Consolidation of DC Hodgepodge

DairyQueen

I am in the process of reviewing my husband's eclectic mix of DC pensions. The main objective is to consolidate in the run-up to retirement to facilitate drawdown.

These policies are in addition to the DB/S32/SP that will provide a decent level of base retirement income, and are in addition to his SIPP. No current/future contributions.

Objectives:
- Optimise charges. For us, this means paying charges relative to the service/performance/management received from the platform and funds rather than the cheapest.
- Provide transparency on the underlying assets and charges, and allow easy online management.
- An eye to the max protection (£85k?) offered by each platform/fund manager.
- Flexibility of drawdown.

He lost the policy documents years ago so I am relying on more recent statements to glean details before he contacts providers. Unfortunately, the statements provide very sketchy info on some of these ancient policies. I now manage our investments and need to provide OH with a script of questions to ask each provider before we change the status quo.

I would be very grateful if anyone can add any further info/views on the following:

1) Aviva GPP
Plan acquired last year via their purchase of Friends Life. Unfortunately OH ticked the 'profiling' option when the plan was set-up and I have just discovered that, over an indeterminate period (the transaction history pre-Aviva isn't available), his pot is being moved from a 70/30 equity 'growth fund' into a 20/80 'consolidation fund'. He is now 80% invested in this 'consolidation fund'. Not what we want.

Attempts to manage the policy online have so far proved fruitless as the option to remove profiling isn't available (it should be). The charges and profiling details are hidden and we currently can't switch funds. There is no fact sheet for the consolidation fund.

Calls to the Aviva customer service team have proved frustrating. It seems they employ 18-year-old interns with minimal pensions or system knowledge.

Given that the platform and fund charges on this plan are reasonable (0.35% plus, for example, 0.01% management fee on a growth fund with excellent performance) we were considering consolidating here. However, the poor online offering, and abysmal customer service (they also don't open at weekends), suggests we strike this option.

Can anyone offer feedback on Aviva's online system and CS. Are we simply unlucky or is it uniformly awful?

2) Equitable Life PPP Unit Linked
This policy is on the list for takeover by Reliance Life next year. It has high charges (at least 0.75%) and appears to be invested in their 'Managed Fund'. This one will be transferred asap. Doesn't appear to have any protected rights but this will be a question.

Can anyone advise whether this is likely to be the managed fund referred to above?:
https://www.trustnet.com/factsheets/p/eu23/equitable-managed-pn

3) Sun Life of Canada
Another legacy of high charges - 0.85% plus a monthly charge of £1.98. There is an information document which refers to 'protected rights' dated in the lead-up to the 2012 cancellation of contracting-out. However, no statement mentions any protected rights. This is a very old policy (think it dates to the late 80s) and OH advises that it was the recipient of only contracted-out funds. I can't find information on exactly which fund contains the investment. The statement simply states 'Managed Retirement Fund No 598'. It also appears to be unit linked. The latest statement confirms that there are no exit charges and the CETV equals the current fund value.

Can anyone advise which fund this is on trustnet? Also, whether it may have protected rights given its age?

Subject to any protected rights, the idea will be to consolidate all three (total value approx (£300k) on one platform. We are also considering the option to transfer the lot into OH's SIPP (current value around £110k) with HL. Platform charge would then be 0.25% but I doubt we could match the fund charges he currently enjoys with that Aviva GPP. Even so, I like HL's interface, transparency of charges and fund analysis, and customer service has been first rate. I also understand that there is zero charge to set-up drawdown and they offer all drawdown options.

I currently manage his SIPP along with my own (bulk of mine is with AJ Bell) and we would engage the services of an IFA to review our plan before proceeding.

Once the consolidation is complete I will begin the task of investing for drawdown and considering when/how to take the TFC. We had planned to do the full 25% within the next year but will revisit when the consolidation is complete.

Your comments/advice will be much appreciated.

sandsy

I think you might be confusing terminology between protected rights and safeguarded benefits.

