Scottish Widows Pension Portfolio One

Adventure123

I have noticed that over the past 5 years that the above fund, which is 100% in equities, has performed very similar to Lifestrategy 60% (60% equities / 40% bonds).  Something like 35% over the past 5 years, which doesn't seem great.    I changed from their Pension Portfolio Two fund about 18 months ago.  I want to be reasonably aggressive with my pension because I am in my early thirties.  My employer very recently introduced salary sacrifice;  I am taking advantage of that because, with the student loan, national insurance hike and 40% tax, I probably lose over 50% of salary to tax if I didn't. 

I was informed that Scottish Widows charge 0.54% all in for this, which i suppose is 'O.K' but it seems if I want to choose another fund on their website that the charges would be much higher (the alternative funds seem more expensive than the same funds on, for example, other ISA and SIPP platforms). 

I am acutely aware that the reason for 'underperformance' is largely because of the higher UK allocation and the relatively low US allocation (and possibly also it's actively managed even if the funds chosen are trackers).  Obviously, it may be the case that the fund performs better over the next five years if the UK is deemed cheap and outperforms.

I have read somewhere that it's possible to periodic transfers of the money in the employer pension to a SIPP; I have a very small SIPP on Vanguard which I opened last year.  How does one do this and can anyone comment on how to do this with Scottish Widows specifically?  I obviously want to continue paying into the work place pension using salary sacrifice, as i gather you cannot take advantage of this and direct pay into a SIPP. 

So my questions are: 

1. Should I stick with Pension Portfolio One

2. If not, how can I sensibly change it

Thanks. 

dunstonh

I was informed that Scottish Widows charge 0.54% all in for this, which i suppose is 'O.K'

0.54% is fine.  Its not just ok.

but it seems if I want to choose another fund on their website that the charges would be much higher (the alternative funds seem more expensive than the same funds on, for example, other ISA and SIPP platforms). 

If your SW pension is bundled then you need to remember that if you are comparing it to unbundled options.  (i.e. mono charged plans have a single charge whereas unbundled plans have platform charge and fund charge).   Also, the pension fund will include TC & IC whereas the investment platforms need to include them on top.

 (and possibly also it's actively managed even if the funds chosen are trackers).

If the underlying funds are trackers then there is no management on the fund level.  However, there are management decisions made on the asset allocation (just the same as similar multi-asset options).

How does one do this and can anyone comment on how to do this with Scottish Widows specifically? 

Before process is discussed, it would probably be a good idea to find out if your employer allows it and SW allow it.  If either of them do not then you haven't wasted your time finding out the process.

Adventure123

dunstonh said:

I was informed that Scottish Widows charge 0.54% all in for this, which i suppose is 'O.K'

0.54% is fine.  Its not just ok.

but it seems if I want to choose another fund on their website that the charges would be much higher (the alternative funds seem more expensive than the same funds on, for example, other ISA and SIPP platforms). 

 (and possibly also it's actively managed even if the funds chosen are trackers).

If the underlying funds are trackers then there is no management on the fund level.  However, there are management decisions made on the asset allocation (just the same as similar multi-asset options).

How does one do this and can anyone comment on how to do this with Scottish Widows specifically? 

Before process is discussed, it would probably be a good idea to find out if your employer allows it and SW allow it.  If either of them do not then you haven't wasted your time finding out the process.

If your SW pension is bundled then you need to remember that if you are comparing it to unbundled options.  (i.e. mono charged plans have a single charge whereas unbundled plans have platform charge and fund charge).   Also, the pension fund will include TC & IC whereas the investment platforms need to include them on top.

For example, the Baillie Gifford Managed Fund usually has OCF of 0.42%.  SW Baillie Gifford Managed Pension has, according to Trust next (charge not mentioned on SW), a OCF of 1.31%.

Do you have a theory as to why there is a difference?  

Albermarle

Firstly if you have the BG managed fund in a SIPP, there will be a platform/management  charge to add , typically 0.3%.
Your pension probably has just one charge for the fund and the management charge together.
Many workplace pensions have big discounts from the published charges, negotiated by the employer.
You probably need to dig a bit deeper.

There can still be differences, but no special theory needed. Like baked beans or petrol, it is a free market and the providers set the charges they think appropriate for them. 

michaels

I have transferred work SW into II in a couple of tranches, just request it from II.  IN SW 2 I was paying 1% (old scheme), in II global tracker including platform fees is less than 0.15%.  Over 50+ years with a reasonable pot it makes 10s-100s of k difference.

dunstonh

For example, the Baillie Gifford Managed Fund usually has OCF of 0.42%.  SW Baillie Gifford Managed Pension has, according to Trust next (charge not mentioned on SW), a OCF of 1.31%.

BG Managed fund in OEIC form doesn't just have a charge of 0.42%
OCF 0.43% plus TC of 0.15% plus IC of 0.00% = 0.58% is the total OEIC charges
You then need to add your platform charges on top to make it comparable to the pension fund charges. 

You don't expect SW pensions to be cheap but make sure you are not looking at generic pricing.  i.e. the fund factsheet.   Many workplace pensions are cheaper than factsheet pricing.  Factsheets use the maximum default before discounting.

Albermarle

You don't expect SW pensions to be cheap

The one I have has a platform charge of 0.17% and the basic funds ( including a passive multi asset one)  only cost 0.1%.

It is an ex Zurich workplace pension ( bought out and rebranded by SW, but still seems to operate separately) and it was with a very large employer.

dunstonh

Albermarle said:

You don't expect SW pensions to be cheap

The one I have has a platform charge of 0.17% and the basic funds ( including a passive multi asset one)  only cost 0.1%.

It is an ex Zurich workplace pension ( bought out and rebranded by SW, but still seems to operate separately) and it was with a very large employer.

Zurich used to throw discounts around very easily.   Maybe that is why they ended up pulling out.   However, the new owner has to honour the pricing.

Albermarle

dunstonh said:

Albermarle said:

You don't expect SW pensions to be cheap

The one I have has a platform charge of 0.17% and the basic funds ( including a passive multi asset one)  only cost 0.1%.

It is an ex Zurich workplace pension ( bought out and rebranded by SW, but still seems to operate separately) and it was with a very large employer.

Zurich used to throw discounts around very easily.   Maybe that is why they ended up pulling out.   However, the new owner has to honour the pricing.

Yes they seem to be doing that. There is a small increase in charges if you go into drawdown but it is still very cheap. However the website is clunky, and customer service response very slow. My two other DC pensions/SIPPs have a little bit higher charges, but respond quickly to queries and have much better websites . In accumulation the clunky website/poor service is not so important, but I think when I do start to drawdown, I will grit my teeth and use one of the other ones.