Pension transfer in cash or in specie?

SabNys

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I have a personal pension pot of £85,000 with Clerical Medical, and a SIPP pot of £235,000 with Zurich/Capita.

I want to transfer both of these to a Flexi-Access Drawdown SIPP with Interactive Investor.

I would be grateful for any advice on whether to transfer in cash or in specie.

All three companies said that they don't care how I do it (although in slightly more diplomatic language).

Thanks.
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bigadaj

Firstly what are the relative costs of either option.

It may well be that the sipp could easily be transferred in specie if III offer the same finds, whereas they well not hold the funds in the personal pension so would have to be transferred in cash. Check with the receiver what they do allow to be held.

The other consideration is what you intend to hold and invest in going forward, you will no doubt have to maintain some cash holding so it's achieving the target balance you want, in the correct asset proportions.

II are often the cheapest option for larger pots, but they have historically had a lot of complaints about their service and records, there's a long running thread if you search the board.

I think there's some indication they may have improved more recently, but this should also be a consideration, particularly as soem of the complaints referred to missing dividend payments, tax records etc hich aren't just inconvenient but can affect returns.

SabNys

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bigadaj wrote: »

II are often the cheapest option for larger pots...

Thanks for everything before the quote.

Can you delete everything else please before other posters read it. I'm a beginner. Everything is difficult enough for me to understand without off-topic posts resulting in a ball of spaghetti.

I hope you understand :-)

Thanks again.
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tacpot12

Whether you want the funds you already hold is the key question. If you want the funds you have, transfer them in specie so that you don't miss out on any growth.

dunstonh

I would be grateful for any advice on whether to transfer in cash or in specie.

You cannot do in-specie with pension funds.

All three companies said that they don't care how I do it (although in slightly more diplomatic language).

Scottish Widows probably didnt know what you were talking about when you spoke to them. Zurich cant do it on their insured pension contracts but can on their platform pension.

bigadaj

SabNys wrote: »

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Thanks for everything before the quote.

Can you delete everything else please before other posters read it. I'm a beginner. Everything is difficult enough for me to understand without off-topic posts resulting in a ball of spaghetti.

I hope you understand :-)

Thanks again.
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If you don't understand something then ask and someone will explain.

Service levels are very important for most people and it is something you should be considering, particularly as you are a beginner. Tracking problems on relatively complicated products would be a challenge.

If you are a beginner then why not speak to an ifa, overall their level of service may prove of value given the relatively large sums involved.

If you don't want to discuss the issues around providers and investment management it would suggest that you might struggle to diy in your retirement.

coyrls

Assuming that you are able to transfer your Zurich SIPP in specie, I would suggest that you do so. Bigadaj asks what the relative costs are for the transfers but the point about a cash transfer is that you can’t know the cost in advance. A 5% change in the market on £235,000 is £11,750. If the market went up 5% when you were in cash, £11,750 would dwarf the costs of an in specie transfer, of course the market could go down 5% and you’d be quids in but I wouldn’t take the risk, I would stick with a known cost. Once you have completed your transfer, you can rebalance or change your investments while minimising your time out of the market.

xylophone

What is the attraction of the II SIPP?

SabNys

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dunstonh wrote: »

You cannot do in-specie with pension funds.

Well, that's an easy one to handle. So I can start that transfer in cash immediately.

dunstonh wrote: »

Scottish Widows probably didnt know what you were talking about when you spoke to them.

dunstonh wrote: »

Zurich cant do it on their insured pension contracts but can on their platform pension.

It's the platform pension.

It looks as if the responses don't show much enthusiasm for in specie. I deliberately didn't post the following link in my OP - to avoid any initial bias:

https://www.ftadviser.com/2016/02/01/pensions/sipps/raw-deals-on-in-specie-pension-transfers-uncovered-s8W1C4zcBZsIDhl8WrS8sK/article.html
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coyrls

SabNys wrote: »

It looks as if the responses don't show much enthusiasm for in specie. I deliberately didn't post the following link in my OP - to avoid any initial bias:

https://www.ftadviser.com/2016/02/01/pensions/sipps/raw-deals-on-in-specie-pension-transfers-uncovered-s8W1C4zcBZsIDhl8WrS8sK/article.html
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I really don't see how you can detect a lack of enthusiasm for in specie transfers from the responses you have got, all of which are fairly neutral. The thrust of the article you link to seems to be that in-specie transfers take longer. It also contains the quote:

The comparison of taking a quick cash transfer which is risky as being out of market is also compounded by the cost of sale and repurchase, meaning that in the vast majority of cases the transfer in specie is the by far desirable route.

Why would the length of time taken for the transfer be a problem for you?