Review of pension portfolio of funds

foofi22

Albermarle wrote: »

This is the same as my current employers workplace pension . In 2015 Zurich relaunched it as 'Money4Life' following the pension reforms, and you can do everything on line , move seamlessly into drawdown etc .18 months ago Zurich sold this arm of the business to Scottish widows, who operate it as a standalone business. So all website functions remain the same ,same staff etc except it is now branded Scottish widows .
So it is already a modern personal pension ( and due to employer negotiated discounts , cheaper than many SIPPS)

Same as mine too. IIRC Scottish Widows may be updating the fund options soon so maybe they will get better (?)


As an aside, I have a very similar fund selection to the OP (bar the Asia, managed and property funds which I have in the global tracker)

bostonerimus

Mistermeaner wrote: »

I wanted to add more smaller companies exposure (as I understood smaller companies to be under represented in such global trackers) and also to add more asia/emerging markets for the same reason - is this a flawed approach? (NB: there is no global small companies fund available)

This sounds like a "seat of the pants" French Fama portfolio. There are many advocates for such a scheme, but I'd worry about one if it isn't analytically constructed and managed and the high fees of the active funds will be a drag on the supposed alpha you might hope for from such a portfolio. The lack of fixed income also suggests a somewhat "devil may care" approach.

dunstonh

IIRC Scottish Widows may be updating the fund options soon so maybe they will get better (?)

Lloyds have been starving SW of funds for 15 years. Their software is antiquated and full of issues. So, don't expect them to do much on the software side.

It may be that they saw the Zurich option as being a way to bypass updating their software to buy something better. You would expect fund consolidation in time though. It took them about 5 years with past consolidations.

bowlhead99

Mistermeaner wrote: »

Main issue raised that I don't think I can do anything about is the pension product itself - I get all of the benefits of salary sacrifice and 11% compnay contribution where it is and unless someone tells me differently I don;t think I can retain those benefits AND have my choice of SIPP platform (or is it possible to 'pay into' the workplace pension but then transfer funds out each month to a personal SIPP of my choosing?)

NB: I agree the fund choice and platform is rubbish

My workplace pension is Scottish Widows too (though not ex Zurich ; just the 'pension 2' choice of holdings). I agree the technology and choice of investments is weak. They have SW versions of external funds but effectively per the fee disclosure, the charge to use them works out at the normal external fund cost plus our employer-negotiated SW charge (instead of just the SW negotiated charge, to use the SW funds). As the SW charge our employer put us on is higher than a platform admin fee elsewhere, that makes it expensive to use anything other than SW funds, which do not appear great.

I had been misled into thinking that it would not be worthwhile to move the money to another provider because as an active member receiving company contributions and some salary sacrifice each month, it would mean me leaving the workplace pension scheme, transferring that pot away to someone else, and then rejoining the pension scheme again. That would probably lead to me missing a month or two of employer contributions depending on exact timing, as well as causing hassle for my HR/finance department.

However, actually the Scottish Widows DC scheme I'm in *does* support partial transfers out. When I called to clarify some fees/charges info I floated the question to the customer services person and they said I could do a transfer out without closing it as long as I kept at least £2 in the pension. I was quite annoyed to realise that was allowed after all - after a number of years - prompted by another thread on here, as I'm usually pretty savvy.

I filled out the transfer forms for my existing SIPP at AJBell Youinvest, requesting a specific amount of cash which would not completely empty the account even if markets dropped a bit (and leaving a covering note that I didn't want to close the SW pension). Not too much later, I had the money over in my SIPP, being invested in more competitive products.

I'm not too bothered about paying highish fees on relatively small amounts of money so now I let my workplace pension keep filling the SW account until it periodically gets to the £10-20k range and then do a transfer of £10k+ to my SIPP which is a much bigger pot.

If you/employer are putting in £40k a year, it's worth giving SW a call to see if they will let you transfer out £200k+ now while keeping the pension open, and if it works, you could pretty much repeat it for £20k a couple of times a year.

