Transfer expensive private pension to cheap Sipp?

dharm999

I have a private pension with Standard Life, Personal Pension One, that was set up around 15 years ago. The charges are relatively high, and I am looking to transfer to a low cost Sipp, say iii or iWeb. The intention is to invest in cheap trackers, and hopefully get a better long term outcome. I already have money in ISAs investing in VLS 60, so am happy with the concept. The plan is to retire in 9 years time. I have a small DB pension, c3700 a year, and three other small DC pensions, total value of c30k.

On the face of it, I can't see any huge downside to transferring, am I missing something?

zagfles

Unlikely, unless there are any guarantees with it such as guaranteed annuity rates etc

dharm999

zagfles wrote: »

Unlikely, unless there are any guarantees with it such as guaranteed annuity rates etc

Nope, no guaranteed rates, so nothing to stay with Standard Life

LHW99

When you say "private", presumably it isn't connected with your current employment, and getting employer contributions?
If it was, you could lose those if you transferred.

dunstonh

I have a private pension with Standard Life, Personal Pension One, that was set up around 15 years ago.

In which case it wont be an expensive plan.

The charges are relatively high, and I am looking to transfer to a low cost Sipp, say iii or iWeb.

15 years ago means that the plan would have had RU64 to deal with. That means charges would be 1% or less.

IN 2016, that is higher than modern personal pensions (which come in around 0.4%). However, you cannot refer to 1% as expensive.

On the face of it, I can't see any huge downside to transferring, am I missing something?

A lot of SL plans from that era have a guaranteed minimum growth rate of 4%. Does yours?

zagfles

dunstonh wrote: »

In which case it wont be an expensive plan.



15 years ago means that the plan would have had RU64 to deal with. That means charges would be 1% or less.

IN 2016, that is higher than modern personal pensions (which come in around 0.4%). However, you cannot refer to 1% as expensive.

Why not? You do, when it suits you

dharm999

LHW99 wrote: »

When you say "private", presumably it isn't connected with your current employment, and getting employer contributions?
If it was, you could lose those if you transferred.

Employer is contributing, but they would be OK to pay in to the new plan.

dharm999

dunstonh wrote: »

In which case it wont be an expensive plan.



15 years ago means that the plan would have had RU64 to deal with. That means charges would be 1% or less.

[/I'm not sure how SL take their charges, the charges on the 4 funds I invest in, are all at least 1.5%, do SL's charges come out of these?


IN 2016, that is higher than modern personal pensions (which come in around 0.4%). However, you cannot refer to 1% as expensive.

[i was comparing the charges on the 4 funds I invest in compared to the fund charges on trackers, over 1.5% v around 0.25%

A lot of SL plans from that era have a guaranteed minimum growth rate of 4%. Does yours?

[/there is no guarantee of growth, wish there was, as for the first few years the growth was appalling, my fault completely

On that basis, I think it's worth transferring

dunstonh

Why not? You do, when it suits you

No I don't. It is more expensive than modern options but not expensive.

I'm not sure how SL take their charges, the charges on the 4 funds I invest in, are all at least 1.5%, do SL's charges come out of these?

For a plan that was taken out 15 years ago, it would have to have complied with rule RU64 (that came in during 2001 and had a three year build up where plans were expected to be stakeholder friendly by then). This means they could not charge more than 1% on internal funds. They are allowed to charge more on external funds.

Most personal pensions of that era, charged their tracker funds at the same cost of their internal funds.

i was comparing the charges on the 4 funds I invest in compared to the fund charges on trackers, over 1.5% v around 0.25%

You are not going to get 0.25% though as you need to add the platform charges on top. There is no reason to be paying 1.5% but do remember that the pension AMC is the equivalent of the OCF on the funds plus the platform charge.

Employer is contributing, but they would be OK to pay in to the new plan.

This would make you an opt-out. Many providers will not accept pension business from people opted out without an adviser signing off on it. So, check that before you decide your provider.

On that basis, I think it's worth transferring

The only other issues then are that you get less FSCS protection on SIPPs than on personal pensions. That may or may not be a concern to you. And that if you are running with trackers, then that means you will need to rebalance and control your sector allocation personally rather than a multi-asset fund that does it internally.

dharm999

dunstonh wrote: »

No I don't. It is more expensive than modern options but not expensive.



For a plan that was taken out 15 years ago, it would have to have complied with rule RU64 (that came in during 2001 and had a three year build up where plans were expected to be stakeholder friendly by then). This means they could not charge more than 1% on internal funds. They are allowed to charge more on external funds.

Most personal pensions of that era, charged their tracker funds at the same cost of their internal funds.



You are not going to get 0.25% though as you need to add the platform charges on top. There is no reason to be paying 1.5% but do remember that the pension AMC is the equivalent of the OCF on the funds plus the platform charge.



This would make you an opt-out. Many providers will not accept pension business from people opted out without an adviser signing off on it. So, check that before you decide your provider.



The only other issues then are that you get less FSCS protection on SIPPs than on personal pensions. That may or may not be a concern to you. And that if you are running with trackers, then that means you will need to rebalance and control your sector allocation personally rather than a multi-asset fund that does it internally.

I am looking to transfer to a III Sipp, and the annual charges, plus the cost of the trackers would be around 1% less than the 1.5% I am currently paying. I will check with III that they will accept the transfer. I was planning on investing in one or two of the Vanguard Lifestrategy, or other equivalent, funds.

dharm999

The only other issues then are that you get less FSCS protection on SIPPs than on personal pensions. That may or may not be a concern to you. [/QUOTE]

I am not clear about the protection offered user a Sipp and the difference to that for a personal pension. As I understand it, the Sipp protection is a maximum of 50k, but the personal pension is 100% of the pension. What does the 50k refer to, the total value of the Sipp, or if the Sipp was used to Invest in a number of funds, the maximum value protected for each fund is 50k?

Thanks