Merge pensions for save charges?

Pat38493

Hi,

I have one DB and 2 DC pensions that were set up by my employer over the years.

Aviva pension which I do not contribute to current value £217K in "Mercer Growth / Balanced Risk FP".

Aegon pension SIPP still in contribution current value £111K in "Aegon’s MI Savings (H) (ARC)",  I am currently aggressively funding this scheme (42K this year including rollover).

I am wondering whether to transfer the Aviva one into the Aegon one.

I think the charges are not the standard ones but were negotiated by my employer.

Aegon
Admin fee 0.25% up to 250K then zero.
Fund fee 0.2% on the contract but 0.22% quoted on recent fund fact sheet (not sure which one takes priority).

Aviva
AMC 0.34% and admin fee 0.04% are the only fees quoted on annual statements.

I am thinking that by transferring the Aviva across, I could theoretically save 0.16% charges per year on about half of it straight away, and also cap the management charge on all my future contributions at zero.

I would need to check this but I believe that it was negotiated to have zero transfer out fees from the Aviva when they changed to Aegon - certainly this was the case at the time if you took the option immediately.

On the flip side, I guess there could be an advantage to having 2 pensions with slightly different fund mix and maybe not worth it just to save maybe a couple of hundred quid a year which could easily be cancelled out by market movements on one or other schemes?

I would be interested in thoughts/comments on this?

Also as a side question - when I retire and start drawing the funds, will I then have to negotiate charges as a single customer and no longer get the company charge rates that were negotiated by my employer?

dunstonh

Aegon
Admin fee 0.25% up to 250K then zero.
Fund fee 0.2% on the contract but 0.22% quoted on recent fund fact sheet (not sure which one takes priority).

Fund factsheets are generic and display the maximum charge.   They do not included any discounted charge or newer pension versions that may be cheaper.

I would need to check this but I believe that it was negotiated to have zero transfer out fees from the Aviva when they changed to Aegon - certainly this was the case at the time if you took the option immediately.

It is rare to have any exit charges on plans from the last 20 or so years.

On the flip side, I guess there could be an advantage to having 2 pensions with slightly different fund mix and maybe not worth it just to save maybe a couple of hundred quid a year which could easily be cancelled out by market movements on one or other schemes?

If you want to mix funds then you can do that within one pension contract.

I would be interested in thoughts/comments on this?

Aegon is one of those that can be cheap but their servicing also reflects that.      

Also as a side question - when I retire and start drawing the funds, will I then have to negotiate charges as a single customer and no longer get the company charge rates that were negotiated by my employer?

Depends on which Aegon pension version you have. A number of them do not support drawdown or the full range of drawdown methods.

Pat38493

dunstonh said:

Aegon
Admin fee 0.25% up to 250K then zero.
Fund fee 0.2% on the contract but 0.22% quoted on recent fund fact sheet (not sure which one takes priority).

Fund factsheets are generic and display the maximum charge.   They do not included any discounted charge or newer pension versions that may be cheaper.

I would need to check this but I believe that it was negotiated to have zero transfer out fees from the Aviva when they changed to Aegon - certainly this was the case at the time if you took the option immediately.

It is rare to have any exit charges on plans from the last 20 or so years.

On the flip side, I guess there could be an advantage to having 2 pensions with slightly different fund mix and maybe not worth it just to save maybe a couple of hundred quid a year which could easily be cancelled out by market movements on one or other schemes?

If you want to mix funds then you can do that within one pension contract.

I would be interested in thoughts/comments on this?

Aegon is one of those that can be cheap but their servicing also reflects that.      

Also as a side question - when I retire and start drawing the funds, will I then have to negotiate charges as a single customer and no longer get the company charge rates that were negotiated by my employer?

Depends on which Aegon pension version you have. A number of them do not support drawdown or the full range of drawdown methods.

It’s a SIPP that allows employer contributions set up in 2017 - not sure if that tells you what “version” it is?   I can see all the summary information in Retireready but I have also been given a login for ARC and it appears that I have the full SIPP with thousands of options listed.  It is gated into 5 gates and it says I am in gate 1 which limits my investment choices but I think I can override that.

in any case up to now I just left it all in the employer default recommendation.  