Protected rights were abolished in 2012 - anything that was previously a protected right (which meant an annuity income had to be taken a certain way) is now a non-protected right.

However, in 2015, safeguarded rights terminology was introduced to mean anything with a promise about the rate of pension payable, such a a guaranteed annuity rate. These are the ones you need to ask about on the older contracts.

DairyQueen

sandsy wrote: »

I think you might be confusing terminology between protected rights and safeguarded benefits.

Protected rights were abolished in 2012 - anything that was previously a protected right (which meant an annuity income had to be taken a certain way) is now a non-protected right.

However, in 2015, safeguarded rights terminology was introduced to mean anything with a promise about the rate of pension payable, such a a guaranteed annuity rate. These are the ones you need to ask about on the older contracts.

Thanks for that. The information sheet Sun Life sent now makes sense.

EdSwippet

A few random thoughts below. Feel free to take from them what you will ...

DairyQueen wrote: »

Objectives:
- Optimise charges. For us, this means paying charges relative to the service/performance/management received from the platform and funds rather than the cheapest.
- Provide transparency on the underlying assets and charges, and allow easy online management.
- An eye to the max protection (£85k?) offered by each platform/fund manager.
- Flexibility of drawdown.

What type of investor are you (or your OH)? Hyperactive stock trader, searcher for the optimum active fund manager, or comatose passive tracker? That would tend to shade which of these objectives take precedence, and so which particular SIPP or other pension you would be best consolidating into.

For example, cost transparency is vital (and now required by regulation, to the n-th degree!), but easy online management might not be -- 'doable' might suffice. Also, I tend not to worry about the (actually) £50k limit on protection here. That would only kick in where the platform was embezzling your money. In case of it collapsing, say, investor holdings and assets should be safely ringfenced (although yeah, Beaufort Securities may provide a counter-example).

DairyQueen wrote: »

1) Aviva GPP
Plan acquired last year via their purchase of Friends Life. ... Attempts to manage the policy online have so far proved fruitless as the option to remove profiling isn't available (it should be). The charges and profiling details are hidden and we currently can't switch funds. There is no fact sheet for the consolidation fund.

I have an Aviva/MyMoney (formerly FL) pension from a previous employer, and while it doesn't quite look or behave the same as my SIPPs, I'm actually pretty happy with it. Like your OH, I was auto-enrolled into 'profiling' on starting it, but unlike your OH I turned that off on day two.

There certainly should be a way to remove that option and instead use a range of self-selected funds. I hold only BlackRock trackers in mine, and at an annual charge of 0.19% all-in I like the offering overall. I have other SIPPs, but I have not chosen to move this GPP into them, particularly since it (or at least, my plan with it) offers flexi-drawdown at no extra charge.

Aviva's front-line phone jocks are perhaps not the best informed, but I have found that if you email FL (now Aviva, and with, I think, a secure message system online) instead you will get a much more complete and nuanced response. Also, they have a dedicated set of employees specifically for pensions -- if you can make sure your enquiries get to those folk you might provoke better responses.

Aviva's online system is somewhat idiosyncratic, and often seems to be a slow as molasses, but as a comatose passive tracker investor that doesn't bother me. Certainly not enough to accept an increase of over £1k in annual charges simply for something more superficially shiny such as HL.

DairyQueen wrote: »

We are also considering the option to transfer the lot into OH's SIPP (current value around £110k) with HL. Platform charge would then be 0.25% but I doubt we could match the fund charges he currently enjoys with that Aviva GPP. Even so, I like HL's interface, transparency of charges and fund analysis, and customer service has been first rate. I also understand that there is zero charge to set-up drawdown and they offer all drawdown options.

This 0.25% looks optimistic. HL charges 0.45% up to £250k, so that would be 0.45% on the first £140k of the consolidation into HL.

Assuming you use funds, of course. For a passive investor, tracker ETFs would be by far the better choice in this account. Your mention of 'fund analysis' suggest that this isn't you, though. (I've always found HL's 'Wealth 150' or whatever they call it these days to be ... suspicious.)

