Company SIPP (limited fund choice) v Personal SIPP

JamTomorrow

My pension contributions deducted from salary are invested in an L&G SIPP in which platform fee's are covered by company, I just pay the fund fee's. This is saving me ~0.3% per annum.

There has been a reduction in the number of funds that are available to me recently which is making it more challenging to align with the asset allocation I would like.

For example, there is little by way of Global Property funds and the only Gold fund is the Blackrock Gold & General with a FMC of 1.34%. Value tilts and small company tilts are also limited and secured through managed funds with relative high fee's.

I'm a Hale convert and beyond these tilts most of my funds are held in trackers and therefore in the gold example I would prefer to make the investment in a tracker such as the iShares Gold trust at an expense ratio of 0.25%. Similarly I'd like to get more Global Property exposure through a tracker or ETF.

My thinking is therefore to transfer out some of the L&G SIPP for sectors where I can't get the exposure I would like into a new SIPP (probably in Interactive Investor as already have ISA there and fee's seem reasonable).

The downside is I would then have to pay a platform fee, but this would give me flexibility to obtain the asset allocation I want and would also add some minor de-risking by holding my pension across a couple of providers.

Also, the saving on the expenses on the Gold fund of 1.09%
(Blackrock Gold & General v iShares ETF) would probably cover the cost of the platform at interactive investor.

Are there any other pro's or cons I'm not considering before taking this approach?

Malthusian

If you're not confident that your management decisions would increase the growth of your pension fund by way more than 0.3% then you shouldn't bother.

Naturally you need to ensure you still get the benefits of employer matching / salary sacrifice (if applicable) on your ongoing employer contributions, but you said you were only going to transfer out some of the L&G SIPP to the new one so that's covered.

TheTracker

It sounds sensible to me. If I understand correctly, you aren’t making management decisions, you’re looking for the cheapest way to buy funds that match your decided allocations. If anything, you’re fighting against imposed decisions. If the platform and transfer fees stack up, go for it!

The thought that comes to mind for me is whether you have significant enough other savings, such as ISAs, where you could hold the tilts and otherwise unavailable funds while keeping the SIPP on the straight and narrow.

dunstonh

For example, there is little by way of Global Property funds and the only Gold fund is the Blackrock Gold & General with a FMC of 1.34%. Value tilts and small company tilts are also limited and secured through managed funds with relative high fee's.

You are likely to only hold no more than 10% in property and less than 5% in specialist/niche funds in total. So, is it really worth it in the scheme of things?

Thrugelmir

JamTomorrow wrote: »

For example, there is little by way of Global Property funds

What level of exposure are you hoping to achieve?

Alexland

Do a spreadsheet and see where you stand overall in relation to platform and fund fees. Then consider the materiality of having your preferred fund mix. If you are already an II customer adding a SIPP won't be too expensive but be careful not to have too much of your wealth in one place. Check you don't give up any other benefits such as guaranteed annuity rates, larger tax free lump sum or earlier withdrawal dates.

I partially transfered out from my workplace pension and have no regrets. I will do it again next year once the balance is big enough.

Alex.

JamTomorrow

dunstonh wrote: »

You are likely to only hold no more than 10% in property and less than 5% in specialist/niche funds in total. So, is it really worth it in the scheme of things?

It's borderline, but I think the temptation to move is as much because the L&G platform is so poor and the choices restricted. Therefore this lack of a low cost gold fund is probably being used as an excuse.

If I include the value and small cap tilts were I could get a lower expense then I would be up in the range of 20%-25% of my portfolio.

Assuming an incremental platform cost of £200 for II (versus free with L&G), then at a 1% delta on the expenses I would need to be transferring >£20k to break-even. My transfer out would be more than double that now so think it makes sense from an expense perspective; although at only ~£200 pa its still fair to say is it worth it.

JamTomorrow

Alexland wrote: »

Do a spreadsheet and see where you stand overall in relation to platform and fund fees. Then consider the materiality of having your preferred fund mix. If you are already an II customer adding a SIPP won't be too expensive but be careful not to have too much of your wealth in one place. Check you don't give up any other benefits such as guaranteed annuity rates, larger tax free lump sum or earlier withdrawal dates.

I partially transfered out from my workplace pension and have no regrets. I will do it again next year once the balance is big enough.

Alex.

I think the numbers stack up for me and there are no other benefits I'd be giving up by transferring some out - I'll still have 80%-90% of my pension in the company SIPP.