Small pensions

lisyloo

I have a couple of relatively small pensions that are languishing, by which I mean I'm not managing the funds.
They are defined contribution schemes and are not being paid into (from past employment).
I have a couple of SIPPs that are being much more actively managed.
I'd like to move these small pensions but in general the costs of having them reviewed professionally
is not justified by the size of the pots and it's not the sort of thing an advisor can take a quick look at, so that's why I'm here.


Firstly one is a section 32 buy-out policy.
1) Is it possible to transfer a section 32 buyout policy into a SIPP?
It probably has low costs but I'm willing to forego that to get the active management that will happen in the SIPP.
2) I'm not aware of any specific benefits but are there any obvious ones I need to think about?
I mean things like death benefits, lump sum, retirement age. I can't think of any that are significant on a small pot and I'm not aware of any.
The other one is within an occupation scheme and again I believe the costs are low but I'm not aware specifically of any other benefits.
3) Same question as 2 - Are there any benefits I might lose by transferring out. I'm not aware of any with either scheme.
4) General question - is there any obvious reason I shouldn't tranfer these schemes if I think the active management in the SIPP will outweigh any cost savings.


Cheers

dunstonh

1) Is it possible to transfer a section 32 buyout policy into a SIPP?

Yes. However, section 32 buy out bonds are classed as occupational pensions and may require an adviser to be involved on transfer (usually if there is GMP and/or other safeguarded benefits)

If there are safeguarded benefits then it is a case of looking at what they are and whether they are valuable or not. Usually there are valuable benefits but sometimes there is not.

4) General question - is there any obvious reason I shouldn't tranfer these schemes if I think the active management in the SIPP will outweigh any cost savings.

What is wrong with the investment options on the existing plans?

lisyloo

What is wrong with the investment options on the existing plans?

Probably nothing, but I lack the investing skills to know which funds to pick and the size of the pots aren't big enough to justify regular professional advice - past experience is that I picked a fund 25 years ago and it's still in the same one.


With my Novia and HL SIPPs the management is provided at low cost.
So for example with the Novia SIPP, my advisor will regularly review and advise if any funds needs switching.


I simply don't have that skill.


Any suggestions? as it seems I'm a bit stuck if the cost of investigating are not justified


Can I simply ask myself what are the "safeguarded benefits" (I know it's important to have the right terminology).
I'd be amazed if there was any guaranteed minimum on tiny pots.

atush

If you lack the skills to manage your pensions as they stand, who is managing your SIPP? Should be you (ie self invested) or do you have an IFA who runs that?

If there are no guaranteed benefits that you lose by transfer, you may be able to transfer it to your Sipp- ask them?

How old are you?

lisyloo

I am being professionally advised on both the SIPPs and I'm happy that I'm sufficiently diversified and in the right risk profile.
My employer did not give me a choice - they only offer to pay into an HL SIPP.
It's been the same with every employer I've had for the past 25 years. If you want their contributions you have to use the scheme of their choice (I work in IT).
Of course I could not take it, but I'd lose 45.8% via salary sacrifice plus the employers contribution, so in practice there is no choice.

I don't know if there are any guaranteed benefits.
What questions do I need to ask?
Guaranteed minimum pension? Any others?
The problem is that I don't know what questions to ask.
If you can help by telling me what these benefits might be then that would help a lot.
As far as I understand the age couldn't be lower than 55 and the lump sum can't be more than 25%, so what are the possible benefits I need to check please.
Is it just guaranteed min for me and for spouse after death? Or is there anything else I've missed?

I am 48. I don't expect to be able to afford to retire before 60 at the earliest and yes I know state pension age is 67.

Thanks

mgdavid

It's not unusual for Section 32s to have Guaranteed Annuity Rates, if it dates from back in the '80s or 90's it could be as high as 10% which far exceeds today's rates.

lisyloo

The section 32 buy out was from 1997 - 1999.
I don't recall ever being advised of any guarantees, but thanks for letting me know about it.

lisyloo

So am I relatively safe to ask about the safeguarded benefits and penalties myself? I'm thinking of doing it in writing and then asking my advisor to transfer them execution only? (they'll do that for nothing if it's into a pension they make charges on).

Or does this really need professional checking?

It won't be justified and won't happen but I'd really like to know if DIY is ok in this case.

The other alternative if just to leave the, where they are where they don't get managed very well.

xylophone

The section 32 buy out dates from 2000.

You had previously been employed by a company with a contracted out pension scheme? Is there GMP in your S32? What does the policy say?

See

http://www.financialadvice.net/s32_buy_out_plan/zone/1288

As to the second pension, what kind of scheme was provided by the employer?

lisyloo

You had previously been employed by a company with a contracted out pension scheme?

I was contracted out but I had a separate scheme for the government contributions and that's now in my Novia SIPP.
Neither of these pensions received any contracted out contributions.
Neither are final salary.


I'm afraid I don't have a policy from either of the pensions which finished in 1999 and 1994.
I have statements which provide a forecast with no mention of any minimum.

As to the second pension, what kind of scheme was provided by the employer?

A money purchase occupational scheme (contacted out contributions going elsewhere).

xylophone

Contact the administrators of the old schemes and establish whether there are any guaranteed benefits and ask for transfer values.

Establish whether there are any transfer out charges.

Check whether your SIPP providers will accept a transfer in.