Checking Company Pension

byteseven

I am 32 years old and working full time. I don’t intend to retire “early” but would expect to retire between 65-70. I currently earn a base salary of £27,000, and earn significant overtime. Overtime can be an additional £500-2000 per month.

I pay 10.5% of my base salary as pension, by salary sacrifice and my employer matches this by 5%. This means a monthly total contribution of 15.5%. Note, the employer contribution is expected to rise to 8% in January 2019. My workplace pension currently stands at £11,579.15.

I budget such that my month to month expenses are entirely covered by my base salary. I do not depend on my overtime to maintain my lifestyle. Overtime is split between various savings pots, including 15% into my pension. This is saved up and when it reaches £1000 (approx 9-12 months), it is added to my SIPP. I appreciate I miss out on the salary sacrifice benefits by not increasing my monthly contribution by estimating my overtime but I do not wish to count eggs before they hatch.

My SIPP pension is 100 % invested in Vanguard Lifestratergy 100. This is held with Cavendish. The current valuation is £12,748.88

Total pension = £24,328.03

My workplace pension follows a lifestyle strategy that moves me into less risky assets as I approach 65. I am happy with this at the moment as I believe I have the time to ride out the peaks and troughs. I will need to re-assess the 65 years default when I am closer to 65, eg between 50-65 years old.

My current employers pension consists of the following funds, held via Fidelity:

Schroder Diversified Growth Fund Series 2 50.6%
BlackRock World (Ex-UK) Equity Index Fund 39.4%
BlackRock Emerging Markets Index Fund 5.2%
BlackRock UK Equity Index Fund 4.9%

I am trying to find out what fees are being levied on these funds but I cannot find a definitive factsheet that gives the information. To be honest, I am bamboozled by the names of all the very similar funds. I naively believe that typing in the ISIN number should give me all the info but alas that does not appear to be the case.

Could anyone more experienced in the investing world point me in the right direction?

Based on the fees being incurred on my workplace pension I may decide to move the money into comparable passive low cost funds within my SIPP. . I am able to invest in alternative funds within my workplace pension but the choice is very limited (< 30 funds).

I believe that low fee investing is key to success and that as a unsophisticated investor passive funds are the best method to achieve this.

Brynsam

Typing in the fund names does the trick: e.g.

Schroder Diversified Growth Fund Series - https://www.trustnet.com/factsheets/p/m5y3/sw-schroder-diversified-growth-pension-series-2

BlackRock World (Ex-UK) Equity Index Fund - https://www.trustnet.com/factsheets/p/cww4/scot-eq-blackrock-world-ex-uk-equity-index-pn and https://www.trustnet.com/factsheetpdf?url=https:%2F%2Fwww2.trustnet.com%2FFactsheets%2FFundFactsheetPDF.aspx%3FfundCode%3DCWFW4%26univ%3DP&Citicode=cww4&Universe=P

AMC 1% in each case.

kidmugsy

byteseven wrote: »

Overtime is split between various savings pots, including 15% into my pension. This is saved up and when it reaches £1000 (approx 9-12 months), it is added to my SIPP. I appreciate I miss out on the salary sacrifice benefits by not increasing my monthly contribution by estimating my overtime but I do not wish to count eggs before they hatch.

The 12% advantage from avoiding NICs by using salary sacrifice is so big that in your shoes I'd save a good little nest egg in this tax year and then pay the same amount into your occupational pension by sal sac next tax year.

In other words if I could save £1k this year I'd increase my sal sac to use it up next year; that would be much more efficient than just bunging it into a SIPP.

crv1963

byteseven wrote: »

I am 32 years old and working full time. I don’t intend to retire “early” but would expect to retire between 65-70. I currently earn a base salary of £27,000, and earn significant overtime. Overtime can be an additional £500-2000 per month.

I budget such that my month to month expenses are entirely covered by my base salary. I do not depend on my overtime to maintain my lifestyle. Overtime is split between various savings pots, including 15% into my pension. This is saved up and when it reaches £1000 (approx 9-12 months), it is added to my SIPP. I appreciate I miss out on the salary sacrifice benefits by not increasing my monthly contribution by estimating my overtime but I do not wish to count eggs before they hatch.

My SIPP pension is 100 % invested in Vanguard Lifestratergy 100. This is held with Cavendish. The current valuation is £12,748.88

Total pension = £24,328

I believe that low fee investing is key to success and that as a unsophisticated investor passive funds are the best method to achieve this.

Well done for getting a grip and planning- far sooner than I did! Paying the equivalent of 30% of your salary into pensions is good for options to retire earlier. Just a question not a criticism! Why save the £1000 and then transfer to the SIPP, would it not make sense to drip feed say £85 per month into it, so smoothing the pound cost averaging?

Albermarle

You are right in saying it is not always easy to pin down the charges on these workplace pensions.
Normally there is a charge for the pension itself and then plus a charge for the funds. However I have one DC pot where there is a 1 % charge for the pension but the funds are zero . Another one has total charges of 1.3% but there is an overall 0.55% discount . The only sure way to find them out is to call them and ask the right questions.
You may find the charges competitive with your SIPP, in which case it might make more sense to increase your salary sacrifice contribution due to the NI boost.

si2winit

I will say one thing, that world ex uk fund growth has been amazing for me the last few years. It’s heavily equities in the US. Just hoping it continues...

si2winit

I also moved my funds out of the EM markets. Way to volatile for me but some will say I will miss out on gains over the next 20 years.

