SIPPs, ETFs and UFPLS

TJ666

I have a query about UFPLS and SIPPs, which may be a terminology thing - that I just need confirmation that my thinking is correct. My husband and I have some DC pensions from various employments invested in multi-asset funds (often the default of the provider). In 18 months time or so my husband would like to retire (age 55), using UFPLS for a decade or two, then maybe buy an annuity.  I have the same intention starting in maybe 3 years time.  It looks like many pension providers insist you use an IFA, or have expensive charges - or don't tell you on their website,  I don't think an IFA should be necessary. 
So I'd like to find a provider that will allow me to self-administer a UFPLS with low and transparent fees and simple user interfaces.  From other threads Fidelity, AJBell , and Vanguard look like contenders for our pot sizes.  I have a pension with Peoples pension which also looks cheap (although no reviews on using it to drawdown yet).  As I understand it, I don't necessarily need to get a SIPP to self administer a pension (Peoples pension is not a SIPP), but a SIPP will be the ultimate in control.  However, I don't know of many cheap  self-administered UFPLS providers that aren't also SIPPs.
I have previously been put off SIPPs as I thought they were expensive compared with the employers provided scheme.  SIPPs now don't look so expensive, so it may be the costs have come down in the last few decades , or that I am now comparing them with the cost of drawing down our pensions via said employers scheme (e.g. 0.8% pa with Reassure (was old Mutual, previously Skandia). 
Also, am I right in thinking if transferring between providers e.g. from a default multi-asset, this must be disinvested to cash, then re-invested in the new providers funds.  So, it might be best to buy ETFs in the future ?  If we hold ETFs this would mean they could  be transferred in specie in potential future transfers, so reducing transaction costs and time out of the market ?  I don't particularly want to build my own multi-asset portfolio from a range of single ETFs.  Is my understanding of the considerations correct ?
Thank you in advance.  There seems to be excellent comment on this forum.

Albermarle

It looks like many pension providers insist you use an IFA, or have expensive charges - or don't tell you on their website,  I don't think an IFA should be necessary. 

This would be a minority of providers doing this , so maybe you have been unlucky.

You can use UFPLS with many providers ( although not all) including the ones you mentioned 

I have previously been put off SIPPs as I thought they were expensive compared with the employers provided scheme. 

They can be more expensive and they can be cheaper . Employers schemes are sometimes heavily discounted but not always 

.Also, am I right in thinking if transferring between providers e.g. from a default multi-asset, this must be disinvested to cash, then re-invested in the new providers funds.  So, it might be best to buy ETFs in the future

Probably , but not certainly , a transfer from a typical workplace scheme would have to be in cash.

However then in a SIPP like Fidelity for example , you would have the choice of shares; ETF's; Investment Trusts and OEIC funds ( like the multi asset fund you have now). Funds are usually better for less experienced investors and many experienced ones as well. Not quite sure why you are focusing on ETF's?

TJ666

Thank you Albermarle.  I shall  investigate OEICs .  I'd like to buy into something which is a multi-asset but could be easy (cheap) to move out of if I find out its a dog or I want to change platform due to increased charges or tiresome features.  The documentation with (non-SIPP) pension providers seems to be: a lot of lovely pictures of grey haired couples on beaches, some basic info on pensions but light on charges and specifics (you might have to ring them for a chat).  From my investigations so far (starting with providers we have pensions with, or mentioned in this forum), of non-SIPP pension providers:  Aegon: Have to use an IFA (I think); Standard Life (need to ring them for a chat, won't answer specific qus about charges by secure mail); Peoples pension (will do UFPLS);  Royallondon (through FA only); Reassure (0.8% pa fee);  L+G not answering emails (sent Jan ); Old Mutual (seems to require you to have an IFA).  I suppose I need a comparison table or all the viable candidates.  I guess this is what you pay an IFA for - to do this donkey work

IvanOpinion

You don't say what your pot size is but for pots >£100K  you might want to include Interactive Investor (II) in your list of providers

dunstonh

 It looks like many pension providers insist you use an IFA, or have expensive charges - or don't tell you on their website,  I don't think an IFA should be necessary. 

Intermediary only providers require an intermeidary.  DIY providers do not.

I have previously been put off SIPPs as I thought they were expensive compared with the employers provided scheme. 

Historically, SIPPs were the most expensive option.  However, that is no longer the case.   They can still be expensive but there are also lower cost versions available.

SIPPs now don't look so expensive, so it may be the costs have come down in the last few decades

More like last few years rather than decades.

Also, am I right in thinking if transferring between providers e.g. from a default multi-asset, this must be disinvested to cash, then re-invested in the new providers funds.  

Insured pension funds are unique to the insurer and cannot be found on other providers products or platforms.  So, yes, you would need to do a cash transfer.

