Thinking of Transferring to Interactive Investor

Dew_2

I have a SIPP with Aegon that's currently worth c£236k. It's in an old style pension called an Aegon Flexible Pension that doesn't support drawdown.  Funds are mainly split between a North American Fund, UK Smaller Companies and Property. I pay £620 a month into it inc. tax relief. It's currently down around 6.4% since January but has been lower.

I'd like to transfer this pension to Interactive Investor and am thinking about their Vanguard Life Strategy 80% Equity fund. I'm 56 and am aiming to retire in just under 3 years  time. I'll be then taking c£12k a year out via drawdown, or if markets haven't recovered then my partner and I will use savings instead.  A couple questions please:

1. Is it better to do the transfer in a falling or rising market, or doesn't it matter?

2. Has anyone any experience of Vanguard Life Strategy 80% Equity fund and if so, is it any good?

TIA

Albermarle

Presume the Aegon pension is not a workplace pension, with employer contributions ?

Nobody can say whether VLS 80 is good or bad for you. It depends on your objectives and risk tolerance.
Otherwise it has some direct, very similar competitors( HSBC global strategy Adventurous/Dynamic for example) and many other ways of setting up a medium/high risk- low cost portfolio.

 It's currently down around 6.4% since January but has been lower.

Which is typical/ less than most pension pots.

Linton

2) If your current investments are 100% equity funds then it would be usual to reduce the % at drawdown to something like 60% equity, 40% non equity to reduce the volatility.  So 80% equity seems a bit half hearted.  What is your objective in choosing that number?

Us nerds may have technical issues with Vanguard VLS 80 but in principle it is fine, it does what it says it does.  The question is what do you want it to do?

Although you did not raise the issue I would question whether £12K/year drawdown  rising with inflation, for say 35 years is sustainable in the long term from a pot of perhaps £260K.  Or will the £12K be largely replaced by State Pension when you are 68?  Do you have other income?  If you have a drawdown plan it may be possible to develop an equity/non equity allocation based on when you need the money.  For example the money you may need in say 25 years time could reasonably be held in 100% equity funds whereas you may wish for that to be taken during the first 5 years be held in cash or very cautious investments.

Dew_2

Thanks Linton.  Tbh, I'd be fine going with 100% equity but can't see any ready packaged option for that on II.  I will have another small works pot of c£40k to add to the II SIPP. 
My OH will be contributing £1600 per month from a mixture of savings and one of his pension pots.  Plus we'll have a rainy day fund of £50k.
We'll both get full state pension at 67 and he'll start accessing another another DB pension then. 

Dew_2

Albermarle said:

Presume the Aegon pension is not a workplace pension, with employer contributions ?

Nobody can say whether VLS 80 is good or bad for you. It depends on your objectives and risk tolerance.
Otherwise it has some direct, very similar competitors( HSBC global strategy Adventurous/Dynamic for example) and many other ways of setting up a medium/high risk- low cost portfolio.

 It's currently down around 6.4% since January but has been lower.

Which is typical/ less than most pension pots.

Hi Albermarle, the pension with c£236k in is not a works pension. I currently have a small work pension with c£25k in it that my employer pays £450  a month into.

Does it matter when you transfer? I'm guessing probably not!  I'd like to make one off contributions into the Aegon pension but it means printing off multiple pages and posting it so would like to move to a platform that allows for online transactions.

Linton

There is a vast choice of 100% equity funds.  The obvious one is Vanguard Life Strategy 100 but there are plenty of other and arguably better choices.  WIth II you will be able to choose from almost any mainstream fund  that you could want, there are 1000's available - for example it does include the Aegon UK Smaller Companies Fund.  You could if you wanted duplicate the allocation of your current portfolio

QrizB

Dew_2 said:

Thanks Linton.  Tbh, I'd be fine going with 100% equity but can't see any ready packaged option for that on II.

There are several 100% equity options on the II platform; even a choice of Vanguard funds, including VLS100. (Not a recommendation; many people think there are "better" 100%-equity options than VLS100.)

Albermarle

Tbh, I'd be fine going with 100% equity but can't see any ready packaged option for that on II. 

Must say that it seem a little odd that you are happy with 100% equity getting near retirement, as it is normally too high risk for most people to stomach at that stage in life. It is not actually necessarily a bad choice, but one you would normally see from more experienced investors as part of a wider investment strategy 
On the other hand you do not seem very well informed about 100% equity investment options, which you would expect for someone going down this route.

On a more practical note, the only issuing about transferring, is that if you transfer in cash , which you may well have to do, then the market may go up or down in the few days you are not invested.
The alternative is to transfer 'in specie' which means  transferring the actual investments across, so you are never out of the market. Two points to consider here. You can only do this if both pension providers have the investment available on their platforms. If you do do it it can be a bit long winded (months rather than weeks).

Dew_2

QrizB said:

Dew_2 said:

Thanks Linton.  Tbh, I'd be fine going with 100% equity but can't see any ready packaged option for that on II.

There are several 100% equity options on the II platform; even a choice of Vanguard funds, including VLS100. (Not a recommendation; many people think there are "better" 100%-equity options than VLS100.)

Thanks QrizB, I need to investigate further.

Dew_2

Albermarle said:

Tbh, I'd be fine going with 100% equity but can't see any ready packaged option for that on II. 

Must say that it seem a little odd that you are happy with 100% equity getting near retirement, as it is normally too high risk for most people to stomach at that stage in life. It is not actually necessarily a bad choice, but one you would normally see from more experienced investors as part of a wider investment strategy 
On the other hand you do not seem very well informed about 100% equity investment options, which you would expect for someone going down this route.

On a more practical note, the only issuing about transferring, is that if you transfer in cash , which you may well have to do, then the market may go up or down in the few days you are not invested.
The alternative is to transfer 'in specie' which means  transferring the actual investments across, so you are never out of the market. Two points to consider here. You can only do this if both pension providers have the investment available on their platforms. If you do do it it can be a bit long winded (months rather than weeks).

I'm coming at 100% equity from the POV that hopefully the fund would continue to grow. I'll look into in specie. Never heard of it, thank you. I totally admit to not being clued up..Linton said:

There is a vast choice of 100% equity funds.  The obvious one is Vanguard Life Strategy 100 but there are plenty of other and arguably better choices.  WIth II you will be able to choose from almost any mainstream fund  that you could want, there are 1000's available - for example it does include the Aegon UK Smaller Companies Fund.  You could if you wanted duplicate the allocation of your current portfolio

Replicating my current portfolio is an option. Thank you for the heads up re. The Aegon UK SMC fund.

dunstonh

 I'll look into in specie. 

I will save you the effort.  You cant use inspecie.

The Aegon Flexible pension plan is a circa 2005-2012 personal pension that uses insured funds only available from Aegon.  It was a cheap pension in its time but is dated by today's standards.  It has some comparable options to VLS and in some cases, can come in cheaper but the lack of drawdown functionality is going to be a blocker.

Tbh, I'd be fine going with 100% equity but can't see any ready packaged option for that on II. 

You don't need a multi-asset fund then. A global equity fund will do the job and would be cheaper.