Transfer Standard Life pension to SIPP

shinytop

IanSt wrote: »

Don't forget to consider the costs of drawdown. The ii platform (as with many other platforms) has additional costs when you start to take money out, so that could swing your decision depending on when you thought that you'd need access to it.

Another tenner a month. I wouldn't have thought that would sway a decision on a £500k SIPP.

IanSt

shinytop wrote: »

Another tenner a month. I wouldn't have thought that would sway a decision on a £500k SIPP.

Maybe it will, maybe it won't - it depends on what other costs they have. But if someone is not aware of it then it could come as a surprise.

sk99

Thanks very much for all the information - greatly appreciated.

I agree that my existing SL rebate is good and agree that it will be a challenge to significantly reduce the stated charges however I don't think they tell the whole story.

In the case of the Vanguard US Equity Index Acc - Interactive Investor charges a fee of 0.19% (0.11% for Vanguard plus 0.08% for ii) plus the fixed SIPP platform fee. SL, for their equivalent "Standard Life Assurance Vanguard US Equity Index fund", charges 1.018% which is reduced to 0.32% after my rebate. So there is a small saving but not so much as to justify a transfer in itself.

However, there may be hidden charges associated with SL putting a wrapper around the Vanguard fund. SL state the following about so-called "External Fund Links"

"... The investment performance of the Standard Life version of a fund will be different from what you would see if you invested in the underlying fund directly. There can be several differences including: charges, cash management, tax and the timing of investing"


Is the SL stated fund management charge equal to the full cost of investing in the underlying fund or are there additional hidden charges?

SonOf

However, there may be hidden charges associated with SL putting a wrapper around the Vanguard fund.

No there isnt.

Is the SL stated fund management charge equal to the full cost of investing in the underlying fund or are there additional hidden charges?

There are no hidden charges. However, there will be a tracking error which may at times give better performance or worse performance.

Snakey

I am in the middle of a similar decision-making process and wrestling with the charges and the difficulty of getting the info (speaking as a know-nothing amateur. I'm sure if you know what you're looking at it's easy. But it seems that the only way I can work out all the charges is to dig through underlying documents and try to find each one, and the discounts I just have to take on trust because I can't see them anywhere.)

Entirely by coincidence, directly before coming on here and reading this thread I did pretty much the same as you've just done with a random fund from my portfolio. The "SL Vanguard FTSE All Share" fund shows Total Fund Charges of 1.02% - that's before any discount. But when I click through to the underlying "Vanguard FTSE All Share" fund in which, as far as I can tell, the SL fund of the same name is invested in its entirety, I see they have an OCF of only 0.08%. (I assume TFC and OCF is the same thing, since I can't find the initials OCF on the document that talks about the TFC or vice versa.)

Now, I freely acknowledge and deserve any and all eye-rolls coming my way from the IFAs and experienced investors on here, but it was news to me that "wrapper" meant "add a massive charge for doing no work". And it makes that 0.7% SL rebate look a lot less fantastic than I had previously thought. I thought it was a discount on the fund's management charges! Not an imaginary discount along the lines of a supermarket sticking a label on a bar of chocolate saying "SALE! Was £5, now only £2!" when in fact they're selling the exact same thing down the road in the pound shop.

(I don't know what I'd previously assumed they were doing. Running their own funds and charging full price to non-SL investors? Leveraging some sort of superior buying power to get each external fund to give them a kick-back and then passing some of the benefit of that on to me? And I don't know how I thought everyone at SL fed their kids.)

But anyhow, it basically means that if the 1.02% includes the 0.08% - and I have no idea whether it does or not - then the platform charge is 0.24% for that particular investment. And if it doesn't, then it's 0.32%. Which makes my previous outrage about the 0.2% platform fee in the SIPP that my IFA wanted me to transfer to seem misguided. Perhaps I should wind my neck in on that one.

I have been with SL since 2000 and always been happy with them, but am now starting to wonder whether the reason for that was because I'd never asked the right, or indeed any, questions but instead had simpleton thought processes along the lines of "ooh, a 0.7% rebate, that sounds amazing, better hold on to this!"

When in fact presumably if I took my sample fund over to that SIPP the total cost would be 0.28%, which is either 0.04% more or 0.04% less than where it is now. Not exactly proof of a massive rip-off on SL's part, true, but also far from the big difference (0.7% plus 0.2%!) that I'd thought it was. Ah well. You live and learn.

So. Next I need to try to get clarity on whether the SL TFC does or doesn't include the OCF of the underlying fund, and then go through and check every other sodding fund as well to see whether the numbers vary or whether it's a bog-standard "add 1%" across the board.

I know my lack of knowledge is nobody's fault but mine, and I am sure SL are no better or worse than any of the others, but I'm finding it all really tiresome right now. Honestly, you wouldn't get away with this lack of clarity with, I don't know, the cost of a unit of electricity, and I pay peanuts for my electricity bill in comparison to these fund charges.

I'm sure there will be more new-only-to-me revelations to come as I get further into it, and if you're interested I will keep you posted. Also though, if I've gone off on one and all of the above is totally wrong, somebody please tell me!

SonOf

which, as far as I can tell, the SL fund of the same name is invested in its entirety, I see they have an OCF of only 0.08%. (I assume TFC and OCF is the same thing, since I can't find the initials OCF on the document that talks about the TFC or vice versa.)