The documentation given by my employer said that the reason they were switching us to this was to give us the full new pension flexibilities.   I am not 55 yet so I wouldn’t expect it to offer me any withdrawal facilities.

dunstonh

It’s a SIPP that allows employer contributions set up in 2017 - not sure if that tells you what “version” it is? 

If its the SIPP then you have a pretty full range of funds.  Not as much as many other platforms but enough for inexperienced to middle experienced investors.  Its not quite a full SIPP but more in line with the older fund supermarket personal pensions.

  I can see all the summary information in Retireready but I have also been given a login for ARC and it appears that I have the full SIPP with thousands of options listed.

RR is a heavily cut down product.  ARC is the better of the two.  ARC does offer full functionality. Just pretty naff software.

Pat38493

dunstonh said:

It’s a SIPP that allows employer contributions set up in 2017 - not sure if that tells you what “version” it is? 

If its the SIPP then you have a pretty full range of funds.  Not as much as many other platforms but enough for inexperienced to middle experienced investors.  Its not quite a full SIPP but more in line with the older fund supermarket personal pensions.

  I can see all the summary information in Retireready but I have also been given a login for ARC and it appears that I have the full SIPP with thousands of options listed.

RR is a heavily cut down product.  ARC is the better of the two.  ARC does offer full functionality. Just pretty naff software.

OK but I am pretty sure it must have drawdown and PCLS capabilities - I should hope so because that was the main selling point from my employer when they wanted to switch us all over (obviously their real motivation was to reduce their admin costs but it's clearly stated in all their slides that we would have full pension flexibilities and so on).

Previously I thought a SIPP was a specific thing but I guess you are saying that a SIPP can be whatever the provider defines it to be so some may offer access to more products than others.  I thought the whole idea of a SIPP is that you have access to the entire market.

What about the charge % for my pensions I mentioned above - would you see that as reasonable for the current rates?

dunstonh

OK but I am pretty sure it must have drawdown and PCLS capabilities - I should hope so because that was the main selling point from my employer when they wanted to switch us all over (obviously their real motivation was to reduce their admin costs but it's clearly stated in all their slides that we would have full pension flexibilities and so on).

I think they do all drawdown options except automated regular UFPLS.

Previously I thought a SIPP was a specific thing but I guess you are saying that a SIPP can be whatever the provider defines it to be so some may offer access to more products than others.  I thought the whole idea of a SIPP is that you have access to the entire market.

The water has been muddied by providers using "SIPP" as a marketing name.   SIPPs typically were a pension type that allowed you to pick funds, listed stocks and shares, bonds etc and invest in property etc.  Effectively, if it was allowed in a pension, then a SIPP would offer it.    However, in recent times you have seen providers with restricted own-brand funds only referring to their pension as a SIPP as, thanks to the marketing of certain DIY platforms over the years, SIPP has become a fashionable word.

What about the charge % for my pensions I mentioned above - would you see that as reasonable for the current rates?

Charges are fine.  We have special terms with aegon too.  We present Aegon ARC to clients as the cheap and cheerful option but be prepared for admin hassle.    The vast majority of our clients do not pick them as they don't want that hassle.   Indeed, one that did pick them wanted a withdrawal out last week but it required a paper form to do it.  That is just so unusual nowadays.   The paper form was rejected by Aegon and had to be sent again.   What would have taken minutes with other platforms ended up taking over a week.

So, you need to decide what price you put on the quality of software and service.

Albermarle

You should retain the employer discount, even if you leave that employment/retire.
However some providers charge more for their drawdown product, than for the pension in accumulation.
Probably will not be a lot, if anything, but might be worth checking before taking the plunge.
One advantage of keeping two pensions for now is you can test out the customer service. For example ask them both the question about extra drawdown charges, and see how quickly you get a response.
Plus you can see what you think of their website functionality etc

Pat38493

dunstonh said:

I think they do all drawdown options except automated regular UFPLS.

