Transfer out of People's Pension - no brainer?

Genevieve29

My son is 21, has worked since leaving school and is now off to university. He has £4000 in a pension with People's Pension.

Am I right in thinking it's a no brainer to transfer it to a SIPP with AJ Bell or Vanguard? And if so, to an adventurous portfolio given his age? 

dunstonh

Am I right in thinking it's a no brainer to transfer it to a SIPP with AJ Bell or Vanguard?

No.

And if so, to an adventurous portfolio given his age? 

In isolation of other facts then at the upper end of the scale, yes.  However, does he understand that he will lose half his value periodically and it may take 5-10 years to recover and not to worry about that?

Genevieve29

OK. So what's good about People's Pension? From what I've read the fund choices are limited. The charges didn't look particularly competitive either but maybe I'm missing something. 

dunstonh

So what's good about People's Pension? 

It is simple and you cannot make any real mistakes with it, unlike a SIPP.   At 21, he is still a kid and likely to be easily swayed.

The charges didn't look particularly competitive either but maybe I'm missing something. 

0.50% all in on a small pension fund is not expensive.

Albermarle

Actually 0.5% all in is competitive. A difference of 0.1% or so in charges is hardly worth worrying about when the value of the investment could change by 10% in a day. 

 And if so, to an adventurous portfolio given his age? 

The Shariah fund with PP is pretty adventurous.

Genevieve29

dunstonh said:

So what's good about People's Pension? 

It is simple and you cannot make any real mistakes with it, unlike a SIPP.   At 21, he is still a kid and likely to be easily swayed.

The charges didn't look particularly competitive either but maybe I'm missing something. 

0.50% all in on a small pension fund is not expensive.

OK. That makes sense. Going back to your earlier point, he does understand about losing significant value periodically, how long it can take to recover and not being worried by it.

We talk about financial stuff pretty often and openly ('kids' aged 16-21) and I've taken the opportunity that the last three years has provided to emphasise that point in particular plus the importance of diversification, investing in what's appropriate for the term you're looking at etc.

I know there is some fund choice with PP. So I'll get him to think about whether there's a different fund that better suits his circumstances.

Brie

Albermarle said:

Actually 0.5% all in is competitive. A difference of 0.1% or so in charges is hardly worth worrying about when the value of the investment could change by 10% in a day. 

 And if so, to an adventurous portfolio given his age? 

The Shariah fund with PP is pretty adventurous.

How does that work??  I've never got into any Shariah products.

xylophone

How does that work??  I've never got into any Shariah products.

https://thepeoplespension.co.uk/investments/shariah-fund-factsheet/

cobson

Note that if you want to invest in the Shariah fund then you must put all of your pension into it, you can't split it with other funds.

Albermarle

xylophone said:

How does that work??  I've never got into any Shariah products.

https://thepeoplespension.co.uk/investments/shariah-fund-factsheet/

From an investment point of view it is heavily weighted to US tech stocks. So has done very well until some downward correction this year. There is also a more diversified 100% equity global fund. It has not performed as well as some other global trackers in recent years, probably because the US% is not as high as usual . 50% instead of the more usual 60 to 65%.
That lower US % may or may not be an advantage going forward,