 So, it might be best to buy ETFs in the future ?  If we hold ETFs this would mean they could  be transferred in specie in potential future transfers,

UT/OEICs, ITs and ETFs can all do in-specie transfers.      However, do be aware that in-specie transfers can take up to 6 months to complete.  That may not be suitable if you are looking to move into drawdown within that period.

so reducing transaction costs and time out of the market 

UT/OEICs dont have dealing costs.  ITs & ETFs would.   Cash transfers typically means being out of the market for about 3-5 days.

The documentation with (non-SIPP) pension providers seems to be: a lot of lovely pictures of grey haired couples on beaches, some basic info on pensions but light on charges and specifics (you might have to ring them for a chat).  

You should see some of the SIPP providers.  Their list of charges can be pages long compared to mono charged workplace plans.

L+G not answering emails (sent Jan )

is it still with L&G or transferred to ReAssure?

  I guess this is what you pay an IFA for - to do this donkey work 

yes.   Most, if not all, the providers/plans you listed sound like legacy plans or ones that can be improved upon via an IFA or using a DIY provider/platform.     However, you would need to check for safeguarded benefits or other guarantees that may exist.

green_man

Most of the SIPP providers use different charging structures so it often depends on a number of factors as to which is best for you - pot size, how often you trade, investment types etc.   

As an example I use Halifax SIPP - administered by AJ Bell.  I use UFPLS and these are the charges I pay 
Admin fee - £180/year.  UFPLS fee £90 (per withdrawal).

So in my case will a pot north of £600k I pay a total of £270 fees a year or around 0.04% I use a few different funds but my core is the HSBC balanced Global strategy at 0.22%.  But then I seldom trade and I’m happy for one UFPLS per year.  For me this worked out a very cost effective solution YMMV.

[Deleted User]

I use ETFs, but its to reduce cost rather than for ease of transfer

TJ666

Thanks all, the L+G pension is the current employers pension, so I'll give them more pokes.  I have been checking the features of pensions to move (with profits, GAR, terminal bonus ?)

green_man said:

As an example I use Halifax SIPP - administered by AJ Bell.  I use UFPLS and these are the charges I pay 

Admin fee - £180/year.  UFPLS fee £90 (per withdrawal).

Thats intriguing.  Don't you have to pay AJBell platform fees on on top the Halifax fees ? (AjBell fees are 0.25% up to £250k). I'm wondering why you've set it up like this (is it not possible to do UFPLS directly with Halifax ?) and how its set up in practice.

Also, do you do your single withdrawal each year in March (end of the tax year), to avoid a massive tax charge, which requires clawing back ? I'd be interested to know if that works in practice. 

For info, husband has 2 pots: 1 started about 11 years ago, £400k would look to move to a DIY platform and drawdown first.  Also, current L+G pension: about £500k, total service and fund charges: 0.3%. Would look to keep there and use second, depending on how well the first DIY platform works for us. 
As total pension value is currently about 90% of LTA, and LTA is not going to increase in the next few years, we're looking to UFPLS the max available in 20% income tax bracket for the first few years.  This is so that growth does not tip pensions over the LTA.  Spare withdrawn cash would be used to buy S+S ISAs and non-ISA funds (over the £20k ISA limit) and build up an easy access pot.  I'm aware of the MPAA consequences of drawdown.

Albermarle

Thats intriguing.  Don't you have to pay AJBell platform fees on on top the Halifax fees ? (AjBell fees are 0.25% up to £250k). I'm wondering why you've set it up like this (is it not possible to do UFPLS directly with Halifax ?) and how its set up in practice.

You have misunderstood ( not surprisingly ), Green Man has a SIPP with the Halifax sharedealing platform . A J Bell are contracted by Halifax to operate the SIPP as presumably they have a better IT system for administering the SIPP, tax issues etc 

You might ask then why the Halifax charges less than A J Bell and it would be a good question . 

It depends to some extent as to the size of the fund involved , the number of trades, what type of investments, which works out cheaper though .

Croeso69

Albermarle said:

Thats intriguing.  Don't you have to pay AJBell platform fees on on top the Halifax fees ? (AjBell fees are 0.25% up to £250k). I'm wondering why you've set it up like this (is it not possible to do UFPLS directly with Halifax ?) and how its set up in practice.

You have misunderstood ( not surprisingly ), Green Man has a SIPP with the Halifax sharedealing platform . A J Bell are contracted by Halifax to operate the SIPP as presumably they have a better IT system for administering the SIPP, tax issues etc 

You might ask then why the Halifax charges less than A J Bell and it would be a good question . 

It depends to some extent as to the size of the fund involved , the number of trades, what type of investments, which works out cheaper though .

i have a crystallised SIPP with AJ Bell Youinvest. I invest in shares, IT and ETF.

The max annual charge is £120.

With Halifax it is £180 plus £180 for a drawdown fund even if not taking income. That would be 3 times as much.

Halifax would be a lot cheaper than AJB IF I used funds, admittedly.

zagfles

Snowman's spreadsheet is a useful tool to compare platforms:

https://forums.moneysavingexpert.com/discussion/5583030/coolly-comparing-investment-platform-charges-snowmans-spreadsheet/p1