Workplace pension in to SIPP or leave alone?

JustAnotherSaver

I know asking for direct advice often leads us to brick walls & wishy washy statements so tbh i'm not even sure what to expect from this. I thought about asking this after a link was given on my other thread currently running

Link: https://theescapeartist.me/2018/04/26/do-you-even-know-whats-going-on-in-your-pension/


My answer is 'no', for my workplace pension at least.


A lot of you appear to be with NEST, the same applies for my wife & sister and pretty much everyone i know who doesn't work with me come to think of it. I've seen the online portal - there's choice, you can find things out etc.


I on the other hand am with NOW Pensions. I've tried finding out what my money is invested in but the response is very wishy-washy (their response time is also ridiculous. I'd get a quicker response crawling to their HQ and asking in person!)


On their site it says they manage the investment like so: https://www.nowpensions.com/how-money-managed/ which to me sounds a little like Vanguard Target Retirement style, although the more knowledgable folk may say it sounds nothing like that and like something else entirely, i don't know.


There's no option for change. It's a sort of 1 size fits all it seems, depending on your age.





Now for me personally, i know everyone here seems to talk about higher rate tax all the time when i ask a question and it's nice to be in the company of some higher earners but i'm a BR tax payer and likely always will be. Add to that that my employer does and (unless i change employers) forever will only ever pay the minimum in. They'd pay nothing in at all if they could.


My employer may very well decide to answer this with no. If there's a lot of work in it on their part then it's probably a non-starter as i can't see them doing it as a favour for me however if it may cost them less then they may consider it.




I'm currently investing through Cavendish Online. I'm wondering if it was you in this situation, would you consider asking your employer to switch payments in to your SIPP rather than Now Pensions or would you just leave the workplace one as it is & concentrate on paying in 'extra money' (beyond your workplace 5%) to your SIPP?

ColdIron

Most employers won't do this as it creates a whole heap of extra admin for them,

AnotherJoe

What I suggest is, when you move jobs, move what's in your current employers pension to a SIPP.
Do that every time you move. That way you end up with just one personal pension and one current company pension rather than a raft of different ones to keep track of. Plus, eventually the bulk will be in your direct control.
In addition to that, the general "rule" is to pay as much into your company pension to get maximum employer matching. After that, by all means pay additional into a SIPP so you can keep a closer eye on at least some of your pension.

jamesd

NOW Pensions are reasonable enough as a pension firm. For target retirement products, if you aren't planning to buy an annuity but use drawdown instead, you can often improve the investment mixture by setting the target date ten years after the real one. That blocks or reduces the switch from equities to bonds.

It's often possible to transfer money out of a workplace pension but there can be restrictions when still an employee. This tends to be more viable than getting an employer to pay the money somewhere else.

Adding extra money to a different pension is likely to be the best way to go.

JustAnotherSaver

Thanks for the replies guys.


IF my employer paid in more than the minimum then i'd pay whatever i needed to to make the most out of that ... BUT the only way my employer will ever do that is if i got a different one.
I've no idea whether my SIPP will return more than my workplace pension or not. I'd like to think it would since i imagine the workplace pension will be very middle-of-road but at the same time they'll know infinitely more about investing than i do so who knows.

ColdIron wrote: »

Most employers won't do this as it creates a whole heap of extra admin for them,

I wasn't sure if it was a simple case of redirecting pay (such as changing account details) or a load of paperwork. Since it sounds to be the latter then i know this will be an instant non-starter so i'll not even suggest it.


Thanks again

crv1963

JustAnotherSaver wrote: »

A lot of you appear to be with NEST, the same applies for my wife & sister and pretty much everyone i know who doesn't work with me come to think of it.

There's no option for change.

Hi JustAnotherSaver,

Like your wife mine has NEST as workplace pension. Like you employer would not entertain any other option for pension saving for an individual and would cite cost to the organisation/ confusion for others if there were too many choices of pension savings type.

