Complicated SIPP Transfer Question

_pete_

I'm planning to transfer my SIPP from A J Bell to iWeb, because of the difference in fees.

- For historical reasons, about 30% of my SIPP is in Vanguard Lifestrategy 60, and the other 60% spread across 13 tracker funds which were chosen with the intention of giving me 60% equities overall, but with fund performance are currently at 70% equity.

- I pay a monthly sum into the Vanguard Life strategy, and plan to continue doing so until April 2018. I expect to start drawdown in April 2019.

- I was thinking about selling the 13 funds and putting that money into another Vanguard-type global fund. This is because I'd rather just leave the funds alone than have to fiddle around with rebalancing. I'm thinking a fund other than Vanguard on a 'not wanting all my eggs in one basket' basis.

- I have spoken to A J Bell and iWeb and it seems to be that if I transferred the whole pension in cash, the process would take about a week. If I transferred it 'as is', then it could take 8-10 weeks. The A J Bell price for a cash transfer is £75 plus VAT, their price for transferring the funds is £425 plus VAT.

I'm drawn to the cash transfer because I'm keen to avoid the delay and mutual blaming that I understand can be a feature when two SIPP providers don't collaborate efficiently.

I'd be interested in people's thoughts on this situation.

Thank you.

ianthy

I can't comment on the impact on selling your fund etc but having transferred out my DB pension in July, I then undertook some general housekeeping of other investments - getting them onto the same provider/platform and small pension transfers.


I am currently navigating my way thru transferring a number of small SIPPS and part of my DB pension £250k into AJ Bell from Old Mutual Wealth (OMW). I have found the process slow, CS staff not able to answer questions or knowledge of systems used and of course mutual blaming. Once the internal admin is completed OMW transfer time of 5 working days unless I pay a fee of £23.00 for same day. The process between OMW and AJ Bell got so confused that we have had to go back to scratch and start again. The likely transfer date will be 22 August - so it has taken nearly a month. The only upside is that my funds are still 'invested' with OMW.


Personally I would go for the quickest route and allow plenty of time to be on the phone checking that these professionals are doing their jobs.

EdSwippet

Is this a large pension you're transferring away from AJ Bell, or a more modest one? If it's large, how will you feel if stocks rocket upwards by 5% or so during the week or two you are out of the markets while the cash transfer occurs?

Personally, on larger transfers I'm prepared to pay a little more to avoid significant time out of the markets. If you plan to move to a single fund anyway, you could do that before, rather than after or as part of the transfer, then move that one single fund holding 'in specie' for a greatly reduced AJ Bell transfer out charge.

Cost to move 13 funds into one at AJ Bell before the move would be £10 more than going fully to cash. After that you only pay AJ Bell the cost of reregistering one fund. You can be relaxed about any delays and a circle of finger-pointing because you're not out of the market for the duration. My last one took more than nine months, but I remained fully invested at all times.

Obviously, the one single global fund you buy does need to be offered by both platforms. That should be easy enough to arrange (provided you don't pick one of AJ Bell's new own-brand funds!).

Unfortunately for ianthy upthread, transfers from life insurance companies to SIPPs mostly aren't possible in specie. But with some forethought you can probably avoid what he describes.

AnotherJoe

_pete_ wrote: »

I'm planning to transfer my SIPP from A J Bell to iWeb, because of the difference in fees.

- For historical reasons, about 30% of my SIPP is in Vanguard Lifestrategy 60, and the other 60% spread across 13 tracker funds which were chosen with the intention of giving me 60% equities overall, but with fund performance are currently at 70% equity.

- I pay a monthly sum into the Vanguard Life strategy, and plan to continue doing so until April 2018. I expect to start drawdown in April 2019.

- I was thinking about selling the 13 funds and putting that money into another Vanguard-type global fund. This is because I'd rather just leave the funds alone than have to fiddle around with rebalancing. I'm thinking a fund other than Vanguard on a 'not wanting all my eggs in one basket' basis.

That "basket" is the global economy, so I think you are mistaken if you think performance will be hugely different. Apart from the arbitrary 25% or so in the UK I suspect youve simply created a higher cost version of VLS S60. There are anyway many other funds or ITs oryou could have bought that would replicate the 13 , so I agree sell them all now,transfer, and buy one, or perhaps two one equities and one bonds and do that in your new broker.

_pete_

EdSwippet wrote: »

Is this a large pension you're transferring away from AJ Bell, or a more modest one? If it's large, how will you feel if stocks rocket upwards by 5% or so during the week or two you are out of the markets while the cash transfer occurs?

Personally, on larger transfers I'm prepared to pay a little more to avoid significant time out of the markets. If you plan to move to a single fund anyway, you could do that before, rather than after or as part of the transfer, then move that one single fund holding 'in specie' for a greatly reduced AJ Bell transfer out charge.

Cost to move 13 funds into one at AJ Bell before the move would be £10 more than going fully to cash. After that you only pay AJ Bell the cost of reregistering one fund. You can be relaxed about any delays and a circle of finger-pointing because you're not out of the market for the duration. My last one took more than nine months, but I remained fully invested at all times.