Charges are fine.  We have special terms with aegon too.  We present Aegon ARC to clients as the cheap and cheerful option but be prepared for admin hassle.    The vast majority of our clients do not pick them as they don't want that hassle.   Indeed, one that did pick them wanted a withdrawal out last week but it required a paper form to do it.  That is just so unusual nowadays.   The paper form was rejected by Aegon and had to be sent again.   What would have taken minutes with other platforms ended up taking over a week.

So, you need to decide what price you put on the quality of software and service.

Automated regular UFPLS means if I want to take a monthly payment which is always a UFPLS?

When you say a withdrawal, this is just taking some money out from the drawdown fund (or a UFPLS payment) required them to send a paper form to Aegon?  I can see why this might be needed if it's the first time you ever do it but once you are established it seems a bit strange.

My impression was that the Aviva "Membersite" is even worse than the ARC one - it seems to offer a lot less funds, and it also seems to be not available for days at a time with no indication of when it will work again.  Also the "documents" section only seems to list documents since some time in 2021 - all my original contracts and setup stuff is not there.

ARC - seems a bit clunky but i have not actually tried to do anything with it yet other than just poke around and look at the number of options available.  Since I don't have any other pensions I don't have somethign to compare it with but I can always move it out later when I want to start accessing the benefits.  

Pat38493

Albermarle said:

You should retain the employer discount, even if you leave that employment/retire.
However some providers charge more for their drawdown product, than for the pension in accumulation.
Probably will not be a lot, if anything, but might be worth checking before taking the plunge.
One advantage of keeping two pensions for now is you can test out the customer service. For example ask them both the question about extra drawdown charges, and see how quickly you get a response.
Plus you can see what you think of their website functionality etc

Yes well I guess doing a transfer right now wouldn't save me much because I will be paying more charges on some of it and less on the rest.  Once I have put a lot more into the Aegon one it might be more worthwhile.

dunstonh

Automated regular UFPLS means if I want to take a monthly payment which is always a UFPLS?

Yes.  each monthly payment would be split between 75% taxable and 25% tax free.      For those that do not support regular UFPLS, you would get around that by doing ad-hoc UFPLS (maybe once a year for the annualised amount).

When you say a withdrawal, this is just taking some money out from the drawdown fund (or a UFPLS payment) required them to send a paper form to Aegon?  I can see why this might be needed if it's the first time you ever do it but once you are established it seems a bit strange.

Aegon's ARC software is less advanced than other platforms and that is from the adviser side.  From the consumer side, it is even more restricted.

My impression was that the Aviva "Membersite" is even worse than the ARC one - it seems to offer a lot less funds, and it also seems to be not available for days at a time with no indication of when it will work again.  Also the "documents" section only seems to list documents since some time in 2021 - all my original contracts and setup stuff is not there.

Like Aegon, Aviva run multiple pension product types.  Their main platform pension is more advanced than Aegon and is paperless.  However, most of their other contracts are restricted or more manual with processing.

In most cases, those that intend to DIY are often best served by using a platform that is geared to DIY investors.   Those that are mostly geared for intermediaries tend to be quite poor for DIY investing.   And those aimed at auto-enrolment tend to be quite basic.   You could get charges in the same ballpark by looking at some of the DIY platforms

Pat38493

dunstonh said:.   You could get charges in the same ballpark by looking at some of the DIY platforms

Such as?

If I look up "DIY pension platforms" there is a lot of stuff that comes up.

I'm guessing you mean companies like Vanguard / AJ Bell / Fidelity?

I actually already have some small share holdings in an AJ Bell account (but not in a pension wrapper).

I am not sure about it yet but I am yet to be convinced that I need to spend thousands more each year for an IFA to look after my finances for me when that will be a significant % of my annual spend and presumably, being retired, I have time to research it all myself.  I guess because I am quite interested in financial matters and although I'm not an accountant, I spent quite a few years implementing IT financial systems and I know my way a bit around debits and credits and so on, it's not completely outside my skillset to learn about it.