Consolidate multiple pensions? SHP/PPP vs. SIPP?

st_swithin's

I'm 36 and have four previous and current work pensions. I'll keep my current pension but am debating whether to consolidate the others, and if so whether to keep them in a SHP/PPP or open a SIPP.

Aviva personal pension £3.5k
Legal and General stakeholder £20k
University's own pension plan £5.5k - joined March 2017
USS defined benefit scheme - joined March 2018 when I went up a pay grade and was automatically switched to USS.

I have to transfer the university own scheme (and initiate the transfer by 25 August) or else I'll only receive a refund of the contributions made before joining salary sacrifice (£414.15), having been a member for less than two years. I could transfer it to my new scheme but with the issues around the USS deficit I'm thinking it's best not to keep all your eggs in one basket, while at the same time wanting to consolidate the others so I have fewer accounts to manage.

I'm new to investing and intend to learn as much as I can but for now I'll be playing it safe - if I open a SIPP I'll choose a straightforward package. I contribute 9% of salary to my current pension and my partner and I are focusing all other money on an emergency fund, a house deposit and a wedding (we'll look at his pensions in due course), so I won't contribute anything else to this consolidated fund, certainly for some time. I'm looking at AJ Bell, due to low charges for pots under £50k. I think I'd pay a flat-rate annual fee of 0.5% for their passive fund and there would be no charge for purchasing it: youinvest.co.uk/investment-ideas/ajbell-passive-funds.

My incentive for consolidating is the convenience of only having one scheme to manage alongside my current pension. The appeal of a SIPP is the potential to pay lower fees. My SHP and PPP both have an annual management charge of 1% so 0.5% seems a considerable improvement. I do appreciate the value of professional advice but it doesn't seem worth getting any yet because £28k is quite a nominal amount. At the same time, I want to maximise my return on it if I can.

Any reason not to consolidate? If so, should I stick it all in the Legal and General account, another account, or put it in a SIPP? Have I totally misunderstood the AJ Bell fees? Is financial advice worth it for a low amount like this? I would be grateful if anyone could give me some pointers please.

hyubh

st_swithin's wrote: »

I have to transfer the university own scheme (and initiate the transfer by 25 August) or else I'll only receive a refund of the contributions made before joining salary sacrifice (£414.15), having been a member for less than two years. I could transfer it to my new scheme but with the issues around the USS deficit I'm thinking it's best not to keep all your eggs in one basket

The USS isn't going to go bust, the current 'discussions' are whether the DB section will remain open. That said, what are the actual terms of the possible transfer here? In particular - regular transfers into the DB section were stopped when the hybrid scheme came in (transfers can only be made into the DC section), so do you have special terms - and if so, what are they...?

kidmugsy

st_swithin's wrote: »

University's own pension plan £5.5k - joined March 2017

That is a money purchase scheme, is it, not a DB scheme?

st_swithin's

No special terms hyubh; any transfers in are made into the DC and not the DB section. I've signed up to the match so employer and I both put in an extra 1% each month, which also goes into the DC section. I'm not worried that they'll go bust. The complaints I've heard so far are mainly that people's final pensions will be worth less because of the proposed changes so if I was going to lose money I'd want to see if I could make it up elsewhere. I haven't looked in detail yet though, I confess, to see whether/how this might affect me personally.


Kidmugsy the booklet I got when I joined described it as "a valuable 'defined benefit' pension when you retire, paid for the rest of your life" and "a Career Average Revalued Earnings (CARE) scheme". A number of changes were being made from 1 April 18 but as I left it on 1 March 18 those won't apply.

hyubh

st_swithin's wrote: »

No special terms hyubh; any transfers in are made into the DC and not the DB section. I've signed up to the match so employer and I both put in an extra 1% each month, which also goes into the DC section. I'm not worried that they'll go bust. The complaints I've heard so far are mainly that people's final pensions will be worth less because of the proposed changes so if I was going to lose money I'd want to see if I could make it up elsewhere.