So we have started a SIPP for her, save regular amounts monthly with ad hoc additions if we can afford it. She also has another DC pot from years ago when she used the SERPs scheme roughly 100k in that- not bad when she forgot she even had it- this was when she was in her 20s!

Plan is- she retires age 55, we transfer the NEST pension to the SIPP- which reading up may take a bit of time- when she leaves her employer. Then she draws 4k pa from the SERPs pot and takes the TFLS from the SIPP pot and then 8k pa draw down to zero over 12 years. Then when SP starts at 67 she has 8.5k pa SP plus 4k pa from SERPs pot.

We know she'll have to move the SERPs pot to enable draw down but still plan to keep her then two pots separate so we know where we are at.

AnotherJoe

JustAnotherSaver wrote: »

Thanks for the replies guys.


IF my employer paid in more than the minimum then i'd pay whatever i needed to to make the most out of that ... BUT the only way my employer will ever do that is if i got a different one.
I've no idea whether my SIPP will return more than my workplace pension or not. I'd like to think it would since i imagine the workplace pension will be very middle-of-road but at the same time they'll know infinitely more about investing than i do so who knows.

That's what you'd hope but it doesn't work that way. Probably most overriding factor is they don't want to be criticised for taking chances and getting into a position where their a big drop and people stop their pensions and there are headline shows in Daily Fail "mismanagement in risky funds cost me £20,000" or whatever.
So their main aim is not to get best growth, its to get steady growth over time. Not ups and downs. And trading off performance for that, even if performance will in the long term be much worse. They will not aspire to middle of the road, thats probably too risky for many investors already grumbling about being forced into pensions.
So even if over say 30 years "risk scale 8 out if 10" is the "best" for growth, they will do risk scale 2 or 3 because it won't have the big declines and bad publicity and few in the schemes will be comparing and see what it could have been.
And to be fair I don't blame them. I'm sure if you invested via an IFA they also would dial the risk scale down to guard themselves against accusations of risky investing or nervous clients bailing out at the slightest drop.
If you invest for just yourself and can be flexible about when you take the money out, then you should be able to get much better results than an over cautious approach aimed at the nervous, as long as you can stick through the inevitable big declines. If you cant, dial the risk down yourself.

JustAnotherSaver

Only time will tell but i imagine i can handle the drops. If i had only 10 years to go until retirement and i started seeing the decline then i may start getting a bit nervous.
But the way i see it is i have at least 30 years remaining. I don't know how many big drops and big booms there's been in the past 30 years & the 30 years before that, so on & so forth but i'd guess there's been a few, more than 1 at any rate.


So i fully expect to face more than 1 drop off in the next 30 years but at the same time i would fully expect investments to rise as well.



If anything it would be nice to see a big drop off right now so that i could buy low relatively early on. It'd also test whether what i've just said stands true but i'm positive it would.


But like i said ... if things started falling in 20-25 years time then i wouldn't be so confident, but then i probably wouldn't be so adventurous at that point either and *hopefully* would've learned something along the way.

crv1963

JustAnotherSaver wrote: »

Only time will tell but i imagine i can handle the drops. If i had only 10 years to go until retirement and i started seeing the decline then i may start getting a bit nervous.

I think - the secret will be to not do as my wife did and forget you have the pension pot but, do as she did and not worry about any market drops. Usually big drops are followed by rises and recover over time.

My sons just starting out with work and pension savings are fully aware there will be drops but accept these as a good thing getting more units/ shares for their money so time in the market with regular savings is the winner.

Edit- As you near draw down as we are our approach is to save some money into a separate pot so if there is a big fall just before entering draw down we can delay it, if it falls whilst in draw down then we can stop taking the income and fall back onto the separate savings pot.

Albermarle

To balance out the low/medium risk approach of NOW , you should maybe go for a more risky/growth fund(s) strategy in your Sipp. A low charge global stock market tracker for example .
If markets improve then the sipp will grow quickly . However if markets fall the NOW funds will weather the storm better.