To SIPP or not to SIPP?

Andyed201

I currently have three pension pots, 1 of which is live with my current employer which I take advantage of salary sacrifice and the full employer match. I'm 44, so at very best I won't be retiring for at least 10 years.

I am trying to work out what to do with the other two, and if I should open a SIPP to combine them and maybe make some AVCs when I have the chance.

The first is a Scottish Widows DC that I haven't paid in to for 7 years. It has about £120k and is split across too many funds that I don't understand. The fees are all over the place and seem high.

The second is a Legal and General DC pension from a previous employer. Fees are reasonable, but fund choice is massively limited. Again there is about £120k in this one and there is no protected benefits.

My thought is open a Fidelity SIPP, transfer the money from both into that and use a small number of low cost funds to get a diverse portfolio.

If it matters, I also have a fidelity S&S ISA with less than £20k in vanguard LS80 which i contribute to each month.

Anything stupid in that plan or that I should think about?

bolwin1

Have you considered transferring both of the old schemes to your current employers pension (if they allow it) ? They may get better rates than you can individually.

Andyed201

bolwin1 wrote: »

Have you considered transferring both of the old schemes to your current employers pension (if they allow it) ? They may get better rates than you can individually.

Yes, they won't allow any transfers in.

Paul_Herring

1 of which is live with my current employer which I take advantage of salary sacrifice

and maybe make some AVCs when I have the chance.

You'd save NI by sacrificing extra into your pension with your employer, than contributing to your SIPP from post-tax income.

Andyed201

Paul_Herring wrote: »

You'd save NI by sacrificing extra into your pension with your employer, than contributing to your SIPP from post-tax income.

Thanks, I will see if they allow that, I'm not sure how far I can increase my contribution above the employer match 8%.

Paul_Herring

I'm not sure how far I can increase my contribution above the employer match 8%.

Legally (and simplistically - there are exceptions):
1) You cannot be paid, after sacrifice, less that the equivalent of the minimum wage. However if you drop it that low, anything you are subsequently paid may then be put into a SIPP or similar and get tax relief.
2) You cannot have more than £40K going into (all of) your pensions in total.

There's normally no reason for employers to prevent you increasing your contribution within those limits. (Unless they cite 'admin costs' which is usually read as 'we can't be arsed.')

Albermarle

My thought is open a Fidelity SIPP, transfer the money from both into that and use a small number of low cost funds to get a diverse portfolio.

This is what I did with an older pension. I could have transferred to current SW workplace pension that has low costs, but my general experience with the website and service was not great, so I decide to transfer to a new SIPP with Fidelity and have had no problems and the service is good. A few points to note though:
Even with low cost funds you still pay 0.6% in total ( 0.35% platform charge and around 0.25% fund charge ), so there are cheaper providers, especially for larger funds.
There are no other charges at all ( apart from dealing charge for shares etc) . The 0.35% is an all in charge .
There is a low cap on platform charges of £45 when you hold shares ;ETF's or investment trusts
Fidelity has not got the shiniest whizziest website, but it is improving .
If your total funds ( including your ISA )exceed £250K the platform charge drops to 0,2% for the whole amount ( not just the amount above £250K )
There are regular cashback offers for transfers.

Andyed201

As a quick update, I decided to transfer my two old pensions into a single SIPP with ii, and put the money in two Vanguard funds. It only took 5 years from when I first though it doing it.....

As a side I also increased my contributions to my employer scheme and increase my savings in my ISA rather than add more to my SIPP. I know the ISA is not as tax efficient on the way in, but my FI plans need me to have more money available outside pensions to bridge at least a 2 year gap.

So thats the plan - let the SIPP grow, continue employer scheme contributions and build ISA alongside.