40K yearly Pension - Is it safe to have all your eggs in one basket ?

RichyB71

Dear Forum, 

It seems like general rule of thumb these days is to consolidate pensions. However when we talk about other investments people talk about having a portfolio spread across various assets. I have a good sized pension and contribute £40K per year through my limited company. The pot on retirement will be in excess of £1 million and that makes me nervous. Will it reach its potential ? Have a chosen to partner with the correct provider ? I don't expect to have a crystal ball solution to my financial future but it feels scary having one company in control of all that investment pot. I'm currently with St James Place. Performance seems to be tracking just below 5% growth per year. The fees are not transparent and I have a meeting booked to go through the historical charges. What are people's feelings about spreading investments across more than one pension provider. As discussed I'm a Limited Company owner so I don't plan to be moving from job to job in the coming years. I don't want to mess around with property, self managed stocks and shares, bitcoin, gold...etc I just want a good old fashioned pension. But one.....can I trust my future to just one company ?

bownyboy

Both mine and my wife's SIPPs are with Interactive Investor. Both in Vanguard FTSE Global All Cap and Total Bond Index. No worries here about issues. The assets are ring fenced, so if any issue with ii then yes there could be a delay in getting it transferred to a new provider, but I don't worry about it.

dunstonh

Will it reach its potential ? Have a chosen to partner with the correct provider ?

The provider is relatively straightforward.  Go with a well-capitlised provider that is profitable with no entry charges and no exit charges.

Reaching its potential will be purely down to the investments.

I'm currently with St James Place.

One of the most expensive providers with an old fashioned style product and barriers to exiting.

What are people's feelings about spreading investments across more than one pension provider. 

No need with most modern options.  

I just want a good old fashioned pension. 

And you almost have that.  It meets the old fashioned pension part of your criteria.  However, what you really need is a modern whole of market investment platform where you can diversify properly within the pension.

Old Fashioned pensions tended to have much higher charges than modern options. So, you have that as well at the moment.

But one.....can I trust my future to just one company ?

I wouldn't.   History was shown that the best provider one year wont be the best for long as another will come along.   Same with investment funds.  This is why the whole of market options are better.

RichyB71

bownyboy said:

Both mine and my wife's SIPPs are with Interactive Investor. Both in Vanguard FTSE Global All Cap and Total Bond Index. No worries here about issues. The assets are ring fenced, so if any issue with ii then yes there could be a delay in getting it transferred to a new provider, but I don't worry about it.

If you don't mind me asking whats the yearly average growth and are the charges transparent and acceptable ?

dunstonh

RichyB71 said:

bownyboy said:

Both mine and my wife's SIPPs are with Interactive Investor. Both in Vanguard FTSE Global All Cap and Total Bond Index. No worries here about issues. The assets are ring fenced, so if any issue with ii then yes there could be a delay in getting it transferred to a new provider, but I don't worry about it.

If you don't mind me asking whats the yearly average growth and are the charges transparent and acceptable ?

What Richy is doing is using a modern investment platform and modern investment funds.  Charges will be transparent and acceptable as virtually all modern platforms and unit linked funds are.   It's only on old fashioned style products where it is not transparent or even not properly disclosed unless you know what you are looking for.

kidmugsy

dunstonh, whose opinions I value greatly, is agin' diversifying across providers.  On this we disagree: I would hate to have all my money in one place, subject to possible financial or software catastrophe.  It's an even easier decision if your current provider is SJP.  I'd put my future contributions with a second provider while I pondered what to do about the money that's with your ultra-expensive chums.

dunstonh

On this we disagree: I would hate to have all my money in one place, subject to possible financial or software catastrophe. 

It's not really a matter of disagreement but of risk perception and an opinion based on the level of risk perceived.   If your chosen providers were small players or you were on legacy in-house software or the providers were unprofitable then I would likely agree with you.  Although my preferred solution would be to have one provider that isn't all of those things.  

So many of the platforms today operate from one of three software providers.  So, a software issue with one software supplier at the core level could affect all platforms that use that software.  So, diversifying providers who all use the same software is not really diversifying providers.

It is also notable that the platforms rarely run the latest version of the platform software.      This allows issues to be ironed out before they move over.  Some platforms are running versions that a good number of years behind.  Some of the platform software is modular and bits can be updated without updating all of it.  

So, if it's a risk you perceive, then fair enough. There is nothing wrong at all with diversifying providers if you prefer.   Just make sure they are not using the same software.

RichyB71

bownyboy said:

Both mine and my wife's SIPPs are with Interactive Investor. Both in Vanguard FTSE Global All Cap and Total Bond Index. No worries here about issues. The assets are ring fenced, so if any issue with ii then yes there could be a delay in getting it transferred to a new provider, but I don't worry about it.

I had a call with Vanguard just 30 mins ago. Helpful chap...bottom line was various funds are performing well, the website clearly shows how things are performing and the maximum fee was £375 for a year...but generally 0.15% of the fund. No exit fees and no entry fees for bringing in existing policies. My guess is that St James Place will be so much higher than that when I receive the information linked to historical and current charges. I do get advice from my SJP contact and yearly paper report on performance but access to an online portal and capped / reasonable fees are what I'm looking for along with a reasonable return.

bownyboy

RichyB71 said:

bownyboy said:

Both mine and my wife's SIPPs are with Interactive Investor. Both in Vanguard FTSE Global All Cap and Total Bond Index. No worries here about issues. The assets are ring fenced, so if any issue with ii then yes there could be a delay in getting it transferred to a new provider, but I don't worry about it.

If you don't mind me asking whats the yearly average growth and are the charges transparent and acceptable ?

ii charge £19.99 per month for the SIPP and ISA. A fixed fee is appropriate when your fund exceeds a certain amount (I think around £80k otherwise a % fee is better)

Peformance data is here: 
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/price-performance
https://www.vanguardinvestor.co.uk/investments/vanguard-global-bond-index-fund-gbp-hedged-acc/price-performance?intcmpgn=fixedincomeglobal_globalbondindexfund_fund_link

Anonymous101

Also I'd be much more concerned with what level of fee's SJP charge than anything else!

Although 1+1 redundancy is a good principle in many things and I wouldn't be comfortable not having at least this in pensions and ISA's regardless of ringfencing.

So finding 2 low cost pension providers would be a priority for me.

gm0

Future investment somewhere else from the SIPP spreadsheet - Vanguard, iWeb, II etc. etc.  Look at who owns it and the web facilities on your home and mobile tech and pick your poison.  Run down the clock on SJP investment exit fees.  Don't let them restructure as fresh reinvestment to reset it.

Then you can stay or go at SJP later - based on your view then on advice service, relationship, cost, net cost performance having had experience with a second offering. On this DIY heavy and moneysaving focused forum they are viewed as close to devils.  But some people buy Skodas and some people buy Audis despite a similar magnitude cost discrepancy to drive about in a car made from broadly the same parts bin.  And there are plenty of other higher net worth wealth managers that don't get stick on here as they are less mainstream (i.e. we are all too poor to be in the target customer group) so it doesn't come up.

I landed on "two platforms" not one - partly for risk/business continuity reasons (no prolonged outage to access to drawdown income in the case of corporate failure).  It costs more to run two.  I'd probably be happy at Vanguard or a single big advised platform (provided other buffers  and ISA's were elsewhere).  I had the additional reason of wanting to keep 100% insured funds at a life company but also wanting a 2nd platform with an improved range.  This last likely doesn't apply if you are at SJP.