FIREside Chats

listoflists

Apologies if these are numpty questions, but hoping they fit with the theme of this thread. 

Is there any issue with switching a ‘stakeholder with profits’ personal pension into a SIPP?  The FAQ on the company site just talk about bringing more pensions into join the fold, not moving it to another provider....

Is there much difference between a SIPP invested in some kind of life strategy package (e.g. Vanguard) and an offering from one of the more traditional pension companies?  SIPPs seem infinitely flexible, but if the option picked is just one of the life strategy type ones, is that similar to the package from an old styley pension co where it’s a set mix of equities and bonds?  Does it just come down to whether the choice of contents of the package suits the individual and the fees charged?

edinburgher

@listoflists - I don't think there's anything to stop you doing this, but the fund may offer certain guarantees that would be lost if you transfer out. Might be asking with specifics on the proper pensions board 

It's usually far easier to keep your costs low and your asset allocation diverse and representative in a SIPP

listoflists

Thanks Ed,  I was a little worried about the apocryphal stories of being eaten alive on the pensions board.... I shall dig out the original paper work and try and see if there are any guarantees listed. 

edinburgher

If you go with specific questions I'm sure you will get helpful answers. It's also worth having a think about why you're considering switching

edinburgher

Made £6.60 referring someone to a stock trading app (full disclosure, I don't stock trade)! £3.32 paid into my SIPP, £4.15 after tax relief. In the wonderful "Smarter Investing", Tim Hale writes (here I paraphrase terribly) that dribs and drabs do not a pension make, but that you have to make meaningful contributions. I don't disagree, but the dribs and drabs do add up

gallygirl

edinburgher said:

Made £6.60 referring someone to a stock trading app (full disclosure, I don't stock trade)! £3.32 paid into my SIPP, £4.15 after tax relief. In the wonderful "Smarter Investing", Tim Hale writes (here I paraphrase terribly) that dribs and drabs do not a pension make, but that you have to make meaningful contributions. I don't disagree, but the dribs and drabs do add up

It was either in Rich Dad, Poor Dad or The Secret Millionaire  (I think the former) where the author talked about a mindset where you clipped 50p coupons for hours instead of spending the same amount of time learning about investing. The principle is a good one - sometimes you need to look after the pounds, not the pennies - but i think you're like me Ed. The little 'victories' keep you focused on the end game (and can be done in seconds while still carrying on with day to day life, whereas researching etc takes time and focus which is not always available). And there is also a point where you feel 'yup, I feel confident I'm making the right decisions/investments and I'll just revisit every three months'.

What do you actually do with these payments? Do you actually pay them directly into your SIPP and invest when you have x pounds, or have them in a holding account paying a massive 0.2% interest then pay a larger lump sum into your SIPP?

edinburgher

@gallygirl - they're directly invested - I think £3 is my smallest payment to date. Usually takes a few days before the tax relief gets added, but I survive 😀

I'm comfortable enough that I understand investing, at least to the extent that I need to, its just really boring and needs constant feeding...  Agree on little actions/victories keeping me focused, definitely a thing. 

Suffolk_lass

listoflists said:

Apologies if these are numpty questions, but hoping they fit with the theme of this thread. 

1. Is there any issue with switching a ‘stakeholder with profits’ personal pension into a SIPP?  The FAQ on the company site just talk about bringing more pensions into join the fold, not moving it to another provider....

2. Is there much difference between a SIPP invested in some kind of life strategy package (e.g. Vanguard) and an offering from one of the more traditional pension companies?  

3. SIPPs seem infinitely flexible, but if the option picked is just one of the life strategy type ones, is that similar to the package from an old styley pension co where it’s a set mix of equities and bonds?  

4. Does it just come down to whether the choice of contents of the package suits the individual and the fees charged?

1. Nothing to add here - just check what you would be giving up if you switch away

2. The primary differences are that a pension fund is invested by professional fund managers and providing people continue to contribute, it is taking the long view about maintaining its assets so that the pensions it pays are sustainable and don't deplete the capital - the thing about V Life Strategies is that they are low management fee pots based on the top companies and an algorithm tracker (with the number indicating the percentage in that LS of equities or shares) - they also do target retirement funds, but I believe all the Vanguard products are passive (algorithm driven) trackers based on a portfolio of shares and bonds.

3. Some and some, as I understand it. MY DH has a pot that is now with Scottish Widows and as soon as he drew down his 25%TFLS they were obliged to move his pot into a portfolio with a more conservative, or lower risk profile and with a greater proportion of cash and bond-based (government or corporate) investments. If you mirror this in your SIPP your bond purchases will start and return from point of purchase. And you will pay whoever your platform provider is for each transaction as you change, whereas a managed fund provider will spread the cost across everyone in it plus add their human costs in a management fee.

4. On one level yes, but it assumes you understand enough about the fund you are choosing. When I stopped work I chose some strong return funds and direct shares for my ISA and mixed the capital growth with the dividend payers to see if I had understood it. I could have spread it across three funds types but I chose to be a bit more risky and see how it went. Two of the shares I chose have outpaced the funds by some margin but not all. Petrochemical choices and media have bombed. (my choices were based on reading the financial pages in the papers, reading blogs and and looking at the share holdings of several funds). I have not sold any and taken my hit (but we lost a fair bit in DH's ISA when the Woodford fund was suspended).

I think the other thing to mention is that there is a legacy in terms of the way companies are set up that goes back to the expectation that people will buy an annuity with their pot when they stop work, whereas lots of self-investors treat their pot as a dividend/income generating pot that they will see potentially deplete over their non-working phase of life and hopefully they are comfortable with that

edinburgher

Happy weekend all 

I read a sobering article this morning that stated that more money had been invested in equities in the last 5 months than the preceding 12 years and that valuations for everything are frothy.

I can absolutely agree with that viewpoint, I'm starting to get worried about the increasing number of posts from people gambling on cryptocurrencies and a slew of other alternative investments. That said, there's not much I can do about the market losing steam, except stick to the plan and buy more (cheaper). Housing markets are just as bad in nice areas (everything going to closing dates around here or mad offers of tens of % offers over).

From looking at Vanguard, I can weather a fall of roughly 30-40% without losing any actual money, I can live with that. £2 paid into my SIPP, £2.50 after tax relief. Perhaps I'm part of the problem - nowt to spend money on but bills, Internet shopping, food and drink and investments?

South_coast

Well the BoE seems to think we're all going to rush out shopping as soon as we can, so it will be interesting to see if that figure plummets over the next 5 months. Then you'll know if it's just you!