The zero-cost drawdown is an attraction, but doesn't Aviva also offer that?

Albermarle

Also some random comments:
With Aviva, it could be an issue that they have not properly integrated the FL business?I have an Aviva GPP ( not the only one ) and the charges are clear and the on line offering is OK . The main thing I do not like is that they do not seem to like e mail communication and always want you to phone and sit in a queue ( previous poster seems to have a different experience though ). Also although they seem to offer flexi drawdown, I think you will in fact have to transfer into a different product rather than a seamless change.
For the others, charges of 0.85/0.75% are not the cheapest, but are not really that high, assuming that is the total fund + pension cost together . In the past charges >2% were common.
When I looked at Sipps , HL were fine for smaller amounts, but for the figure you mention the ones with a flat rate annual fee rather than a % work out cheaper. As you say probably none will have the low charges the Aviva one has.

DairyQueen

Thanks for your helpful replies.

I too suspect that Aviva has failed to fully integrate the FL policy into its systems. Looks like the FL data is the wrong 'shape' - square peg/round hole. As things stand we must contact Aviva to action any transaction or policy change and there is little/zero information available online, including fact sheets and charges. This is not helped by the woeful level of knowledge demonstrated by those picking-up the phones.

The Aviva 'jock' (after 10 minutes of explaining the problem) finally understood and confidently confirmed that the he had switched profiling off. I checked today; he hasn't. He couldn't answer even the most basic of questions about drawdown and he calculated the total %age charge incorrectly. OH had to point out the flaw in his maths.

I appreciate the points made on the relative cost of using HL (thanks for the correction on the charging structure) but I have experienced an incredibly smooth ride with them over the last 5 years, plus an equally smooth ride with A J Bell (another, and cheaper, SIPP possibility). Is it worth £1000 to have a fully-functioning, flexible and comprehensive interface supported by advisers who know their stuff? After dealing with Aviva, OH would say a resounding 'yes'. However, I manage the family investments - minus only these policies until now - so I guess that the decision rests with me unless Aviva press any more of OH's frustration buttons.

I am trying to imagine having to use OH as an email intermediary each time I wish to make a transaction or ask Aviva a question. Err... nope. That's a non-starter.

I am not an active investor. I review and rebalance once each year. Two thirds of our SIPPs are invested in global passives and the rest in satellite, actively managed funds that address any gaps (e.g. small caps) plus cash that is destined for withdrawal as TFC soon.

Ironically, Aviva's growth fund is a good combination of Blackrock funds. As they offer decent charges and flexibility on drawdown they should be a serious contender. Right now, the inability to do anything with the policy, plus the lousy customer service and lack of online information, has caused a heap of inconvenience. OH's blood pressure is up a few degrees and I have been careful to avoid the 'A' word today.

He will be calling them again on Tuesday and is sufficiently peeved that he will insist on speaking to someone more senior. If they fail to respond properly this time I suspect that he will lose patience and will write them off.

Once again, thanks all for taking the time to reply. Looks like we have been relatively unlucky with Aviva so far.

kidmugsy

DairyQueen wrote: »

An eye to the max protection (£85k?) offered by each platform/fund manager.

£50k now, £85k in April. Dunstonh understands these things, but apparently you can get 100% cover if you invest with/in the right sort of insurance products. For big money I'd investigate that possibility. The "but nobody would steal your money" line looks particularly feeble in the week of Patisserie Valerie.

DairyQueen wrote: »

1) Aviva GPP
Plan acquired last year via their purchase of Friends Life. Unfortunately OH ticked the 'profiling' option when the plan was set-up and I have just discovered that, over an indeterminate period (the transaction history pre-Aviva isn't available), his pot is being moved from a 70/30 equity 'growth fund' into a 20/80 'consolidation fund'. He is now 80% invested in this 'consolidation fund'. Not what we want.

Maybe it should be what you want. If you're at all close to drawdown I'd think hard about sequence-of-returns risk.

