Scottish Widows refusing to let me transfer my pension to a SIPP - What can I do?

lookatbowen

Hi all, 
First time poster on this forum. 
I have dormant pension with Scottish Widows that was funded by myself and previous employer for 12 years. When I left that job, the pension contributions stopped (obviously). 
In the pension I have 4 funds: 

• SW SSgA North America Equity Index Pension
• SW Schroder US Smaller Companies Pension
  
• Scottish Widows High Income Bond Pension
  
• Scottish Widows Property Pension
  

Recently I had an idea to partially transfer my Scottish Widows pension to a SIPP, so I could invest in my own future.
I initiated the process with the SIPP provider. They told me it would be best if I called SW and asked them to sell a value of the funds and then to partially transfer the money to the SIPP. 
I called Scottish Widows and asked them to partially sell the funds to value X. They told me they cannot do this because one of the funds is a Property fund and there is currently a selling restriction on all property funds in the UK due to Covid19. "Fine, leave that fund as is and partially sell the other 3 funds to value X", I said.
"No, because your pension contains a Property fund in it, the whole pension is restricted." they said.   
I've called them 3 times over the past 6 months and each time they give me a slightly different story. Bottom line is they don't seem to know exactly what the rule is now, so simply say no on principal. 
The daft thing is the Scottish Widows Property Pension fund is only 5% of my pension and a very small amount, where as the other 3 funds are large. 

Here is another odd thing. Before I had these 4 funds, I actually had 9 funds in this pension and I called them up in July 2020 and asked them to sell 5 of the funds for cash and to invest the money equally into the 3 existing funds (excluding the Property Fund). They happily did that for me. It appears they can sell funds in the pension without any issue and buy or transfer the money back into existing funds in the pension, but partially transferring money out is a NO NO. 
All I want to know is:

1. Is what Scottish Widows saying Legal? 
2. What if I wanted to consolidate my Scottish Widows pension with my current work pension, could they still prevent that from happening given that pension contains a Property fund?
3. Is it possible to sell all by the SW Property Fund? 
4. What options do I have to move this pension? 

Any help or advice or comments will be much appreciated. 
Mike

Albermarle

Point 1 - Yes , can you really imagine a financial institution like SW doing something illegal?
Point 2 - Would make no difference 
Point 4 - None , unless SW decide to change their current internal rules . I saw on another thread that some pension providers are starting to relax similar rules due to the same issue you face. Maybe SW will do the same . At some point the property fund restriction will be lifted anyway.

lookatbowen

Albermarle said:

Point 1 - Yes , can you really imagine a financial institution like SW doing something illegal?
Point 2 - Would make no difference 
Point 4 - None , unless SW decide to change their current internal rules . I saw on another thread that some pension providers are starting to relax similar rules due to the same issue you face. Maybe SW will do the same . At some point the property fund restriction will be lifted anyway.

Hi Albermarle,
I imagine point 1 is tongue in cheek. I've had nothing but good performance from them in the previous 12 years, but this had really annoyed me. Their lack of "not knowing the answer each time" I call them and the lack of any material on their website explaining the situation, makes this whole thing very frustrating. 

Point 4 - None - that is terrible! I do hope it is soon, because being told the only time one can get the cash is at retirement seems very wrong.

cloud_dog

The situation has arisen because of the epidemic, some professionals are not operating fully at present which means that funds invested in property are unable to obtain an updated valuation or where the risk associated with using the valuation brings unacceptable risk to the fund (over / under valuing) for fund holders.

dunstonh

I have dormant pension with Scottish Widows that was funded by myself and previous employer for 12 years. 

Pensions do not go dormant.  That only applies to bank accounts.

Bottom line is they don't seem to know exactly what the rule is now, so simply say no on principal. 

 A lot of legacy pensions cannot do partial transfers.

Here is another odd thing. Before I had these 4 funds, I actually had 9 funds in this pension and I called them up in July 2020 and asked them to sell 5 of the funds for cash and to invest the money equally into the 3 existing funds (excluding the Property Fund). They happily did that for me.

All quite normal and correct.   So, cannot see what is odd about that.

 It appears they can sell funds in the pension without any issue and buy or transfer the money back into existing funds in the pension, but partially transferring money out is a NO NO. 

The funds that are not suspended can be switched as much as you like within the pension.  Transferring out is a whole different kettle of fish.

Is what Scottish Widows saying Legal? 

The law has nothing to do with it.    Its a bit like asking if it is legal that a black and white TV doesn't show colour.

What if I wanted to consolidate my Scottish Widows pension with my current work pension, could they still prevent that from happening given that pension contains a Property fund?

That would still involve a transfer out and you cannot do that.

Is it possible to sell all by the SW Property Fund? 

assume you mean "but" rather than "buy".  If so, yes it is but you would have to purchase an alternative fund or funds.

