Old employer pension - how to move?

[Deleted User]

Edited for privacy

El_Torro

If you’re planning to stick with iWeb it should be as simple as opening a SIPP with them and telling them to transfer your current pension over. They’ll tell you what information you need to provide (your Account Number with Aviva, etc...).

Most pension providers don’t charge you to transfer out. I recently part transferred a pension out of Aviva and they charged me nothing. My new platform didn’t charge me to transfer in either, though that wasn’t with iWeb so check their pricing structure.

Don’t expect this transfer to be quick, it will take weeks, maybe even months.

bowlhead99

pioruns wrote: »

International Equities 38.0%
UK Equities 29.1%
Gilts 20.2%
Index Linked Gilts 6.7%
Corporate Bonds 6.0%

It's benchmark is:

40% FTSE Custom Developed ex UK Midday Net Tax Index
30% FTSE Custom All-Share Midday Net Tax Index
30% BofA ML Sterling Broad Market

It's a mixed asset fund based mostly on passive building blocks. Much like the LifeStrategy really, with a different mix of assets. Its benchmark is 70% equities and 30% bonds although it has a smidge more bonds than that at the moment. As it's benchmarking itself against 70% equity, you might choose to think of it as somewhere between the Lifestrategy 80% equity and Lifestrategy 60% equity products. Unsurprisingly for a fund based on mostly passive holdings with between an LS60 and LS80 level of equity, it has delivered a return of somewhere between LS60 and LS80 over the last 5 years (nearer LS80) so does not seem too bad:

Fund bears OCF cost of 0.39%.

So, a bit more than the OCF of the VLS series. You don't say how much (if anything) on top of the OCF you have to pay to Aviva to run the pension product administration. For example a SIPP pension at AJ Bell would be 0.25% on top of the LifeStrategy OCF of 0.22%, plus £1.50 every time you buy a bit more of the fund ; a SIPP pension at Hargreaves Lansdown would be 0.45% on top of the LifeStrategy OCF of 0.22%. Those numbers are more than 0.4% in total and so the question of whether it would be cheaper to move depends what you are paying to Aviva over and above the OCF.

I'd love to transfer all these funds to Vanguard LifeStrategy or Vanguard Target Retirement, once nicely set up, I would top it up myself every month or every quarter (depends on transaction fees), if possible.

'Love' seems a strong turn of phrase for an investment fund. What is so terrible about the current fund to mean that you would love it to be something different? For example, are you prohibited from adding more money to it where it is?

I have ISA with iWebShare, I use my ISA allowance every year, but I never had SIPP or pension plan, except for this one.

If you like IWeb Sharedealing, they offer a SIPP product which would allow you to hold a Lifestrategy fund. If your pension is worth under £50,000 they charge £90 a year for the SIPP admin and then they charge you £5 each time you buy more of the fund. If you do that once every couple of months, 6 buys a year would be £30 on top of the £90 annual fee, for a total annual cost £120 over and above the OCF of the Lifestrategy fund.

If the Lifestrategy costs about 0.2% less a year than Aviva in OCF (which on £50,000 would only be a cost saving of £100), but you have to pay £120 a year in SIPP admin fees at IWeb to be able to hold and add to the Lifestrategy fund, it would seem there is no noticeable saving in running costs to move to an IWeb SIPP which holds Lifestrategy, if your fund size is £40-50k or smaller. For much bigger pots it would make more sense to move, while for much smaller pots the fixed nature of the IWeb fees would make it really expensive to start using IWeb.

But it depends what if anything you are currently paying in annual admin fees for the Aviva platform, to get access to the 'My Future Growth' product, and whether you believe the Vanguard fund will outperform the Aviva fund for the same risk. Note, you are currently using the 'My Future Growth' fund but Aviva do have other funds if you want to take more risk or less risk, so don't just think moving to Vanguard is the only option to increase or decrease your equities exposure.

How can I tackle this? I don't want to lose too much money on transfer, lower OCF is also a must, and it would be ideal if I can sell Aviva shares and invest it all to Vanguard.

If you want to move it to a new DIY SIPP account the steps would be:

1) Decide what fund you want (you seem to have decided Vanguard Lifestrategy or Target; not sure there's a particular reason why it needs to be those, but they are not bad funds);

2) Consider the amount of value you will start with and the amount of new value (and number of purchases) you will add each year, and use a platform comparison website or spreadsheet to compare the cost of different platform options (e.g. IWeb and their rivals) checking that they have the features you want and they offer the fund that you decided you want in (1).

As you can transfer the pension to another provider again later, some features and costs are less important (e.g. costs of drawing money out of the pension in a couple of years might be highly relevant, or irrelevant, depending if you are age 65 or 25);

3) Ensure you are satisfied that the combination of new fund and new SIPP platform provider is going to be an improvement from what you have, in terms of cost and/or quality. Find out if there are any exit fees from your current arrangement, though these are unlikely to be so high as to make much difference to your decision in the grand scheme of things;

4) Fill out the account opening and transfer document at the new provider;

5) Old provider will cash in your funds (because if you're using a SIPP, they won't offer your Aviva pension fund so the transfer will have to go in cash) and then cash will arrive at the new platform after some time. You will inevitably be out of the market in the meantime. Then use the cash within your new pension account at the new place to buy the fund you want. Once you have created the account, you can add new money and buy some of the investment fund while you are waiting for the pension transfer to arrive, but you might prefer to wait until the transfer-in money arrives and do it all at once.

Albermarle

Don’t expect this transfer to be quick, it will take weeks, maybe even months.

