Can I move some of current employer pension pot

starkiwi26

Dear fellow MSE members,

I make regular monthly contribution by salary sacrifice to my pension. My company use Legal and General.
I am not happy with the default option of the pension funds because apparently my ISA is doing a lot better than it. Therefore I would like to switch the pension funds, but then I immediately noticed the "similar index funds" is much higher at Legal and General (compared to my ISA). "similar index funds" because I could not find the same funds at Legal & General, but it is passive index fund, should perform similar.

For example, LEGAL & GENERAL (PMC) UK EQUITY INDEX FUND. charge 0.15%
But my ISA on Fidelity, Fidelity Index UK Fund P-Acc. charge only 0.06%

I did some google, there are plenty of guides on how to move pension of previous employer into your current employer - for easy management. But, I cannot find any guide or article mentions about moving some of the current employer pension to a personal pension fund or SIPP.

I am still working with my current employer and make regular monthly contribution by salary sacrifice to this pension. Therefore, I only want to move, let's 80% of the pension pot to a cheaper personal pension platform. But I will still maintain our current employer Legal and General pension.
a) Can this be done?
b) Any implication of doing this? (Because if this is a norm, then MSE must have recommended it :money:)

Appreciate your reading and many thanks for the answers in advance. :beer::beer:

AnotherJoe

It depends on your scheme. There is no obligation for them to let you do this. With my last employer it wasn't possible until they changed schemes and then it became possible.

Dox

Check with your employer/scheme booklet whether you can 'leave' the scheme and then rejoin. If you can, it would mean that you have considerably more freedom with the funds you've built up, although future funds would have the same restrictions as you have now.

Alexland

Yes you can phone your employer's pension provider and ask them if a partial transfer would be possible with the rules if the plan and if so to send you the transfer and discharge paperwork. By doing a partial transfer you are leaving it open for future contributions.

I make most of my pension contributions into my workplace pension to benefit from automatic higher rate tax relief and salary sacrifice but I have transferred around half of my total pension pot (including current employer contributions) into a SIPP for self investment. I then only contribute £12 into the SIPP which is boosted by £3 basic rate relief to pay the £180 platform fee.

I am unsure if the pension provider even made my employer aware that I did this.

However managing your own pension via a SIPP is a serious undertaking and you should have a clear understanding of the research, risk management, asset allocation and financial discipline you will need to apply to be successful.

Both pensions are low six digits but I still have 20 years work ahead before I can draw on them.

Alex

starkiwi26

Alexland wrote: »

Yes you can phone your employer's pension provider and ask them if a partial transfer would be possible with the rules if the plan and if so to send you the transfer and discharge paperwork. By doing a partial transfer you are leaving it open for future contributions.

I make most of my pension contributions into my workplace pension to benefit from automatic higher rate tax relief and salary sacrifice but I have transferred around half of my total pension pot (including current employer contributions) into a SIPP for self investment. I then only contribute £12 into the SIPP which is boosted by £3 basic rate relief to pay the £180 platform fee.

I am unsure if the pension provider even made my employer aware that I did this.

However managing your own pension via a SIPP is a serious undertaking and you should have a clear understanding of the research, risk management, asset allocation and financial discipline you will need to apply to be successful.

Alex

Your comment on SIPP scared me... Please, anything I should pay more attention to?
I am currently 35 years old, I need at least 20 years before I am allowed to withdraw the money, though most probably I need to work until at least 60 years old before I have sufficient money to retire.
Therefore, my pension for a 20-30 years of long term investment. In my opinion, the long term investment should be relatively easy because how bad the market crash, it is likely to recover in this timeframe. I just need to take care when I am nearer to retirement age.

Also, why you need to contribute £12 for the SIPP fee? couldnt it deduct from your pension fund?
Sorry, I am newbie to it.

Both pensions are low six digits but I still have 20 years work ahead before I can draw on them.

