Why can't I transfer out of employer's pension into Vanguard consolidated pot? 11 January at 2:00PM in Pensions, annuities & retirement planning 26 replies 1.1K views

KirstenNeilson

My employer's provider BC&E people's pension only has a choice whereby you choose what % of your pot is invested in stocks and which is just money.  So I have selected 100% stocks.  

Albermarle

KirstenNeilson said:

My employer's provider BC&E people's pension only has a choice whereby you choose what % of your pot is invested in stocks and which is just money.  So I have selected 100% stocks.  

Peoples pension also has funds with 85% and 60% equity/shares, where the rest of the fund is made up of bonds/gilts/fixed interest investments. So similar to Vanguard Life strategy 60 and 80.
Investment funds - The People's Pension (thepeoplespension.co.uk)

KirstenNeilson

Yes.  I want more choice though/info though.  Why can't I just put it all in the S&P500 like I can with Vanguard? Why do I have to go with what stocks BC&E choose?

Prism

KirstenNeilson said:

Yes.  I want more choice though/info though.  Why can't I just put it all in the S&P500 like I can with Vanguard? Why do I have to go with what stocks BC&E choose?

There is nothing you can do. Your company has decided to go with a pension provider that doesn't offer an S&P 500 fund (not many do) and doesn't allow partial transfers. Its still usually worth using a workplace pension over a SIPP though for the possible tax advantages and company contributions.

dunstonh

KirstenNeilson said:

Yes.  I want more choice though/info though.  Why can't I just put it all in the S&P500 like I can with Vanguard? Why do I have to go with what stocks BC&E choose?

Technically, putting it all in the S&P500 would be a bad move.     Many occupational schemes dont want to give you too much in case you make mistakes like that.

 Why do I have to go with what stocks BC&E choose?

B&CEs pension is aimed at the smaller employer.at a low cost.   That means keeping costs down and offering a simple solution that caters for 95% of their market.

mark_cycling00

i know it's not ideal.

Your employer has to integrate their payroll system with the pension provider. This isn't easy and has to include all sorts of scenarios such as paid and unpaid leave, bonuses, buying/selling holidays, negotiating notice periods, plus calculate all the changes to employment taxes due to changes in contributions etc etc. and the pension company has to keep their fees low.

Your pension only becomes profitable after a couple of years. So if you could transfer it at any time the fees would need to increase to cover this scenario. 

LHW99

You could put enough in the employer's scheme to get their maximum contribution, and then put any additional amount into your Vanguard scheme. No harm in having two pots.

artyboy

LHW99 said:

You could put enough in the employer's scheme to get their maximum contribution, and then put any additional amount into your Vanguard scheme. No harm in having two pots.

Although bear in mind that if the employer's scheme operates on a salary sacrifice basis, the OP could be losing out on the additional NI saving they would get from that.

Brie

Alternative is to quit the employer scheme and then transfer it to Vanguard.  That way you'd have control of the pot your currently have accumulated.  The downside is going forward you won't have your employer's contributions to your pension as you're not in their scheme.  Until you are auto enrolled perhaps in 3 years time.  Is the control worth losing 3 years of your employer's ££??

KirstenNeilson

Hmm, so as I suspected, it's basically a racket - BC&E don't let you move money out as everyone would do that! 

Interested as to why a pp thought it was a mistake to put it all in S&P500?  
My consolidated pot is VWRL so that would be my alternative.