If a transfer is only possible into the DC section, then the fate of the DB section (which is what those complaints concern) is entirely academic.

Kidmugsy the booklet I got when I joined described it as "a valuable 'defined benefit' pension when you retire, paid for the rest of your life" and "a Career Average Revalued Earnings (CARE) scheme". A number of changes were being made from 1 April 18 but as I left it on 1 March 18 those won't apply.

Presumably the '£5.5k' is a CETV then...?

kidmugsy

st_swithin's wrote: »

any transfers in are made into the DC and not the DB section.

To be clear: that applies even in the case of the DB pension from your former post with your employer?

AnotherJoe

st_swithin's wrote: »

No special terms hyubh; any transfers in are made into the DC and not the DB section. I've signed up to the match so employer and I both put in an extra 1% each month, which also goes into the DC section. I'm not worried that they'll go bust. The complaints I've heard so far are mainly that people's final pensions will be worth less because of the proposed changes so if I was going to lose money I'd want to see if I could make it up elsewhere. I haven't looked in detail yet though, I confess, to see whether/how this might affect me personally.


Kidmugsy the booklet I got when I joined described it as "a valuable 'defined benefit' pension when you retire, paid for the rest of your life" and "a Career Average Revalued Earnings (CARE) scheme". A number of changes were being made from 1 April 18 but as I left it on 1 March 18 those won't apply.

That is a totally different matter as to whether its a good idea to turn down doubling your money in the current scheme!

The old scheme may well have been better than the new one. That doesnt make it a good plan to duck out of the new scheme into another one where the overall contributions are halved !

st_swithin's

To be clear: that applies even in the case of the DB pension from your former post with your employer?

Yes

Presumably the '£5.5k' is a CETV then...?

Yes. On the 'Options on leaving (less than two years qualifying service)' form that I have to complete to notify them of my intentions, option 2 is "I wish to consider the possibility of a transfer of the Cash Equivalent Transfer Value..."

That is a totally different matter as to whether its a good idea to turn down doubling your money in the current scheme!

The old scheme may well have been better than the new one. That doesnt make it a good plan to duck out of the new scheme into another one where the overall contributions are halved !

Sorry AnotherJoe, I don't follow you. I'm not ducking out of the new scheme - I've joined the new scheme (USS) and will continue to contribute to this as long as I am employed by a university. I cannot keep my old university scheme; I have to either transfer it to my new USS pension scheme or to a PPP otherwise I am only eligible to take a refund of the contributions I made before I was automatically enrolled in salary sacrifice (after tax this equals £400 compared to the £5.5k I get as the CETV). If I transfer it to my new scheme, I can only put it into the DC section, not the DB section. How would my contributions double/be halved?

AnotherJoe

st_swithin's wrote: »

If I transfer it to my new scheme, I can only put it into the DC section, not the DB section. How would my contributions double/be halved?

I misread your OP, sorry,
I read it as asking if you should you pull out of the DB pension because it is worse than the old one. So ignore everything i wrote

hyubh

st_swithin's wrote: »

To be clear: that applies even in the case of the DB pension from your former post with your employer?
Yes

OK, in which case all talk of the USS deficit and fate of the DB section definitely is irrelevant. However, the DC section doesn't strike me as notable either way, given you're already au fait with the world of personal pensions.

st_swithin's

No worries AJ, thanks for your honesty.


Thanks hyubh, it's helpful to know the talk re the USS deficit only relates to the DB. I see what you mean about the DC section not being notable either way, although I see now that the annual management charge is only 0.3% (no fee on the extra 1% + 1% match due to employer subsidy) in the DC section default lifestyle investment option compared to the 1% AMC on my SHP and PPP. I guess that's not to be sniffed at although it would no doubt need to be weighed up against the potential to earn more from choosing funds with potential for higher risk that perhaps had higher charges as well.