Changing Pension over to ISIPP

MattParsons

Hi there,

I am asking this question of behalf of my brother, who is 38 and has a group personal pension plan with standard life, from his previous job. Over the past 3 years, since he left his previous workplace he lost nearly £1,500 a year from his pension.

He has been advised to transfer the remainder of his pension to a self investment personal pension (or ISIPP) via a company called James Hay Modular ISIPP, what are the risks of doing this? He has been advised that for investment to an ISIPP he will receive 15% of what he invests, with this modular. Every year he will be shown what he has grown to his pension, dependent on what has been invested. Every 5 years, James Hay Modular will review his investments and out of what he has gained out of it, he will receive 15% of whatever is in his pension fund as a gesture.

We are quite sceptical of this, could someone advise us what an ISIPP means please?

Thanks
Matt

Bravepants

So if he has £100k in his pension fund he will get £15k...how can they take money out of a SIPP, when you are not allowed to access it before retirement age? Sounds really dodgy to me!


What does he get if the fund value has fallen over the five years?


What do you mean he has "lost" £1500 per year from his pension? Do you mean the underlying investments have fallen in value with movement of the stock market, or has someone stolen it?


Presumably this is a DC pension and not a DB?
Does he have another work pension now that he could transfer the previous pension into?


Regarding SIPPS I would choose a company with a more well known name, Hargreaves Lansdown, Charles Stanley, iWeb, Fidelity - those are typical big names mentioned around these parts, and there are others.


But is your brother the kind of person who is happy choosing his own investments, as would be the requirement with a SIPP?


He might be better reading up about the subject of investing before he does anything daft!

dunstonh

Over the past 3 years, since he left his previous workplace he lost nearly £1,500 a year from his pension.

How has it been lost?
Was it each year or just between Oct and Dec 2018?

He has been advised to transfer the remainder of his pension to a self investment personal pension (or ISIPP) via a company called James Hay Modular ISIPP, what are the risks of doing this?

Who is giving him the advice?
What risk warnings have they given?

He has been advised that for investment to an ISIPP he will receive 15% of what he invests, with this modular.

No genuine adviser will ever state what you will get back with investments as you never know. You have reasonable expectations of long term returns and figures you aim for but 15% is certainly not a figure you would expect to see. Unless its a scam. They often use double digit figures.

The James Hay SIPP is well known but its not a particularly commonly used pension for average consumers. Typically used for more obscure investments. So, this would have me on guard.

Every 5 years, James Hay Modular will review his investments and out of what he has gained out of it, he will receive 15% of whatever is in his pension fund as a gesture.

James Hay are a SIPP provider. Not an adviser. they dont do reviews. What you have just described sounds more like a scam. You cannot take money out of a pension like that.

could someone advise us what an ISIPP means please?

It doesnt mean anything. Its a marketing name. Like chocolate SIPP.

xylophone

He could try an independent financial adviser.

https://adviserbook.co.uk/ Tick confirmed independent and pensions and retirement.

He could consider a transfer to one of the well established providers

https://moneytothemasses.com/saving-for-your-future/pensions/the-best-cheapest-sipps-low-cost-diy-pensions

AnotherJoe

From the JH website website (my underlining)

"The value of your Modular iSIPP and the benefits it provides are not guaranteed."


So, if someone is promising he'll get 15% there's something very dodgy going on somewhere.


He should find an IFA to determine if he can do better than his old company pension, since the issue with your post is that someone told him something, hes telling his interpretation/ recollection of that to you and you are doing likewise here.
So no doubt there are some significant errors and omissions along the way. Even the "lost £1500 a year) can be understood in multiple ways.

MattParsons

Thank you all for your responses. I really do appreciate it. Having read out your responses to him, he has certainly thought twice about investing into this particular ISIPP. To address some of the questions raised:-

• He has not contacted Standard Life to find out exactly why the pension he has with standard life is decreasing in value. It could be because he is no longer paying into this pension fund.

• He has lost £1500 over the course of a full year. He now has a new work pension and he asked Standard Life to transfer it over to his new work pension, but this was not possible. I presume this is because he now works for a different company

• As for any risk warnings, none were provided by the officer he has been in contact with. I'm beginning to wonder if the person he was dealing was actually from James Hay.

For now though he is going to do more research about the options he has with the standard life pension before making any commitments to invest it, or make any further attempts to transfer it to his current pension fund.

