Transferring a pension (DC pot, not retired yet)

Snakey

So my IFA wants me to move my pension money from a Standard Life GPP into a SIPP. Reasons given are:
- SL doesn't have a wide enough choice of investments (the ones they think I should be in)
- SL doesn't offer flexi-access drawdown so I'll have to move it at some point anyway
- SL doesn't have options on death other than paying the whole thing in a lump to your nominated beneficiary
- they can manage my investments more easily if it's in the one they recommend (not sure if they're saying they can't/won't do it if I stay with SL, I need to clarify that)

I'm not sure about this, because:
- SL gives a generous rebate on fund charges, and if I close it I won't be able to get that deal again (it was through an ex employer)
- not only are the charges in the SIPP higher due to the lack of the rebate above, it has an 0.2% platform charge, which is a discounted rate while I am with this IFA i.e. if we part ways, I'll need to either pay a higher charge or move it again
- there's going to be a transfer fee, although I don't know what sort of number we're talking about yet

They're going to get back to me with a proper proposal, but in the meantime I'd love to get some views on this from any IFAs on here. All the things I think of (could I do a partial transfer to keep my options open to move it all back? couldn't they do most of what they want to do within SL for now and I'll move it in seven years' time when I'm 54 if I'm still with this IFA?) I run up against the wall of my lack of knowledge about how it works and what's possible and what isn't. I mean for all I know if I leave it in SL the IFA charge would have to be higher. I really don't know how it works.

I know it's not up to me what you guys all do, but pleeeeease don't post just to slag off IFAs - the last thread I started got derailed after a dozen posts with people bickering about that and ignoring my question and I was so disappointed . I have no reason to believe that they are not giving this advice in good faith (to maximise my returns post-charges, get me in the right place for retirement and protect my next-of-kin's interests on death) - I'm just wondering whether it's the right thing to do for me in all the circumstances because of course they assume I'll always stay with them whereas that's an option I'd like to keep open.

There's the matter of their fees too, but that's a separate decision.


p.s. The good news is, they reckon I will be able to give up work at 50! Woohoo!

tacpot12

The transfer fee should be about £400 because it is so easy my dog could do it (She's very clever).

Are the investments that they are recommending for you likely to outperform the investments available to you in the GPP by a good margin over the extra fees? You need to decide this as no-one can guarantee it.

Does the extra performance available from the investments they are recommending allow you recover the transfer fee and the cost of their advice before you retire? Make them calculate this for you - they need to earn their fee!

The above two questions seem the most important because they affect your wealth. Improving the choices available to your beneficiaries should be a secondary concern.

Providing the answers to the two questions are not too unfavourable, transferring seems a reasonable step as it does prepare your pension for the point you need to draw on it. Pensions have to last a long time, and even a little extra performance in the early years can have a big impact.

Oh, and congratulations on being able to retire at 50. I retired at 53 and am still enjoying not having to go to work.

Albermarle

-

SL gives a generous rebate on fund charges, and if I close it I won't be able to get that deal again (it was through an ex employer)
- not only are the charges in the SIPP higher due to the lack of the rebate above, it has an 0.2% platform charge, which is a discounted rate while I am with this IFA i.e. if we part ways, I'll need to either pay a higher charge or move it again
- there's going to be a transfer fee, although I don't know what sort of number we're talking about yet

I am not an IFA I am afraid but have some personal experience of both SL ex employer GPP with discounts and of SIPPS.
With me the SL GPP funds have a charge of between 1 and 1.2% , there is no platform charge and there is a funds discount of 0.5%.
With the SIPP there is a platform charge of 0.35% for funds and the funds vary from 0.25% to 0.6% . However for investment trusts and ETF's the platform charge is lower.
So in fact the SIPP costs me a little more but there is a wider variety of possible investments and their drawdown offering is more flexible. Also if I wanted I could probably find a slightly cheaper SIPP.
So at least this matches with your and your IFA's opinions even if it does not help your decision very much !

The transfer fee should be about £400 because it is so easy my dog could do it (She's very clever).

I agree with this and would even say that the transfer fee should be part of the overall deal and not have a separate cost as it is easy to do .

beamyup

Your last paragraph is so close to sarcasm about IFA motives, but as per your request I will hold my tongue.

If I were you I would ensure that you are not locked in to the platform, the funds or the advice.

For example I would go for funds that are available on the main big sipp platforms, so later I would have the option to transfer In specie.

Another advantage of that approach is that it is then easy to benchmark the charges against DIY, to see overall how it compares and to have a negotiating position for future charges.

Dox

Why not wait until you've got 'the proper proposal' and then post, giving definite information rather than a post peppered with speculation? Bit of a waste of time trying to answer without the facts.

Snakey

In case that question wasn't rhetorical, because - assuming they intend to throw the transfer in for free to seal the deal - the only missing info is the IFA charges and I wasn't planning to ask advice on that element anyway.

