Transfer old Aviva pension into something new with less charges

gambleruk

I am looking to transfer my Aviva pension which I opened in 1989 and not deposited into for a long while (110k pot) to another provider, two reasons being that I am being charged 0.88% per year and also worked out over the past 3 years it has only grown just over 3%. There is no gar on the pension and even though it has a guaranteed 4% that is only on a small part of the funds, also no transfer fee from Aviva.  I am 50 years old and not working and if anything part time work only in the future, looking forward I am pretty sure I will need to start drawdown on this pension pot within the next 10 years, I will be leaving it as long as possible but will need to bridge the gap to state pension where I am just one year off receiving full state pension.

So I am looking for ideas where to put the money, I know people say choose your investments first then your platform but what I think I need is a platform with low costs and a managed sipp ? The one which I have been looking at is the Vanguard Life Strategy 40% fund.  I have very little knowledge of investments myself though do have the time now to improve that now.

Many thanks in advance.

ian16527

If you want to use Vanguard LS40 only then it would make sense to use the Vanguard Sipp at 0.15% fees. If you want to use some other funds( not Vanguard) then perhaps AJ Bell at 0.25%

EdSwippet

ian16527 said:

If you want to use Vanguard LS40 only then it would make sense to use the Vanguard Sipp at 0.15% fees. If you want to use some other funds( not Vanguard) then perhaps AJ Bell at 0.25%

At £110k, a flat fee platform beats AJ Bell. 0.25% of £110k is £275/year, and this annual cost will rise as the fund grows. Interactive Investor's SIPP costs £220/year, and will not rise as the fund grows.

For Vanguard, 0.15% of £110k is £165/year, and this currently beats Interactive Investor. Break-even is a pension value at £147k.

dunstonh

 two reasons being that I am being charged 0.88% per year and also worked out over the past 3 years it has only grown just over 3%. 

With the  WP fund then you need to look at the gains in the transfer value and not the current value as the bulk of the return is in the final bonus accruing.  Final bonuses are not shown in the current value.  Only the annual bonus.
So, how has the transfer value changed over that period?

Albermarle

 what I think I need is a platform with low costs and a managed sipp ? The one which I have been looking at is the Vanguard Life Strategy 40% fund.  I have very little knowledge of investments myself though do have the time now to improve that now.

If you have very little knowledge , how can you pick what you want ? 

For example there is no such thing as a managed SIPP . Best to increase knowledge first and then start to look into whether a transfer is a good idea or not .

gambleruk

dunstonh said:

 two reasons being that I am being charged 0.88% per year and also worked out over the past 3 years it has only grown just over 3%. 

With the  WP fund then you need to look at the gains in the transfer value and not the current value as the bulk of the return is in the final bonus accruing.  Final bonuses are not shown in the current value.  Only the annual bonus.
So, how has the transfer value changed over that period?

The total transfer value on 31/08/18 was £101,417 which was split £83,797 plus final bonus £17,620
Last week was £109,113 which was split £89,946 plus final bonus £19,167
One last thing the final bonus was £19,414 on 31/08/19 but then dropped back to £18,372 on 31/08/20 ?

dunstonh

One last thing the final bonus was £19,414 on 31/08/19 but then dropped back to £18,372 on 31/08/20 ?

That is not unexpected given the falls over that period and that the final bonus would not have been increased much at that point with the post CV gains the market has seen since.  How does the current value and transfer value stand now?  The final bonus tends to have a lag on it.

The other thing to remember is that there is a lot of smoothing with that fund. So volatility is not something you would have seen much on that fund over the years.  If you move to conventional unit linked funds, like VLS40, you need to be prepared for an increased level of volatility.   Many people don't have a problem with that but some panic and go on to make bad decisions.
For example, £101,417 on 31st August 2019 would have dropped to £90k in Spring 2020 with VLS40.
If you can handle the loss periods, then everything is fine.  If you can't handle it then you may need a rethink.

gambleruk

dunstonh said:

One last thing the final bonus was £19,414 on 31/08/19 but then dropped back to £18,372 on 31/08/20 ?