=> You are rich!! :money::money:

Alexland

starkiwi26 wrote: »

Your comment on SIPP scared me... Please, anything I should pay more attention to?
I am currently 35 years old, I need at least 20 years before I am allowed to withdraw the money, though most probably I need to work until at least 60 years old before I have sufficient money to retire.
Therefore, my pension for a 20-30 years of long term investment. In my opinion, the long term investment should be relatively easy because how bad the market crash, it is likely to recover in this timeframe. I just need to take care when I am nearer to retirement age.

Also, why you need to contribute £12 for the SIPP fee? couldnt it deduct from your pension fund?
Sorry, I am newbie to it.

There's lots to learn about the world of DIY investing which starts with choosing a SIPP provider. Some work on a percentage fee (which works well for lower balances) and others work on a fixed fee (which works well for higher balances). They generally expect you to maintain a cash balance alongside the investments to pay their platform fees. Some even charge a penalty if there is insufficient cash in the account and they have to force sell investments to cover their fees. Then there's the transaction fees...

In terms of the investments you could go for an easy multi asset fund or build your own portfolios with periodic rebalancing, etc. There is a lot of choice on the DIY platforms so it takes research and reflection to choose wisely. Then finally there is behavioural risk that causes people to buy high and sell low.

Ps I don't feel rich - you need a massive pension to have a comfortable retirement these days. If you retire for 30 years that's 360 missing paydays!

Alex

Brynsam

You don't have to have a SIPP. A simple personal pension should do the trick!

starkiwi26

Brynsam wrote: »

You don't have to have a SIPP. A simple personal pension should do the trick!

you are right. SIPP is too complex for a layman like me.
simple personal pension should do the the trick. I just want to take control which funds to invest and lower funds charges, platform charges

crv1963

You will need to check with Legal and General first- the scheme that I am joining that the employer uses for Salary Sacrifice will not allow transfers out or partial transfers out while still contributing to it. I will need to leave employment and then re-join if I want to transfer out.

dunstonh

For example, LEGAL & GENERAL (PMC) UK EQUITY INDEX FUND. charge 0.15%
But my ISA on Fidelity, Fidelity Index UK Fund P-Acc. charge only 0.06%

Why are you not comparing like for like?

The pension is bundled and is the total charge.
The funds in your ISA are unbundled and need the platform charge to be added on top. If you only include some of the costs of your ISA then you are not comparing like for like.

Fidelity platform charge is 0.25%. So, your charges on your ISA are 0.31%. The pension is 0.15% and therefore cheaper.

I am not happy with the default option of the pension funds because apparently my ISA is doing a lot better than it.

Again, not comparing like for like. The default fund in most schemes is a medium risk multi-asset fund. The funds you mention you hold in the ISA are all high risk. If we were using a risk scale of 1-10 of conventional options, your pension fund is likely to be around risk 5-6. Your ISA funds you mention are risk 9/10. Its no wonder they are going up more in positive periods. They will also go down more in negative periods.

In context, your ISA funds would lose around 40-50% during a repeat of the credit crunch whereas your pension fund would lose around 15-20%.

Also, unless you are holding around 10 funds, it is unlikely your ISA is invested well. i.e. you are probably being selective in your sectors and have little or no exposure in all the major sectors. That is bad investing if its the case. When you use single sector funds rather than multi-asset funds, you are in control and making the management decisions of what and where you invest. So, what investment strategy are you using for your ISA? How much do you have allocated to Asia, Emerging Markets, Corp Bonds, Gilts, High Yield Bonds, Japan, Property and all the others?

Asghar

Alexland wrote: »

I then only contribute £12 into the SIPP which is boosted by £3 basic rate relief to pay the £180 platform fee.
Alex

Do you mind telling me if that is with Hargreaves Lansdown?
With the Hargreaves Lansdown SIPP I normally just add cash once a year to cover the fee and with the added tax relief it effectively brings the platform fee down to 0.36%.

Just wondering if you are using a different, cheaper platform that allows this. To add cash with tax relief to pay the fee.