DairyQueen wrote: »

Given that the platform and fund charges on this plan are reasonable (0.35% plus, for example, 0.01% management fee on a growth fund with excellent performance) we were considering consolidating here.

That looks attractive to me: certainly attractive enough as a candidate to keep if I wanted a diversity of platforms/brokers/LifeCos.

DairyQueen wrote: »

2) Equitable Life PPP Unit Linked
This policy is on the list for takeover by Reliance Life next year. It has high charges (at least 0.75%) and appears to be invested in their 'Managed Fund'. This one will be transferred asap.

I'd want to speak to an IFA before doing that.

DairyQueen wrote: »

3) Sun Life of Canada
Another legacy of high charges - 0.85% plus a monthly charge of £1.98. Subject to any protected rights, the idea will be to consolidate all three (total value approx (£300k) on one platform. We are also considering the option to transfer the lot into OH's SIPP (current value around £110k) with HL.

That Sun Life charge is far too high. And while I am a fan of HL for small SIPPs (like ours) I think they're pricey for large.

DairyQueen

kidmugsy wrote: »

Maybe it should be what you want. If you're at all close to drawdown I'd think hard about sequence-of-returns risk.

Thanks for your input KM.

Problem is that our circumstances aren't clear-cut. OH has decided to continue working beyond his DB NRD (next April), However, he will do so via our limited company with a little admin support from me. If the contracts dry-up then we will use cash buffer, or drawdown on the taxable element of the non-DB (depending on the markets and income tax situation), to supplement DB until SPs kick-in.

If all goes to plan then we will only take TFC from the non-DB pot until he retires in 3.5 years (age 65), and will then drawdown sufficient to bridge the gap until SPs. By his age 68 (n 6.5 years when my SP kicks-in) we will be in receipt of sufficient DB and SP to cover all expenses including a reasonable amount of discretionary 'jam'. Drawdown from the SIPPs/DC pots will be halted if the markets turn against us.

So, the plan is to keep our non-DB pots (other than TFC) invested throughout retirement to fund an initial 3% drawdown rate. With that in mind I have constructed my SIPP with core funds aimed at different investment durations. The intention is to to do the same with his pot.

Right now, other than the element invested in the Aviva growth fund, I can't see where his DCs are invested. The legacy policies provide zero information on their managed fund allocations, and the same is true of the Aviva 'consolidation' fund. The latter is 20/80 equities/fixed assets with 0.35% platform charge + 0.02% fund charge. I had to use trustnet to discover the former, and Aviva provided the latter info over the phone.

This is not my idea of transparency and I will struggle to manage the portfolio if I have no idea where chunks of his pot are invested.

Definitely intend to engage an IFA to review the situation before proceeding. However, given the shifting sands of our circumstances, it won't be an easy position for him/her on which to advise. I wish to understand the current policies before taking that step.

Ironically, the profiling may have worked in our favour if the markets continue on a downward trend. My guess is that it began last April when OH turned 60 so he had already banked a few good years of growth by then. Aviva's growth fund has been a sterling performer and I would be reluctant to forego the opportunity to keep charges that low.

I think that whether Aviva remains a contender depends entirely on how they deal with OH's next call, and whether the system errors are corrected. Having spent an hour on the phone to them on Friday, and achieved zero, he is not a happy bunny.

AnotherJoe

EdSwippet wrote: »

Aviva's online system is somewhat idiosyncratic, and often seems to be a slow as molasses, but as a comatose passive tracker investor that doesn't bother me. Certainly not enough to accept an increase of over £1k in annual charges simply for something more superficially shiny such as HL.


This 0.25% looks optimistic. HL charges 0.45% up to £250k, so that would be 0.45% on the first £140k of the consolidation into HL.

Assuming you use funds, of course. For a passive investor, tracker ETFs would be by far the better choice in this account. Your mention of 'fund analysis' suggest that this isn't you, though. (I've always found HL's 'Wealth 150' or whatever they call it these days to be ... suspicious.)

The zero-cost drawdown is an attraction, but doesn't Aviva also offer that?

In which case HL would be cheap at around £200 tops.