Consolidating old employer pensions / dealing fee questions

Locoblade

Hi All

I'm trying to get my head round my pension options, so I'm after a little advice if you wouldnt mind.

I currently have 2 pension pots from previous employers worth around £65k combined but both schemes are very limited in terms of available funds etc but wth no exit fees. As I'm now self employed I want to find a more flexible and fully featured solution that I can use to consolidate the above and continue paying into as employer contributions from my Ltd company. Most of my investments will be in funds (Vantage LifeStrategy etc) but I'd like the option of other investments in future so given the size of the pot I think I'm right in erring towards a fixed management fee SIPP like iWeb, Halifax or II rather than a percentage based fee SIPP like HL and BestInvest, am I on the right lines?

One thing that confuses me is how dealing fees work within SIPPs. With both of my previous work pensions I've just split the monthly contribution up to purchase into several funds and each month the scheme automatically bought as many units of each fund as possible with no apparent fee to do that. I assumed it would be similar with a SIPP, pay into it monthly and allocate percentages of that monthly payment to buy into several different funds. However, using iWeb as an example with a £5 dealing fee on funds, would following this investment pattern mean I'd be paying a £5 fee on every monthly investment into every selected fund, potentially £30-50/month in fees if I wanted to invest into several funds? If so thats presumably not the way to do it, so what am I missing?! Do you just leave money in as cash for a few months then make larger but less frequent purchases or does the charging not work in the way I'm interpreting it?

cheers

bigadaj

Your understanding is fine.

The flip side to the fixed fee providers is that they make money on transactions, though there are often reduced fees for regular investments, which can knock teh costs down somewhat.

I suppose the way to look at it is simply to offset trading fees against percentages and work out the most efficient way, compareufndplatforms has a tool for comparison as well as monevators table of charges.

So on your fund size then cheaper percentage brokers might be charging £150-£200 per year. So the difference to a fixed fee with trading may not be too large. You can trade less frequently or maybe buy one fund one month and a different one the next.

Alternatively you can hold two pensions, so move this pot to a fixed free provider, open a new one with a percentage broker and do your free trading on the latter on a low percentage of asset cost. You'd probably have to rebalance annually on the combination of schemes, but can do this within your normal trading on the active scheme. However transfer out costs need to be considered as well, as ever it's total costs that are important.

Locoblade

Thanks for confirming, so perhaps the Halifax SIPP with a £2 regular transaction fee might suit my investment style a little better, compared to the iWeb one. I'm contributing £800 per month so I'd have thought spending a couple of quid per month to get the money invested immediately would reap more reward than leaving it a few months as cash earning nothing at all just to save a couple of pounds in fees.

For Halifax what does £2.00 per trade (purchases only) mean though, am I going to be able to buy funds with this regular trade option?