Albermarle

If you/employer are putting in £40k a year, it's worth giving SW a call to see if they will let you transfer out £200k+ now while keeping the pension open, and if it works, you could pretty much repeat it for £20k a couple of times a year.

This depends as for me ,my large employer had negotiated low charges with Zurich , now SW. So no financial advantage to moving to a SIPP , only maybe more choice .

Mistermeaner

Re charges the SW platform fee is 0.17%

The charges for each fund are as below

(Where AMC+EXP is the fund annual management charges plus expenses)

(Where TOTAL INC SW is the above + 0.17% for scottish widows platform)


Zurich Aquila Emerging Markets Equity Index CS1 AMC+EXP = 0.290 TOTAL INC SW = 0.460

Zurich Aquila UK Equity Index CS1 AMC+EXP = 0.078 TOTAL INC SW = 0.248

Zurich Aquila World ex UK Equity Index CS1 AMC+EXP = 0.085 TOTAL INC SW = 0.255

Zurich Property CS1 AMC+EXP = 0.601 TOTAL INC SW = 0.771

Zurich Threadneedle American Smaller Companies CS1 AMC+EXP = 0.885 TOTAL INC SW = 1.055

Zurich Threadneedle Asia CS1 AMC+EXP = 0.590 TOTAL INC SW = 0.760

Zurich Threadneedle European Smaller Companies CS1 AMC+EXP = 0.895 TOTAL INC SW = 1.065

Zurich Threadneedle UK Smaller Companies CS1 AMC+EXP = 0.895 TOTAL INC SW = 1.065

bowlhead99

That is not a bad platform fee you are paying at SW. If you moved to HL (not that I would recommend it because they are hardly cheap, only because you mentioned them as another provider you use...) your platform fee would be 0.45% on the first £250k of funds - a big step up from 0.17%. However, some things at HL would have only a nominal fee e g. £200k of ETFs caps out at a £200 annual charge which is only 0.1%

You'll find SIPP providers at all ends of the cost scales but an advantage of using a platform is the broader availability of investment choices if you're trying to build a bespoke portfolio out of specialist building blocks. It's not insane to accept higher fees if you are getting better assets.

Holding OEICs on a SIPP platform can limit your FSCS coverage compared to using insurance company funds from a pension provider, if that sort of thing worries you.

Albermarle

Re charges the SW platform fee is 0.17%

I thought my 0.25% ( SW ex Zurich ) was low ! ( fund costs are pretty much the same )
I think unless you want to get a lot more involved in investing ( and have the time ) I would stay where you are .
The only point maybe that if it is an older scheme , it will probably not support drawdown , so when that time comes you will have to change to another scheme .

mikeashy

I am a bit late to the post but I found it very informative.  I like the Threadneedle Asia, it is a bit like my Pacific Fund and has performed well over the years. My portfolio is very similar in its structure with Scottish Widows.  Nice to see you can save 40k into a pension, do you need a co-worker as you must be raking it in or living like a   Good luck with your plan to retire at 57 but looking at the figures you will probably be able to finish much sooner.  Take a look at Monevator.com for a useful website it has guided me well over the years.  I wish I had all my knowledge that I have now when I was 40 regarding investments and I would be in a similarly wonderful position that you find yourself in.  Best Wishes  Mike

MaxiRobriguez

Linton said:

Broadly, the asset mix and strategy look OK for me. With a 17 year time frame I am not over concerned about your high equity allocation at this stage. Assuming you are planning on drawdown you could begin to decrease it steadily to around 60% by the time you retire, and/or increase the cash/bonds/safer investments in your non pension-holdings so you have perhaps 5 years income needs safe from equity crashes.



Some details:
-As has been said the Managed Fund is rather out of place and Property is questionable.

-According to Morningstar the World Index fund is only about 4% Far East which seems rather low and I suspect ignores China. On that basis I would use some of the money from Managed and Property to increase the % Threadneedle Asia and also add Japan Small Companies to complete the SC coverage.

Agree with this.