Once again, thank you everyone for all your help. It's even got me thinking about my pension today, even though I work for local government.

xylophone

He now has a new work pension and he asked Standard Life to transfer it over to his new work pension, but this was not possible. I presume this is because he now works for a different company

I am puzzled by this.

https://www.standardlife.co.uk/c1/faqs/pensions-and-annuities.page#pensions

What happens to my pension if I change jobs?

We recommend that you find out if your new employer has a company pension scheme and whether they make payments to it. If they do, it may be in your best interest to join the scheme. If you are unsure, we strongly recommend you seek financial advice.

Do you mean that his current pension scheme does not accept transfers in?

What reason did SL give for saying that the pension could not be transferred?

squirrelpie

A pension would be unlikely to decrease that much just because he wasn't paying into it. Unless it is all in cash and worth a lot, in which case maybe the fees could be that large? So he should definitely ask SL to explain the source of the decrease.

The James Hay website says: "James Hay Partnership is not authorised to give financial advice."
So it clearly wasn't them your brother was talking to. There's a guide at https://www.thepensionsregulator.gov.uk/pension-scams that might be worth looking at and a link to report it if it is a scam.

Your brother doesn't need to rush, so he should take his time reviewing his situation and considering his options before taking any action.

squirrelpie

xylophone wrote: »

I am puzzled by this.

https://www.standardlife.co.uk/c1/faqs/pensions-and-annuities.page#pensions

What happens to my pension if I change jobs?

We recommend that you find out if your new employer has a company pension scheme and whether they make payments to it. If they do, it may be in your best interest to join the scheme. If you are unsure, we strongly recommend you seek financial advice.

Do you mean that his current pension scheme does not accept transfers in?

What reason did SL give for saying that the pension could not be transferred?

I don't think your quote discusses transfers. It is simply saying that it might be worth joining the new employer's pension scheme rather than continuing to contribute to the SL one. Transferring the SL pension is a separate subject.


Your questions are reasonable ones to ask though.

thickasabrick

Q1. What funds are in his Standard Life pension ?
https://www.standardlife.co.uk/c1/accounts-and-services/pensions/stakeholder-pension-funds.page

Once you have the fund information, you should be able to look up the details on morningstar or trustnet and see what has happened over the last year. There might be an ISIN number on the fund information sheet or you may be able to search by name.

e.g. I have a pension with Aegon and have chosen their "Aegon Balance Plus Core Portfolio" fund.
Using morningstar I searched for it using it's ISIN number

http://www.morningstar.co.uk/uk/funds/SecuritySearchResults.aspx?search=GB00B8J4K209&type=

Click on the performance tab and it shows the Annual returns.
Year Price Return
2018 -5.43
2017 8.79
2016 18.81

Looks like 2018 wasn't a good year for that particular fund (negative number - ouch !) which would explain a loss in value.

I found this article by the Escape Artist helped me understand what was happening with my pension.
Do you even know what’s going on in your pension?

MattParsons wrote: »

Thank you all for your responses. I really do appreciate it. Having read out your responses to him, he has certainly thought twice about investing into this particular ISIPP. To address some of the questions raised:-

• He has not contacted Standard Life to find out exactly why the pension he has with standard life is decreasing in value. It could be because he is no longer paying into this pension fund.

• He has lost £1500 over the course of a full year. He now has a new work pension and he asked Standard Life to transfer it over to his new work pension, but this was not possible. I presume this is because he now works for a different company

• As for any risk warnings, none were provided by the officer he has been in contact with. I'm beginning to wonder if the person he was dealing was actually from James Hay.

For now though he is going to do more research about the options he has with the standard life pension before making any commitments to invest it, or make any further attempts to transfer it to his current pension fund.

Once again, thank you everyone for all your help. It's even got me thinking about my pension today, even though I work for local government.

xylophone

Transferring the SL pension is a separate subject.

Yes indeed - I notice that in the Personal Pension Key features document
(http://lib.standardlife.com/library/uk/ampp17d.pdf) they say

You can transfer your plan to another pension scheme. It’s important that you check with the administrator of the scheme you want to transfer to that they will accept the transfer.

And in the SL Group Personal Pension Plan document http://library.adviserzone.com/gppo17.pdf it says

2. Your commitment
To remain invested in the plan until you choose to take your benefits, and then use it to buy your pension. You cannot cash in this plan at any time, although you can transfer it to another pension provider or registered pension scheme at any time before you start taking your benefits.


The OP says that his brother has a group personal pension plan with SL - assuming that this is a standard DC pension I can't see how SL can refuse a transfer to his current pension scheme if it will accept it.

It is possible that his current scheme will not accept a transfer in.