What options do I have to move this pension? 

If they do not allow partial transfers then you need to wait.

barnstar2077

As Dunston says, are you sure it isn't the partial transfer that is actually the problem?

lookatbowen

Thank you Cloud_Doh and Dunstonh for the answers. 

dunstonh said:

I have dormant pension with Scottish Widows that was funded by myself and previous employer for 12 years. 

Pensions do not go dormant.  That only applies to bank accounts.

Dormant was probably the wrong word - no contributions are being paid in. It's not dormant because it dropped in value post Covid, but has thankfully risen back to the value it was in March 2020. 

Bottom line is they don't seem to know exactly what the rule is now, so simply say no on principal. 

 A lot of legacy pensions cannot do partial transfers.
I don't think it is a legacy pension, or I hope not, the first SW person I spoke to said I would be able to partial transfer if it wasn't for the Property fund attached to the pension as a partial transfer would take the value from each fund. 

Here is another odd thing. Before I had these 4 funds, I actually had 9 funds in this pension and I called them up in July 2020 and asked them to sell 5 of the funds for cash and to invest the money equally into the 3 existing funds (excluding the Property Fund). They happily did that for me.

All quite normal and correct.   So, cannot see what is odd about that.
Okay. 

 It appears they can sell funds in the pension without any issue and buy or transfer the money back into existing funds in the pension, but partially transferring money out is a NO NO. 

The funds that are not suspended can be switched as much as you like within the pension.  Transferring out is a whole different kettle of fish.
Okay. 

Is what Scottish Widows saying Legal? 

The law has nothing to do with it.    Its a bit like asking if it is legal that a black and white TV doesn't show colour.
Okay. I guess I should have asked "Is it right what they are doing?". 

What if I wanted to consolidate my Scottish Widows pension with my current work pension, could they still prevent that from happening given that pension contains a Property fund?

That would still involve a transfer out and you cannot do that.
Damn!

Is it possible to sell all by the SW Property Fund? 

assume you mean "but" rather than "buy".  If so, yes it is but you would have to purchase an alternative fund or funds.
Yes, I wanted to edit that mistake after I saw it, but couldn't see how.
I asked SW if I could buy a new fund and transfer the 3 funds to it and then do a partial transfer, leaving the Property fund as is and they said no. Because it is tied to the pension, all funds are seen as one.

What options do I have to move this pension? 

If they do not allow partial transfers then you need to wait.
Damn! okay. 

Do you think they will allow the property funds to be bought or sold in future? How realistic is it that this doesn't happen? 

bowlhead99

lookatbowen said

Do you think they will allow the property funds to be bought or sold in future? How realistic is it that this doesn't happen?

Yes, at some point they will allow the property funds to be bought or sold. Even if the fund had entirely failed and needed to sell all its assets to meet investor redemption demands, it would just do that. So eventually your money would come out of it or the fund would be merged with another fund that didn't have a trading restriction.

It is entirely unrealistic to think that wouldn't happen. So don't worry, your money isn't trapped forever. Meanwhile, allocate the money that isn't stuck in the property fund into the SW-offered funds which make most sense in the context of your overall portfolio of pension investments that you hold at SW and elsewhere.  In that way, you will still be "investing in my own future" using the options available to you for this particular bit of SW-administered money, even if you would prefer to be investing it through a different provider.

lookatbowen

barnstar2077 said:

As Dunston says, are you sure it isn't the partial transfer that is actually the problem?

No from my understanding it is because the pension has this property fund which has the restriction
But I will give them another call on Tuesday and see. It is worth clarifying if anything. 
Thanks! 

lookatbowen

bowlhead99 said:

Yes, at some point they will allow the property funds to be bought or sold. Even if the fund had entirely failed and needed to sell all its assets to meet investor redemption demands, it would just do that. So eventually your money would come out of it or the fund would be merged with another fund that didn't have a trading restriction.

It is entirely unrealistic to think that wouldn't happen. So don't worry, your money isn't trapped forever. Meanwhile, allocate the money that isn't stuck in the property fund into the SW-offered funds which make most sense in the context of your overall portfolio of pension investments that you hold at SW and elsewhere.  In that way, you will still be "investing in my own future" using the options available to you for this particular bit of SW-administered money, even if you would prefer to be investing it through a different provider.

Thanks for the advice Bowlhead99 and really to everyone who has so far commented. I've have received more comments and answers here than the hours spent on the phone with Scottish Widows so far. 

Brynsam

lookatbowen said:

Their lack of "not knowing the answer each time" I call them and the lack of any material on their website explaining the situation, makes this whole thing very frustrating. 

The explanation has been on their website since April: https://www.scottishwidows.co.uk/global/fundchanges/#collapseFurtherTradingRestrictions