Transferring a Pension

AlwaysLearnin

Don't rush in to anything, as it could cost you.

The reading recommendations in your other thread on the savings board should help you understanding the basics (and more, depending how much you read), which in turn should help you to make more informed decisions regarding what's best for you in your position (which will be different for everyone).

As per your signature, sorting out the pension is a 2015 task, so take your time and give yourself the best chance of getting it right.

jem16

Tammy2 wrote: »

Oh dear - I'm really confused now.

It says it's a SIPP and that I can transfer to it.
"The quick and easy way to start your SIPP
Tell us your attitude to risk and we'll show you just three PathFinder Funds, managed by Fidelity, to choose from - all three will match your preferred level of risk.
Just choose one and we'll do the rest.
Alternatively, if you are looking for income rather than capital growth we also have three PathFinder Income Funds to consider."

Fidelity does have a SIPP and the fund you quote can indeed be placed inside the SIPP.

A SIPP is merely a tax wrapper which gives tax relief and tax free growth. Currently you have stakeholder, personal pension and SIPP which are all types of Defined Contribution pensions. They invest in funds and have a pot of money. The other type of pension is a Defined Benefit pension which is based on number of years service and salary. There is no pot of money with this.

Think of the pension tax wrapper merely as a container into which you put funds. There are thousands of different funds that can be put inside this wrapper and you make the choice dependant on attitude to risk and number of years you are investing.

With the SIPPs there will be a charge for the SIPP itself plus a charge for the fund/s you put inside. When looking at the cost you have to consider both charges. With the Fidelity SIPP you mentioned there is a 0.3% charge for the SIPP plus the fund charge you quoted which says it's a total of 1.05%pa. Whilst not expensive it's not cheap either.

Many Personal Pensions are cheaper than a SIPP, especially when you don't need or want, the extra features that a SIPP can offer.

You were asked earlier about your existing pension and whether it was actually necessary to transfer away from it. Have you been able to find out more about it yet? Who is it with and what charges are currently being paid? More importantly have you checked that it is a Defined Contribution scheme?

Tammy2

You are absolutely right AlwaysLearnin, I'll resist jumping into anything. Book buying is on my to list for today

jem16, thanks - that is really helpful. I think I'm starting to get it now.

I'm about to dig out my pension stuff. Will get back to you!

dunstonh

Tell us your attitude to risk and we'll show you just three PathFinder Funds, managed by Fidelity, to choose from - all three will match your preferred level of risk.

That is bordering on advice. it also is a biased recommendation.

SIPPs are the experienced investor option with pensions. They are also typically the more expensive option (although can result in low cost options depending on investment selection). Stakeholders are the basic option and personal pensions are typically the middle ground. Are you sure you are ready for the experienced investor option.

Tammy2

dunstonh wrote: »

That is bordering on advice. it also is a biased recommendation.

SIPPs are the experienced investor option with pensions. They are also typically the more expensive option (although can result in low cost options depending on investment selection). Stakeholders are the basic option and personal pensions are typically the middle ground. Are you sure you are ready for the experienced investor option.

The amount I have to transfer is so small (for my age) that, rightly or wrongly, I'm willing to take a bit of a gamble with it. But I'm very sure I'm not ready, lol.

The Fidelity PathFinders do appeal to me - they do make it sound 'easy'. I shan't jump into anything though. The pension has sat there forgotten for a decade or so. It can sit a little longer.

jem16

Tammy2 wrote: »

The Fidelity PathFinders do appeal to me - they do make it sound 'easy'.

You sound like the person in this article.

http://www.thisismoney.co.uk/money/diyinvesting/article-2616188/What-investment-virgins-1-000-Theyve-never-money-stock-market-theyre-terrified-losing-it.html

I shan't jump into anything though. The pension has sat there forgotten for a decade or so. It can sit a little longer.

First thing is to get some more detail about what it's currently in.

Tammy2

jem16 wrote: »

You sound like the person in this article.

Spot on! £300! Pah! :rotfl:

dunstonh

The Fidelity PathFinders do appeal to me - they do make it sound 'easy'. I shan't jump into anything though. The pension has sat there forgotten for a decade or so. It can sit a little longer.

Maybe we should put it another way. What you are looking to do with your investment inexperience would likely be classed as a mis-sale if an adviser was telling you to do that.

1 - A SIPP is the experienced investor wrapper. You dont sound like an experienced investor. If there was a low cost justification or an investment not available in stakeholder or personal pension then fair enough. However, you are looking at expensive funds that you dont really understand

2 - Cost. You are looking at total costs that are far higher than an adviser could arrange yet you are doing it on a non-advised basis. People normally go DIY to save money. Not to pay more. An adviser would have to justify the extra cost over the alternatives (typically that means benchmarking any recommendation against a stakeholder pension at 1% p.a.)

3 - Asking questions to obtain a score is just one part of risk profiling. Advisers are required to consider knowledge, ability to understand and capacity for loss in addition to the scoring. Plus, they need to look out for conflicting answers to the questions. A web page does none of that. The FCA did a thematic review on risk profiling and the use of risk profiles and found many issues. Mainly with those that just relied on scoring based on questions and not the other things.

I tried that Fidelity risk profiler and it asked just 10 questions. I intentionally answered a couple with conflicting answers. It gave me the three funds for recommendation and covered none of the things that the FCA had concerns about. It made no reference to the conflicting answers. It is similar to risk profiling from 7 years ago before the FCA report. DIY solutions dont have to be as robust as advised solutions but the regulator does have concerns over DIY offerings and whether they are drifting into advice without giving advice protection or warnings. It is currently carrying out a thematic review into DIY offerings to see what failings there are and what can be improved.

This does not mean you shouldnt DIY. However, DIY is for people that know what they are doing who are looking to save money. Not sure you are falling into that category at the moment.

Tammy2

No, you're right, definitely not in that category ATM.

Unfortunately, I can't find my members booklet and my latest statement doesn't give much info on the actual plan and no info on charges. However, I have managed to google bits and pieces. It looks like it is a With Profits plan and charges are 1%.

jem16

Tammy2 wrote: »

No, you're right, definitely not in that category ATM.

Unfortunately, I can't find my members booklet and my latest statement doesn't give much info on the actual plan and no info on charges. However, I have managed to google bits and pieces. It looks like it is a With Profits plan and charges are 1%.

If it's a Group pension you may have preferential charges which are less than what you see on the website.

What is it called?