When it comes to the pros and cons of moving out of a SL GPP (that I won't be able to rejoin) to an IFAs SIPP, what extra facts do you need? That's a genuine question, not sarcasm. They didn't give me a list of the suggested investments obviously, but I have a fair bit of other stuff that I'd assumed wasn't directly relevant but that I can post.

(e.g. The differential on the platform and portfolio fees is 0.363%. I didn't post that because, to the extent that to do so implies a question, the answer must surely be that there's no way of knowing whether that extra cost will be covered by higher returns in the portfolio they recommend.)

It's more that there would be no going back, that's what's making me unsure. How likely is it that in the next eight years SL will change their policy to allow flexi-access drawdown, for instance? I don't even know enough to know whether that's a stupid question, and it's that kind of thing that maybe other IFAs on here might comment on.

FatherAbraham

Snakey wrote: »

In case that question wasn't rhetorical, because - assuming they intend to throw the transfer in for free to seal the deal - the only missing info is the IFA charges and I wasn't planning to ask advice on that element anyway.

When it comes to the pros and cons of moving out of a SL GPP (that I won't be able to rejoin) to an IFAs SIPP, what extra facts do you need? That's a genuine question, not sarcasm. They didn't give me a list of the suggested investments obviously, but I have a fair bit of other stuff that I'd assumed wasn't directly relevant but that I can post.

(e.g. The differential on the platform and portfolio fees is 0.363%. I didn't post that because, to the extent that to do so implies a question, the answer must surely be that there's no way of knowing whether that extra cost will be covered by higher returns in the portfolio they recommend.)

It's more that there would be no going back, that's what's making me unsure. How likely is it that in the next eight years SL will change their policy to allow flexi-access drawdown, for instance? I don't even know enough to know whether that's a stupid question, and it's that kind of thing that maybe other IFAs on here might comment on.

If you don't need the flexible access for eight years, it seems pointless to pay the higher charges for it now.

SonOf

So my IFA wants me to move my pension money from a Standard Life GPP into a SIPP. Reasons given are:
- SL doesn't have a wide enough choice of investments (the ones they think I should be in)
- SL doesn't offer flexi-access drawdown so I'll have to move it at some point anyway
- SL doesn't have options on death other than paying the whole thing in a lump to your nominated beneficiary
- they can manage my investments more easily if it's in the one they recommend (not sure if they're saying they can't/won't do it if I stay with SL, I need to clarify that)

The old SL pension contract is ok as old fashioned pension contracts go. However, moving out is common as modern plans often offer better value.

Most advisers, where you pay for ongoing servicing, will recommend you move providers when better options appear. As most advisers will not charge for moving providers when you are on an ongoing service, this seems entirely reasonable.

I'm not sure about this, because:
- SL gives a generous rebate on fund charges, and if I close it I won't be able to get that deal again (it was through an ex employer)
- not only are the charges in the SIPP higher due to the lack of the rebate above, it has an 0.2% platform charge, which is a discounted rate while I am with this IFA i.e. if we part ways, I'll need to either pay a higher charge or move it again
- there's going to be a transfer fee, although I don't know what sort of number we're talking about yet

How much is that rebate?
The platform charge of 0.2% along with a portfolio of trackers can be under 0.3% all in. Probably cheaper than most SL pensions. I have seen 0.3% on SL plans before when using internal funds. However, SL is usually expensive on external funds.
Where is this transfer fee? (if its a servicing adviser then that is pretty disgraceful. If its transactional, then not)

jamesd

jeepjunkie wrote: »

SIPP "Self Invested Personal Pension" & IFA ? Just curious... If the IFA wants to do it sounds like it is in his interests not yours.

Many people are confused and think that the self-invested part of SIPP means DIY when it really means more investment choices. It's entirely fine for an IFA to use them.

Ordinary pensions like the SL GPP don't normally allow anything but unit trusts or OEICs. SIPPs normally allow buying individual shares, ETFs and ITs as well, usually with thousands rather than a hundred or so choices.

jamesd

SonOf wrote: »

Probably cheaper than most SL pensions. I have seen 0.3% on SL plans before when using internal funds. However, SL is usually expensive on external funds.

Lower still would be 0.278% AMC + additional expenses - discount for SL Vanguard FTSE Developed World Hedged Pension Fund. The key being a 0.75% SL plan discount for employees.

jamesd

Snakey wrote: »

SL gives a generous rebate on fund charges, and if I close it I won't be able to get that deal again (it was through an ex employer)

Are you still getting the discount extra fund units each month? SL used to write their terms so that the discount ceased when you stopped being an employee.

Regulations later banned that practice but I don't think that was mandated for past contracts. The charging information that SL gives you online should still be correct and if you're still seeing extra units added each month that would support it still being there.

SL do have some good and excellent fund choices in their GPP and if the discount remains it may be best to pick some of those to reduce the overall cost.

Snakey wrote: »

they reckon I will be able to give up work at 50! Woohoo!

Congratulations! How do they get there? Just wondering about drawdown rules and such.