To SIPP or not to SIPP

pt1188

My wife and I have Personal Pension plans with Old Mutual Wealth which are now worth around 700k. They have written to us suggesting that we transfer our existing holdings into a Collective Retirement Account (CRA) which offers more flexibility in terms of withdrawal options. In order to do so they would have to sell off all of the holdings and re-purchase them within this CRA. I asked them if it is a SIPP and they said it isn't although they do provide SIPP's through AJ Bell, but they couldn't explain clearly to me what the difference is between their CRA and a SIPP.

We also have ISA's held within Fidelity and Interactive Investor platforms and my question is whether I should stick with OMW and go for their CRA or switch out to a SIPP with either Fidelity or Interactive. In all of these cases I will be out of the market for about 10 days while they encash then transfer the funds, although with OMW it will be a bit quicker as it's in house. In terms of cost, OMW charges 0.3% annually while II is the cheapest at £96 pa.

This is all our pension savings and I am proceeding with caution. Any suggestions and advice will be appreciated.

dunstonh

My wife and I have Personal Pension plans with Old Mutual Wealth which are now worth around 700k. They have written to us suggesting that we transfer our existing holdings into a Collective Retirement Account (CRA) which offers more flexibility in terms of withdrawal options.

Ok, that would suggest you have an old Old Mutual Wealth Life contract. The CRA is offered by Old Mutual Wealth platform.

Are you sure it is Old Mutual that have written to you and not a third party? I have converted most of my old PP5 plans from Old Mutual Life but there are a couple left who have good terms that were worth keeping. OM have not written to them (they shouldnt have). Also, the CRA is an advised platform. Not non-advised.

I asked them if it is a SIPP and they said it isn't although they do provide SIPP's through AJ Bell, but they couldn't explain clearly to me what the difference is between their CRA and a SIPP.

The CRA is not a SIPP. It is a personal pension. It is difficult to say what the differences are between that and a SIPP as not all SIPPs are equal. And the CRA is a PPP based on a platform and has access to UT/OEIC funds. It does not use pension funds (nor would a SIPP). It also has the largest range of superclean funds of any platform.

The biggest generic difference is that the CRA has 100% FSCS protection with no upper limit. The SIPP is limited to £50k for itself and £50k per fund house (depending on where the failure is).

We also have ISA's held within Fidelity and Interactive Investor platforms and my question is whether I should stick with OMW and go for their CRA or switch out to a SIPP with either Fidelity or Interactive.

Personally, I would pick OMW over Fidelity as its a better platform. However, that is looking at it from an advised point of view. If you were going to DIY, I would not pick the CRA. I still wouldnt pick Fidelity for ISAs or pension.

In terms of cost, OMW charges 0.3% annually while II is the cheapest at £96 pa.

OMW platform have client linking. So, the total of your tax wrappers across family dictate the charges band you fall in. So, if you have your ISAs and PPP on the platform, the combined total matters.

pt1188

Thanks Dunstonh for your prompt and comprehensive reply.

Are you sure it is Old Mutual that have written to you and not a third party?

Actually its on the covering letter of my annual statement elaborating on the withdrawal options of which the CRA is one of them which offers a wider choice of income options.

Also, the CRA is an advised platform. Not non-advised.

I should mention that I had previously used an IFA who set up this OMW platform. However he was planning on charging me 1% to transfer all my holdings into a CRA, investing entirely in Cirilium Dynamic. This is on top of his 0.5% annual fee so I decided to terminate his services and go DIY. Does that mean the CRA option is no longer viable?

I am now thinking of transfer my entire PP5 plan from Old Mutual to a SIPP with Interactive, investing mainly with Vanguard Lifestrategy 60%. The existing plan currently has only two holdings - Invesco Perpetual High Income and Jupiter Income.

Your thoughts on this please? Thanks again.

dunstonh

I should mention that I had previously used an IFA who set up this OMW platform. However he was planning on charging me 1% to transfer all my holdings into a CRA, investing entirely in Cirilium Dynamic.

That doesnt sound like an IFA. More like an FA working with intrinsic network. (reason for that is that OMW are the fund house for Cirillium - so you have OMW platform and OMW funds. Something that only really tends to happen with OMW FAs ).

However he was planning on charging me 1% to transfer all my holdings into a CRA, investing entirely in Cirilium Dynamic. This is on top of his 0.5% annual fee so I decided to terminate his services and go DIY.

I don't blame you. When I have moved people off old contracts onto modern ones, where they had ongoing servicing at 0.5% p.a. I didn't charge any initial. That sort of thing comes under the ongoing servicing side IMO.

. Does that mean the CRA option is no longer viable?

Effectively yes. You could do fund switches on line but not top ups or any of the other options. It is not geared for DIY. It is a good platform. I have my pension with them. However, if I was not an IFA and didnt have access to IFA products, then you wouldnt use the CRA.

I am now thinking of transfer my entire PP5 plan from Old Mutual to a SIPP with Interactive, investing mainly with Vanguard Lifestrategy 60%. The existing plan currently has only two holdings - Invesco Perpetual High Income and Jupiter Income.

So, you are looking to lower your investment risk at the same time? Both funds are a little further up the risk scale than VLS60 but both have outperformed VLS60 since it was launched. So, it should be noted that had you made this move years ago, your value would be lower. Are you letting charges dictate the movement or investment risk/selection? (the Cirillium fund would have been less than all three)

With your portfolio value, I would personally have bespoke portfolio rather than a single multi-asset fund. Or if you want to limit it to multi-asset then at least do a couple of different fund houses to spread the strategy as VLS does have some negatives along with its positives.

pt1188

Thanks again Dunstonh, you're spot on with the FA being part of Intrinsic and tied to OMW. He was previously independant when he set me up with OMW for pensions and Fidelity for my ISA's

With your portfolio value, I would personally have bespoke portfolio rather than a single multi-asset fund. Or if you want to limit it to multi-asset then at least do a couple of different fund houses to spread the strategy as VLS does have some negatives along with its positives.

I will indeed. As the existing funds are OMW pension fund versions of Invesco and Jupiter they cannot be transferred over in specie but will have to be encashed. So I will have the opportunity to spread it amongst 3-4 funds instead of just the two I have presently. These will include VLS 60 as well as perhaps Cirilium which my FA was very keen for me to transfer into. I am in my early 60's and won't need to begin drawing on the funds for at least another 8-10 years.

Your thoughts on transferring into Interactive SIPP?

dunstonh

These will include VLS 60 as well as perhaps Cirilium which my FA was very keen for me to transfer into.

He was keen as his employer was telling him to promote it. Not because it was very good.

Your thoughts on transferring into Interactive SIPP?

I know little about the DIY options other than what I read here. I will let others comment on that one.