Although your reasons for wanting to change are not that clear ( and Bowlhead has detailed all the things you should think about before changing ) it is actually normally quite easy .
I recently transferred a pension from Aviva to Fidelity and it took less than 48 hours .

Alexland

Although the iWeb ISA might suit your needs their SIPP has a £90 or £180 pa charge and they also charge £60 for transfers in. As such it's only really suitable if you have a large value. Even if you do then the related Halifax Share Dealing is the same annual and transfer fee but only £2 per regular trade. Personally I like to spread my different accounts across multiple unrelated platforms and fund managers for extra protection.

short_butt_sweet

if 0.39% is the total cost of the fund + the pension wrapper, then you'd need a pension worth over £106,000 to make iweb/lifestrategy cheaper (and that's without allowing for trading costs with iweb).

(because £180 + 0.22% of £106,000 is about the same as 0.39% of £106,000.)

[Deleted User]

Thanks for your replies. bowlhead, as always excellent amount of detail, thank you.

I have ISA with iWeb, I don't mind having SIPP somewhere else, cost is determining factor.
SIPP with iWeb would cost me from a flat fee £90 (when less than 50k) or £180 a year just to run this account.

So, a bit more than the OCF of the VLS series. You don't say how much (if anything) on top of the OCF you have to pay to Aviva to run the pension product administration. For example a SIPP pension at AJ Bell would be 0.25% on top of the LifeStrategy OCF of 0.22%, plus £1.50 every time you buy a bit more of the fund ; a SIPP pension at Hargreaves Lansdown would be 0.45% on top of the LifeStrategy OCF of 0.22%. Those numbers are more than 0.4% in total and so the question of whether it would be cheaper to move depends what you are paying to Aviva over and above the OCF.

Unfortunately, I was not able to find out what Aviva charges me on top of my holdings OCF there. I will check it closely and contact them if necessary and update here once information is at hand.

'Love' seems a strong turn of phrase for an investment fund. What is so terrible about the current fund to mean that you would love it to be something different? For example, are you prohibited from adding more money to it where it is?

Vanguard LS would complement my investing style. On my ISA, I am investing (from now on) only into HSBC FTSE All-World Index Fund (OCF 0.19%), which is a 100% equity, worldwide, fair distibution based on capitalisation, without claiming any "edge" on anything. Vanguard LS would complement my strategy here, as I like to have the UK bias and will be comfortable to hold excess of the UK stocks in my SIPP. OCF is major factor as well, switching from Aviva to V LS would cut my OCF nearly in half. In the long run, this would cause significant boost to my holdings value.

Note, you are currently using the 'My Future Growth' fund but Aviva do have other funds if you want to take more risk or less risk, so don't just think moving to Vanguard is the only option to increase or decrease your equities exposure.

Yes, they have more than a dozen funds to choose from, I will check them out. Also I need to find out about platform charge (if any).

If you want to move it to a new DIY SIPP account the steps would be:

1) Decide what fund you want (you seem to have decided Vanguard Lifestrategy or Target; not sure there's a particular reason why it needs to be those, but they are not bad funds);

Your steps list is completely in agreement with my plan. I've decided on Vanguard LS or Target, I am confident this is the fund I want to hold. Now I just need to find best place for them.
Looks like that Vanguard doesn't offer SIPP account at the moment. I will watch them maybe their platform will be the best to store funds once it's available. My pension sum is currently less than 50k so if they charge percentage of the amount just like they do on their ISAs, then I could put money into Vanguard SIPP and then later, change to iWeb once reached threshold. So to sum this up, Vanguard SIPP is not there yet, iWeb would be cheaper for me from 100k, is there any other platform I could consider?

Alexland

pioruns wrote: »

Your steps list is completely in agreement with my plan. I've decided on Vanguard LS or Target and now I just need to find best place for them.

When choosing between VLS and VTR funds consider if your retirement income strategy will be based on investment drawdown (accepting the risk of market volatility) or buying an annuity (giving you income certainty). If you are likely to go into drawdown then you may find that VTR reduces the equities exposure further than you would want as it is targeting a withdrawal annuity purchase event.

While you wait for the Vanguard pension to be available consider a Cavendish SIPP at 0.25% with no transfer-in, fund trade or transfer-out fees.

Alex

[Deleted User]

Hi all,


I just have confirmation from Aviva. Annual Management Charge of 0.39% is only fee I am paying there.
So looks like, iWeb would be too expensive at this moment.
Is there any other platform I could consider? Or I am stuck with Aviva? I would need to look at their range of funds to find something similar to V LS or FTSE All-World index, that's where I want to be invested, but Aviva have only their own brands available there.

foofi22

pioruns wrote: »

Hi all,


I just have confirmation from Aviva. Annual Management Charge of 0.39% is only fee I am paying there.
So looks like, iWeb would be too expensive at this moment.
Is there any other platform I could consider? Or I am stuck with Aviva? I would need to look at their range of funds to find something similar to V LS or FTSE All-World index, that's where I want to be invested, but Aviva have only their own brands available there.

Just make sure the tail isn't wagging the dog.

That is to say you should select what you want to invest in, then find the most cost effective route of holding that investment(s)

In your case, it costs 0.47% to hold a VLS* in a SIPP Cavendish*. Is the extra 0.08% a year really such a burden. Remember if VLS (or whatever) returns "beat" the Aviva fund returns you are quids in.

* not suggesting either but you have mention VLS a few times

Albermarle

I just have confirmation from Aviva. Annual Management Charge of 0.39% is only fee I am paying there

If 0.39% is really the full charge of both the pension and the fund together , you have a good deal already !