I am 100% equities too, but less risky equities than EM. Even a violent swing on emerging markets that have 10% portfolio can wipe out any gains for a year. Not for me.

byteseven

Thank you all for your input. I appreciate the suggestions and will be taking them to heart.

That being said I was probably a bit too vague about my intentions. What I should of asked is, is there a cheaper cost way of implementing a similar investment to that currently being provided by my company pension?

Another consideration, given my age and time till retirement, is whether the fund is too conservative? I suspect this default fund has choices made to smooth out volatility to reduce anxiety of other pension fund members.

Brynsam wrote: »

Typing in the fund names does the trick: e.g.

Schroder Diversified Growth Fund Series - [Link redacted]

BlackRock World (Ex-UK) Equity Index Fund - [Link redacted] and [Link redacted]

AMC 1% in each case.

Thank you, I did attempt a simple Google search first. However what confused me was that the first fund listed (Schroder Diversified Growth Fund Series 2) is listed as SW Schroder Diversified Growth Fund Series 2, ie it is a Scottish Widows fund, on the link you suggest. This threw me, is it actually the same fund? Is the SW prefix immaterial?

The same goes for BlackRock World (Ex-UK) Equity Index Fund, which this time has a suffix "Pn SH", are those significant?

Unfortunately, the third link you have posted seems to be a bad one, and I get a error page on Trustnet. Would you care to post an alternative link?

My own similar Google searches for the remaining two funds are as follows. The first Trustnet result on Google for the "BlackRock Emerging Markets Index Fund" is "BlackRock Emerging Markets D Acc" (hxxps://xxx.trustnet.xom/factsheets/o/00pd/blackrock-emerging-markets-d-acc).

There is a similar result for the "BlackRock UK Equity Index Fund", there are two apparently similar funds on that Google found on Trustnet, "Av BlackRock UK Equity Index Tracker FP Pn" (hxxps://xxx.trustnet.xom/factsheets/p/lm80/av-blackrock-uk-equity-index-tracker-fp-pn) and "Aviva BlackRock UK Equity Index Tracker Pn S3" (hxxps://xxx.trustnet.xom/factsheets/p/a9e5/aviva-blackrock-uk-equity-index-tracker-pn-s3). In this instance once as an AMC of 1%, the other 0%! Again, I am confused. Are either of these funds mine? Or is there a third listing out there that is?

Taking your original Trustnet results at face value, then an AMC of 1% seems a bit high. Going back to my original point, ie. can I obtain the same result at a lower cost?

kidmugsy wrote: »

The 12% advantage from avoiding NICs by using salary sacrifice is so big that in your shoes I'd save a good little nest egg in this tax year and then pay the same amount into your occupational pension by sal sac next tax year.

In other words if I could save £1k this year I'd increase my sal sac to use it up next year; that would be much more efficient than just bunging it into a SIPP.

I didn't think of doing that. It seems simple enough and I'm annoyed I didn't think of it myself. Annoyingly, the window for changing the monthly pension deduction has passed and I will now have to wait until Summer 2019.

crv1963 wrote: »

Well done for getting a grip and planning- far sooner than I did! Paying the equivalent of 30% of your salary into pensions is good for options to retire earlier. Just a question not a criticism! Why save the £1000 and then transfer to the SIPP, would it not make sense to drip feed say £85 per month into it, so smoothing the pound cost averaging?

Because my overtime can vary a lot month-to-month and I don't want to either (a) over-estimate the monthly amount or (b) juggle around with differing amounts each month. It is simpler to deposit a lump sump. That being said, I'm going to follow kidmugsy's suggestion above.

I haven't done the maths so I don't believe its actually 30%, it's 15% of my base salary and 15% of my overtime, so hopefully close to 15% overall.

Albermarle

That being said I was probably a bit too vague about my intentions. What I should of asked is, is there a cheaper cost way of implementing a similar investment to that currently being provided by my company pension?

AS far as I can see you have not yet pinned down the exact charges on your workplace pension . It could be the funds are 1% and then plus another charge for the pension wrapper itself . Or it could be 1 % total or could be your employer has even negotiated a discount below 1 %. You need to call them the pension company and find out exactly what you are being charged
I had a friend who moved out of an old workplace pension to a new SIPP , only to find out later the charges were actually higher ….

byteseven

Dear All,

I asked our pension trustees for clarification and a breakdown of fees for my pension. To their credit they were very helpful and prompt in their reply. I however took my sweet time posting back here.

Fidelity stated total fee is 0.56%. I asked for a breakdown per fund they can be found below:

Fund									Proportion	Fee
Schroder Diversified Growth Fund Series 2		50.6%		0.91%
BlackRock World (Ex-UK) Equity Index Fund		39.4%		0.28%
BlackRock Emerging Markets Index Fund		5.2%		0.28%
BlackRock UK Equity Index Fund				4.9%		0.35%

Total calculated percentage fee = 0.60%

I suspect the difference (0.6% vs 0.63%) between the number Fidelity has quoted and my calculated is due to drifts in the proportions and fees.

The fees that have been given are noticeably lower compared to the those on the factsheets that were discovered by Googling.

It seems that the fees are very reasonable and certainly not extortionate. The total cost on £11,000 is approximately £69.30. So I will leave well alone for the time being and probably examine the situation in 3-5 years time.

Thanks again for everyone's assistance.