Consolidate multiple pensions? SHP/PPP vs. SIPP?
st_swithin's
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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.
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.
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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...?
That is a money purchase scheme, is it, not a DB scheme?
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.
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.
Presumably the '£5.5k' is a CETV then...?
To be clear: that applies even in the case of the DB pension from your former post with your employer?
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 !
Yes
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..."
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?
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
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.
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.