Thank you - moving it into one new fund is a great suggestion. Yes, it is a big pension and I know that the odds are in favour of it going up in value while I'm out of the market. Would their scope for getting it wrong be reduced if I put it all into 1 or 2 funds?

_pete_

AnotherJoe wrote: »

That "basket" is the global economy, so I think you are mistaken if you think performance will be hugely different. Apart from the arbitrary 25% or so in the UK I suspect youve simply created a higher cost version of VLS S60. There are anyway many other funds or ITs oryou could have bought that would replicate the 13 , so I agree sell them all now,transfer, and buy one, or perhaps two one equities and one bonds and do that in your new broker.

Thanks for the really helpful insights!

Sorry, I didn't explain it properly in my original post - what I'm twitchy about is something happening to Vanguard (eg, getting hacked) particularly if I move the fund into their SIPP in a year or so when it gets established. My big fear is not just losing the money, but not being able to access it while they sort out the mess.

Interestingly, my 13 alternative funds have worked out slightly cheaper than the VLS60 - they are all trackers with very low charges. If I did a lot of buying and selling the VLS would be a bit cheaper overall.

Linton

_pete_ wrote: »

Thanks for the really helpful insights!

Sorry, I didn't explain it properly in my original post - what I'm twitchy about is something happening to Vanguard (eg, getting hacked) particularly if I move the fund into their SIPP in a year or so when it gets established. My big fear is not just losing the money, but not being able to access it while they sort out the mess.

Interestingly, my 13 alternative funds have worked out slightly cheaper than the VLS60 - they are all trackers with very low charges. If I did a lot of buying and selling the VLS would be a bit cheaper overall.

Why do you think Vanguard are more of a risk than AJBell or Iweb? Vanguard are the second largest fund manager in the world, not a fly-by-night startup.

dunstonh

what I'm twitchy about is something happening to Vanguard (eg, getting hacked) particularly if I move the fund into their SIPP in a year or so when it gets established.

Use a personal pension instead then. SIPPs get £50k FSCS protection. Personal pensions get 100% FSCS protection regardless of their value. Or use a SIPP that allows investment on multiple fund houses and ensure you place no more than £50k in any one fund house.

The risks you describe are very low but if they do worry you then you have ways to mitigate them.

You do need to remember that a company does not have the money you invest for its own purposes. It doesnt get to spend the money. So,a company could fail and not have any impact on the investments other than short term issues over the administration. and its likely an administrator would keep it running as a going concern as any buyer would not want disruption.

ffacoffipawb

dunstonh wrote: »

Use a personal pension instead then. SIPPs get £50k FSCS protection. Personal pensions get 100% FSCS protection regardless of their value.

Does the Aviva Wrap pension fall under the former or latter protection?

dunstonh

ffacoffipawb wrote: »

Does the Aviva Wrap pension fall under the former or latter protection?

That is a good question and Aviva's documentation is not correct on this (that may sound unlikely but I have reported multiple errors in provider key features in recent years and each they have changed).

If you are on the choice/flex pension within Aviva wrap then you would be on the £50k FCSCS protection. (choice being unit trust/OEIC funds. Flex being more advanced options - some of which may not have any FSCS protection).

However, the core pension within Aviva wrap only uses insured funds (those that have Aviva at the start of the name and a series number at the end). The Aviva documentation says that its only £50k FSCS protection. However, normally when you exclusively use insured funds, you get the insurance/pension FSCS protection of 100% with no upper limit.

So, the Aviva KFD maybe just simplifying it to £50k without mentioning potential variations or it maybe that they have a structure with the insured funds that means 100% FSCS protection is not possible.


Edit: Scrub that. It appears that Aviva has clarified the position and adjusted their documentation. the April 2017 version of the document I was reading has been corrected to show that the core version (Aviva insured funds) is 100% FSCS protection with no upper limit). The earlier documentation was wrong.

ffacoffipawb

dunstonh wrote: »

That is a good question and Aviva's documentation is not correct on this (that may sound unlikely but I have reported multiple errors in provider key features in recent years and each they have changed).

If you are on the choice/flex pension within Aviva wrap then you would be on the £50k FCSCS protection. (choice being unit trust/OEIC funds. Flex being more advanced options - some of which may not have any FSCS protection).

However, the core pension within Aviva wrap only uses insured funds (those that have Aviva at the start of the name and a series number at the end). The Aviva documentation says that its only £50k FSCS protection. However, normally when you exclusively use insured funds, you get the insurance/pension FSCS protection of 100% with no upper limit.

So, the Aviva KFD maybe just simplifying it to £50k without mentioning potential variations or it maybe that they have a structure with the insured funds that means 100% FSCS protection is not possible.


Edit: Scrub that. It appears that Aviva has clarified the position and adjusted their documentation. the April 2017 version of the document I was reading has been corrected to show that the core version (Aviva insured funds) is 100% FSCS protection with no upper limit). The earlier documentation was wrong.

Thanks. I am over LTA at 53 due to Brexit boom so am using it as a small pot (also standard life & legal and general for max 3 small pots) so will cash in just under the £10k limit, as will the other two small pots.

May be worth transferring my InVestment Trusts SIPP (A J Bell Youinvest) into its insured funds instead for 100% FSCS protection, as it is in excess of £700k.

Does the Aviva wrap do drawdown?