HL SIPP vs ReAssure personal pension

chissers

I have 2 pension schemes.

1. Personal pension in ReAssure (formerly M&S Financial services, then HSBC which transferred it to Reassure to date).
Current value £70,000.
Annual charge 0.7% (though impossible to work out stealth charges).

Invested in International Managed Pension Fund and UK Balanced Equity Pension Fund originally with M&S but now in ReAssure International Mgd Pen Standard Pension Accumulator Series 01 (IntMNStanN)/B].
Up 19% in last three years.

It is not available as Drawdown but there is no transfer fee.

2. HL SIPP HSBC FTSE All Share Index

Value £45,000
Annual charge 0.25%

Available as Drawdown from 55

Up 11% in last three years.

I can view the pension every day if I wish.


I get very little info from ReAssure and have to chase then for annual statements and dislike that this pension has moved provider 3 times in 18 years. Also there is no option for Drawdown from ReAssure.

Could I have your opinion on the thought of transferring pension 1 to 2
so the charges are less, I get a more hands-on feel for the pension and all my pension is available for drawdown?

I understand that once a pension reaches a certain level that expensive and probably unnecessary financial advice must be sought prior to drawdown. Adding the two together would make this more likely.

xylophone

I understand that once a pension reaches a certain level that expensive and probably unnecessary financial advice must be sought prior to drawdown

If you are used to managing your SIPP and you have no safeguarded benefits (GARS etc) in the Reassure scheme, and you are happy with the HL charges/fees, then there would seem to be no reason why you shouldn't transfer.

If you have a SIPP then you don't have to take advice to draw down.

http://www.hl.co.uk/pensions/sipp/frequently-asked-questions

dunstonh

Annual charge 0.7% (though impossible to work out stealth charges).

its not impossible. It may just require software if it is a multi-charge contract rather than a mono charge one.

ould I have your opinion on the thought of transferring pension 1 to 2

Apart from your rather poor quality investment option with option 2, why would you want to do that at this stage? Charges are the same on both plans. FSCS protection is greater with option 1.

so the charges are less,

How do you work out the charges as being less? Platform charge 0.45% plus 0.25% fund charge = 0.7%

I understand that once a pension reaches a certain level that expensive and probably unnecessary financial advice must be sought prior to drawdown. Adding the two together would make this more likely.

Financial advice is not required. However, in your case it may make sense as your investments are poor quality and that could be costing you more than the cost of advice.

chissers

dunstonh

Thank you for your help.

Could I ask why you feel pension 2 is a poor investment?

What research could I do to find a better one?

Yes I had forgotten about the platform charge!

Why is FSCS protection is greater with option 1.

dunstonh

Could I ask why you feel pension 2 is a poor investment?

It is using a single sector fund by itself. That is poor quality investing. A UK equity fund should not be held by itself. If you are going to use single sector funds, then you should have a portfolio of single sector funds built to match risk profile and model allocations. Where is the US equity, emerging markets, asia, Europe, Fixed Interest Securities, Property etc?

You are putting all your eggs in one basket and hoping that the UK is the best in the world every year.

What research could I do to find a better one?

If you are going down the route of single sector investments then you need to learn about investing. You need to understand risk and reward and have an ability to read economic data and understand what it means. Otherwise you are just taking random punts. Even if you put x% into the different sectors, you would need to know how much goes into each and that figure does not remain static. So you need to keep it under review and rebalance (annually is considered suitable for most)

Why is FSCS protection is greater with option 1.

personal pensions and stakeholder pensions get insurance class FSCS protection. SIPPs get investment class FSCS protection.

zagfles

dunstonh wrote: »

It is using a single sector fund by itself. That is poor quality investing. A UK equity fund should not be held by itself. If you are going to use single sector funds, then you should have a portfolio of single sector funds built to match risk profile and model allocations. Where is the US equity, emerging markets, asia, Europe, Fixed Interest Securities, Property etc?

You are putting all your eggs in one basket and hoping that the UK is the best in the world every year.

Indeed. OP HL have some suggestions for portfolios - though they tend to push actively managed funds, so the charges aren't particularly low.

http://www.hl.co.uk/funds/help-choosing-funds/master-portfolios

They also have low charge trackers (around 0.1%) if you prefer to use those.

dunstonh

zagfles wrote: »

Indeed. OP HL have some suggestions for portfolios - though they tend to push actively managed funds, so the charges aren't particularly low.

http://www.hl.co.uk/funds/help-choosing-funds/master-portfolios

They also have low charge trackers (around 0.1%) if you prefer to use those.

Not sure they are actually trying to build a correctly weighted portfolio with those as they are 5 funds of 20% each.

How much have those fund houses paid to have their funds selected? Remember that this is not advice, so they can pay for marketing positions.

zagfles

dunstonh wrote: »

Not sure they are actually trying to build a correctly weighted portfolio with those as they are 5 funds of 20% each.

That depends which risk profile and the investment amount you choose. None of the examples I tried gave 5 funds of 20%. Mostly more funds with a variety of percentages.

How much have those fund houses paid to have their funds selected?

I don't know. Maybe you should email them and ask if you're interested. Perhaps suggest they send an official reply to this thread?

Remember that this is not advice, so they can pay for marketing positions.

That doesn't mean they do in a suggested portfolio. The funds they recommend are generally IME good funds. People go on about HL's marketing hype etc and maybe they do get paid to market some funds, maybe I've been a sucker but I've followed a lot of their recommendations over the last 10 years or so. Thing is though - my SIPP seems to have done a lot better than my workplace and personal pension. I think I'll carry on being a sucker.

Or perhaps the suckers are those who pay for financial advice when a simple website can come up with a reasonable asset allocation based on attitude to risk

dunstonh

That depends which risk profile and the investment amount you choose. None of the examples I tried gave 5 funds of 20%. Mostly more funds with a variety of percentages.

One I selected showed 5x20. Another is showing three funds with 30/30/40. I have noticed that when you change the amount, the ratios change. Further suggesting that it is distribution method. Allocations shouldn't change just because the amount is different.

zagfles

dunstonh wrote: »

One I selected showed 5x20. Another is showing three funds with 30/30/40. I have noticed that when you change the amount, the ratios change. Further suggesting that it is distribution method. Allocations shouldn't change just because the amount is different.

I think it's reasonable that smaller investments use fewer funds. For instance if you put in £5,000 on the adventurous, it suggests 4 funds but if you put £100,000 it suggests 7.

Would you advise the same number of funds whether the pot was £1,000 or £100,000?

dunstonh

zagfles wrote: »

I think it's reasonable that smaller investments use fewer funds. For instance if you put in £5,000 on the adventurous, it suggests 4 funds but if you put £100,000 it suggests 7.

Would you advise the same number of funds whether the pot was £1,000 or £100,000?

I wouldnt try and build a portfolio with £1000 but use a single multi-asset fund.

if you have researched your allocations, why would they change at £1000 or £100,000?