it means you have an older Skandia pension and not a current business one.

However, that older PP5/6 pension you have (guessing its a PP5 or PP6 from the 0.75%) has funds with no additional charges. Plus, depending on your contribution method, it would return 1% back as bonus units every 5 years.

Am I overlooking something here? Am I getting discounted rates on the funds with Skandia that I won't get with TD? Why is a SIPP said to be dearer?

Yes you are overlooking the fact you are not comparing modern personal pensions with modern SIPPs.

Faraday_Cage

Thanks for your reply dunstonh. You're quite right - it's a PP5. I spoke to Skandia on the phone yesterday and they confirmed that their 0.75% is in addition to the fund managers' fees. I haven't looked into what these are on the grounds that I'd have to pay them wherever they're held but I need to look into why the portfolio has shown practically zero growth over the last 4/5 years despite the underlying funds performing moderately well.


Not quite sure what you mean about not comparing modern pensions with modern SIPPs...I'm comparing what I have with an alternative....are you suggesting I could upgrade my old Skandia pension to a new Skandia pension?


Thanks again for your comments.

Faraday_Cage

zagfles wrote: »

.... though you can get very cheap trackers in a SIPP (as low as 0.1% or less) so you could pay less in a SIPP than you're paying now.

Indeed - I couldn't see many trackers on Skandia's list and the cheapest was 0.25%.


Thanks for replying.

dunstonh

I spoke to Skandia on the phone yesterday and they confirmed that their 0.75% is in addition to the fund managers' fees.

That is correct. However, they had the a couple of funds with no additional charge if you bought it before a certain date. After that it ranged from 0.1% upwards. The PP5 has a 1% rebate every 5 years on transfers in and single premiums.

I used to have the PP5 but it is long in the tooth now. I moved mine to the Skandia Collective Retirement account some years back.

Not quite sure what you mean about not comparing modern pensions with modern SIPPs...I'm comparing what I have with an alternative....are you suggesting I could upgrade my old Skandia pension to a new Skandia pension?

Your existing pension is no longer available for new business. Its not a modern pension. So, when you are looking at SIPPs, you are looking at modern SIPPs with their current pricing. You also need to be looking at modern personal pensions and their current pricing. Not just your existing vs SIPP. it needs to be existing vs SIPP vs other personal pensions.

Faraday_Cage

dunstonh wrote: »

Your existing pension is no longer available for new business. Its not a modern pension. So, when you are looking at SIPPs, you are looking at modern SIPPs with their current pricing. You also need to be looking at modern personal pensions and their current pricing. Not just your existing vs SIPP. it needs to be existing vs SIPP vs other personal pensions.

Thanks dunstonh. I've phoned Skandia again and the only real alternative is to switch to a PP6 (single instead of initial pricing) but I'd have to go through an adviser again. It cost me £1000 last time and with only a £55k fund and minimal benefits in terms of charges it would take me the rest of my working life to recoup his fee.


I was wrong about TD's platform fee for SIPPs. It's 0.25% per six months not 0.25% p.a. as I said.


So it's the devil or the deep blue sea really. I think I'll just stay with Skandia and hope that now my funds have caught up with their bid/offer spread I'll finally start to see some worthwhile growth....


Thanks for your input.

dunstonh

Thanks dunstonh. I've phoned Skandia again and the only real alternative is to switch to a PP6 (single instead of initial pricing) but I'd have to go through an adviser again. It cost me £1000 last time and with only a £55k fund and minimal benefits in terms of charges it would take me the rest of my working life to recoup his fee.

Skandia Life will only tell you what Skandia Life have available. They wont tell you about the Skandia Collective retirement account for example. Not saying that the Skandia CRA is right for you but just pointing out the limitations of going direct to provider.

Faraday_Cage

dunstonh wrote: »

Skandia Life will only tell you what Skandia Life have available. They wont tell you about the Skandia Collective retirement account for example. Not saying that the Skandia CRA is right for you but just pointing out the limitations of going direct to provider.

Funnily enough the guy on the phone did mention the CRA (that's the Skandia Investment Solutions product I think?) in passing but indicated it's primarily for those on the point of retiring.


The way things have worked out for me, my PP will be only a small player in my retirement. This is largely due to my paying into a Standard Life retirement annuity for 25 years and failing to notice it was barely breaking even with their fees. Fortunately I have ISA and non-ISA investments that have performed well and these will provide the majority of my funds in retirement. My PP will never recover the ground it's lost now (I'm 57) but I just wanted to save pennies in fees wherever I can.

dunstonh

Funnily enough the guy on the phone did mention the CRA (that's the Skandia Investment Solutions product I think?) in passing but indicated it's primarily for those on the point of retiring.

Its a platform based personal pension. Can be used from the day you are born to the day you die (just like most personal pensions). It has a much wider fund choice and for a period a few years back it could be the cheapest personal pension on the market. It is still up at the right end for new business but unbundled pricing has increased its charges for some people.

Fortunately I have ISA and non-ISA investments that have performed well and these will provide the majority of my funds in retirement. My PP will never recover the ground it's lost now (I'm 57) but I just wanted to save pennies in fees wherever I can.

Pensions and ISAs share the same investments. You could consider having the pension and ISA on the same platform. You may benefit from lower charges based on fund based discounts.

zagfles

Faraday_Cage wrote: »

Thanks dunstonh. I've phoned Skandia again and the only real alternative is to switch to a PP6 (single instead of initial pricing) but I'd have to go through an adviser again. It cost me £1000 last time and with only a £55k fund and minimal benefits in terms of charges it would take me the rest of my working life to recoup his fee.


I was wrong about TD's platform fee for SIPPs. It's 0.25% per six months not 0.25% p.a. as I said.


So it's the devil or the deep blue sea really. I think I'll just stay with Skandia and hope that now my funds have caught up with their bid/offer spread I'll finally start to see some worthwhile growth....


Thanks for your input.

Maybe worth looking at HL or Fidelity. HL do trackers for under 0.1%pa, there's a platform charge of 0.45% which people have negotiated down to as low at 0.2%, but your pot probably isn't big enough to get a discount.

Fidelity have a lower platform charge (0.35% IIRC) and I don't think they have any transfer out fees so they may be an option, though not sure if they do trackers as cheap as HL. They also don't currently allow drawdown without advice but this may change with the new rules (and if it doesn't you can transfer out when the time comes).