That is not unexpected given the falls over that period and that the final bonus would not have been increased much at that point with the post CV gains the market has seen since.  How does the current value and transfer value stand now?  The final bonus tends to have a lag on it.

The other thing to remember is that there is a lot of smoothing with that fund. So volatility is not something you would have seen much on that fund over the years.  If you move to conventional unit linked funds, like VLS40, you need to be prepared for an increased level of volatility.   Many people don't have a problem with that but some panic and go on to make bad decisions.
For example, £101,417 on 31st August 2019 would have dropped to £90k in Spring 2020 with VLS40.
If you can handle the loss periods, then everything is fine.  If you can't handle it then you may need a rethink.

Just logged in and today's total transfer value is £90,504 plus £19,179 bonus so £109,684 total.
And thanks for the additional info, would not like to see the losses but appreciate they happen.

dunstonh

gambleruk said:

dunstonh said:

One last thing the final bonus was £19,414 on 31/08/19 but then dropped back to £18,372 on 31/08/20 ?

That is not unexpected given the falls over that period and that the final bonus would not have been increased much at that point with the post CV gains the market has seen since.  How does the current value and transfer value stand now?  The final bonus tends to have a lag on it.

The other thing to remember is that there is a lot of smoothing with that fund. So volatility is not something you would have seen much on that fund over the years.  If you move to conventional unit linked funds, like VLS40, you need to be prepared for an increased level of volatility.   Many people don't have a problem with that but some panic and go on to make bad decisions.
For example, £101,417 on 31st August 2019 would have dropped to £90k in Spring 2020 with VLS40.
If you can handle the loss periods, then everything is fine.  If you can't handle it then you may need a rethink.

Just logged in and today's total transfer value is £90,504 plus £19,179 bonus so £109,684 total.
And thanks for the additional info, would not like to see the losses but appreciate they happen.

I just put VLS40 in the chart using the statement date and value from 2019 to now.  You would actually have made less with VLS40 than what you currently have.  VLS 40 would be at £109,516.  However, you would have the platform fee to deduct from that.  So, it would be lower than that.      So, in that period, your Aviva pension returned more than VLS40.  (Aviva £109,684 after charges and VLS40 £109,516 before platform charge)

gambleruk

dunstonh said:

gambleruk said:

dunstonh said:

One last thing the final bonus was £19,414 on 31/08/19 but then dropped back to £18,372 on 31/08/20 ?

That is not unexpected given the falls over that period and that the final bonus would not have been increased much at that point with the post CV gains the market has seen since.  How does the current value and transfer value stand now?  The final bonus tends to have a lag on it.

The other thing to remember is that there is a lot of smoothing with that fund. So volatility is not something you would have seen much on that fund over the years.  If you move to conventional unit linked funds, like VLS40, you need to be prepared for an increased level of volatility.   Many people don't have a problem with that but some panic and go on to make bad decisions.
For example, £101,417 on 31st August 2019 would have dropped to £90k in Spring 2020 with VLS40.
If you can handle the loss periods, then everything is fine.  If you can't handle it then you may need a rethink.

Just logged in and today's total transfer value is £90,504 plus £19,179 bonus so £109,684 total.
And thanks for the additional info, would not like to see the losses but appreciate they happen.

I just put VLS40 in the chart using the statement date and value from 2019 to now.  You would actually have made less with VLS40 than what you currently have.  VLS 40 would be at £109,516.  However, you would have the platform fee to deduct from that.  So, it would be lower than that.      So, in that period, your Aviva pension returned more than VLS40.  (Aviva £109,684 after charges and VLS40 £109,516 before platform charge)

Many thanks for this, been doing research for a couple of months and thought I was ready to change, will carry on monitoring it and see where it leads me, I was under the impression that by saving in fees I would be better off moving.

Albermarle

Fees are important, but not as important as what you actually invest in.