Consolidating Pensions odds and ends

Wsb5tails

I wonder if it would be better for me to move my 2 small pensions into a SIPP.  One has only £2k in,  the other £32k but both have charges of 0.7%.  I plan to move to Vanguard at 0.15%.  Both are in Lifestyle plans, so not invested for much growth, I'm 57 and have another DB Pension that will pay £11k pa from aged 60.  I have already effectively retired from gainful employment but don't rule out returning to some work if I get bored.  I don't expect to need to draw from the SIPP other than perhaps to take advantage of my annual tax allowance.  I'm wondering if it is even worth the hassle, maybe just draw down the £12.5k pa now and stash in my S&S Isa.

What do you think?

Marcon

This may make helpful reading: https://www.thisismoney.co.uk/money/pensions/article-3550085/STEVE-WEBB-merge-small-pension-pots.html

Albermarle

I plan to move to Vanguard at 0.15%.

That is only the platform charge , you have to pay for the investments on top .

Mostly the total charge will be below 0.7% though .

Even if you are not working you can still contribute £2880 to a pension and £720 tax relief will be added, which is an advantage for keeping it in a pension.

On the other hand taking it all out over two tax years whilst you have no other taxable income , means you do not lose your personal allowance , so is also a plan.

Not sure about Vanguard but some pension providers are not keen on people transferring pensions in to them and then withdrawing them quickly , as it costs them money . Some have charges if you withdraw in 12 or 18 months for example.

Wsb5tails

I looked for details about Vanguards fee structure and 0.15% is all they talk about, no extras for trades or drawdown etc.  
I have contributed £2880 this year as advised and will continue to do so until I can't.

Like I said, I have no expectation of having to make withdrawals for some years to come.

AlanP_2

The 0.15% is Vanguard's admin charge. You need to select the investments inside the penion from their list, and each of those will have a built in charge (the OCF) shown on the investment factsheet.

Likely to be 0.1 up to 0.3 say depending on choices made. A like for like comparison to your current 0.7 is the 0.15 + OCF.

I would withdraw as much as you can up to your taxable income ahead of your DB starting and move to an ISA if you don't need the cash as otherwise those years personal tax allowances are lost.

Albermarle

so02see said:

I looked for details about Vanguards fee structure and 0.15% is all they talk about, no extras for trades or drawdown etc.  
I have contributed £2880 this year as advised and will continue to do so until I can't.

Like I said, I have no expectation of having to make withdrawals for some years to come.

On the Vanguard platform ( which costs 0.15%) your money has then to be invested in one of the various Vanguard investments on offer, and all these have their own charge . Exactly the same as with alternative investment platforms.
So for example if you invested in one of the well known Vanguard Life Strategy funds , they have a charge of 0.22%.
So in total you pay 0.37%.
It is pretty clear from their website.
https://www.vanguardinvestor.co.uk/what-we-offer/fees-explained

Wsb5tails

Thanks, silly me, yes, I conveniently forgot that bit on top.

So if I draw down up to £12.5k in the same year I made a £2880 contribution what happens to the £720 of tax relief they already credited?

Albermarle

When you make the £2880 contribution , Vanguard request the tax relief from HMRC and it usually arrives a few weeks later .
It will go into your cash account until you decide where to invest it on the platform .
Whether you also withdraw funds around the same time is not relevant.

AlanP_2

so02see said:

Thanks, silly me, yes, I conveniently forgot that bit on top.

So if I draw down up to £12.5k in the same year I made a £2880 contribution what happens to the £720 of tax relief they already credited?

You can draw a bit more than that tax free in your sitution as there is the 25% TFLS as well so £16,666 gives you a few pence under £12,500 taxable.