That is because the 0.08% one is a unit trust and not a pension fund. So, it has to be held on an investment platform. Whereas the pension fund doesnt have a platform charge as the provider charge is bundled with the fund charge.

but it was news to me that "wrapper" meant "add a massive charge for doing no work". And it makes that 0.7% SL rebate look a lot less fantastic than I had previously thought.

That does not follow as 1.02% minus 0.70% = 0.32% bottom line. Whereas the 0.08% version of the fund has to be held on a platform. Taking HL as an example (as they hold more DIY investors than the rest put together) that is 0.45% plus 0.08% = 0.53% bottom line. More expensive than SL.

Which makes my previous outrage about the 0.2% platform fee in the SIPP that my IFA wanted me to transfer to seem misguided. Perhaps I should wind my neck in on that one.

That is a good price for an IFA platform (most IFA platforms are mono charged. i.e. % based only with no other charges for other transactions). However, 0.28% vs 0.32% is not a lot of difference.

So. Next I need to try to get clarity on whether the SL TFC does or doesn't include the OCF of the underlying fund, and then go through and check every other sodding fund as well to see whether the numbers vary or whether it's a bog-standard "add 1%" across the board.

You are not charged twice.

Honestly, you wouldn't get away with this lack of clarity with, I don't know, the cost of a unit of electricity, and I pay peanuts for my electricity bill in comparison to these fund charges.

Charges on investments are just as transparant. However, the problem you have is legacy contracts from the past built for the rules and distribution channels of the past compared with modern ones today.

In your case, you have an older style bundled priced personal pension using pension funds and are trying to compare it to an unbundled investment platform using OEICs/UTs.

Albermarle

Also most of the SL funds are not just simple trackers that have very low charges , so you have picked on an extreme example.
If you take a typical low cost multi asset type fund , then the SL ' pension portfolio' range costs 1%- minus discount 0.7% = 0.3%
Buying the well known Vanguard LS range on a mid cost platform like You Invest would cost 0.47% .+ potential extra charges for fund switches, withdrawals etc which are all free with SL.
So you have a very good deal with SL , better than the one I have got;) and I will be mentioning this to them the next time I call them , especially as you are the second poster in a few days to say they have such a big discount with them !

Ciprico

...I did call them, about charges, and possible move.

With their StakeHolder pension the cost is 1% - .2 discount (max).

They were inflexible, when I suggested I may move to II, their only response was to move to another SL product, maybe their (SIPP)...

Costs seem complicated for SL SIPP and they don't do Vanguard Funds, plus I was looking for a "flat fee" platform to amalgamate several pensions.

Whilst none of these alone are big issues, when all stacked up I am inclined to jump...

(Does it really cost them more to administer higher a value SIPP or are they just exploiting their longer term, higher value customers ?!)

AnotherJoe

Albermarle wrote: »

Also most of the SL funds are not just simple trackers that have very low charges , so you have picked on an extreme example.
If you take a typical low cost multi asset type fund , then the SL ' pension portfolio' range costs 1%- minus discount 0.7% = 0.3%
Buying the well known Vanguard LS range on a mid cost platform like You Invest would cost 0.47% .+ potential extra charges for fund switches, withdrawals etc which are all free with SL.
So you have a very good deal with SL , better than the one I have got;) and I will be mentioning this to them the next time I call them , especially as you are the second poster in a few days to say they have such a big discount with them !

Note that my discount is a follow-on from a company scheme. The deal is that ex-employees retain the company discount (0.75% in my companies case) whilst staying in the same plan, and can also carry that on to their AMPP pension (which i think of as a "SIPP Lite") but not their more full blown SIPPs where there are other discounts based on the size of the money you have but not as much as 0.75%.
I did discover one glitch, most of my funds were 1% or so, but one fund had a charge that was about 0.6% and for that the 0.75% was not applied, and you had to pay the full charge. But they had two very similar so i picked the higher 1% one which of course is 0.25% after the discount compared to the "lower charging" 0.6% fund :cool:

Snakey

Thank you SonOf and Albermarle for taking the time to even read through all that waffle never mind respond!

That's useful information that the charges are not layered - that their stated SL fund charge includes the charge of the underlying fund rather than being "as well as". Out of interest how did you find this out? In case I am missing an easy source of info!

I'll go through - when I can dredge up the mental energy - the rest of the list and hopefully it will turn out that I happened to pick the one with the smallest differential (I swear I didn't cherry-pick it to try to prove a point, I literally looked at one and it was that one) and the others net out to a bigger saving.

The proposed 0.2% SIPP fee is a rate they only offer if you have an IFA, so any comparisons I make need to take into account the fact that there'd have to be an IFA charge on top always. It's something insane like 0.7% if it's just you doing it. On my To Do list, once I can properly get my head round the SL charges to give me a point for comparison, is to look up other SIPPs and not just the one my potential IFA is recommending, since obviously if I leave SL I can't get back in at my current rate.

I used to work for a large accountancy firm and this is their old GPP. If I were younger I would be tempted to explore the possibility of even larger employers, assuming size is what drives the discount - literally go and work in e.g. the postroom or something for the minimum time necessary to get set up in their pension scheme, then leave, then just transfer funds in for evermore whenever you move jobs in the future! (Although I will have to move it one day when I want to get my clammy hands on the money.)

Sorry OP for hijacking your thread to talk about myself! Hopefully it's useful to you too though.