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Why can't I transfer out of employer's pension into Vanguard consolidated pot?

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  • dunstonhdunstonh Forumite
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    Hmm, so as I suspected, it's basically a racket - BC&E don't let you move money out as everyone would do that! 
    No it is not a racket.   The vast majority of pensions do not allow partial transfers. 

    Interested as to why a pp thought it was a mistake to put it all in S&P500?  
    As a UK investor, your investments are priced in sterling.  The fall in sterling and rise in the dollar has made the S&P500 appear better than it has actually been.   However, as the dollar will start to fall and sterling rise again, this will offset the gains in the S&P500.   Effectively, the things that made the S&P500 do better than it actually did will unwind and it will do worse in the next cycle.

    Typically those buying 100% in the S&P500 don't know what they are doing and are only doing it because of recent past performance.   It is a mistake to buy that way.


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • gm0gm0 Forumite
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    As to S&P500 - I believe the argument is that this is arguably too short a stock list.  An over concentration of equities exposure to a single country i.e. US market.  And to large capitalisation stocks within that single geography. 

    A "hold the world" long list of stocks investor in equities would prefer to take VWRL or similar as you have and then, to taste, add more funds to add more stocks and increase diversification within equities still further i.e. beyond global developed markets.   Emerging Markets, Small Capitalisation, Single country funds being other possibilities for additions and tilts.  Once overlaps and tilts appear as well as longer stock lists - this is mildly active investing.  Of which - just buy the S&P500 would be an extreme tilt to USA and Large away from all others.

    So I think many UK investors with a broadly passive outlook would do as you have with VRWL (Global developed markets by cap at weight) which is still ~50% US +/-). 

    The fact going heavy on the US would have been a good bet since the GFC and CAPE is what it is - does not make it true (or untrue) in the future. So it depends on your beliefs, and objectives and what kind of risks you want to try to manage or carry  (equities speculative, single country economies, currency FX).  It's not right or wrong.  Just a choice of different exposure and risk carried.

  • KirstenNeilsonKirstenNeilson Forumite
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    Thanks all. 

    I'm not singling out BC&E specifically as a racket.  All pension providers which don't allow transfers are rackets imho. What happened to competition and free markets?

    Yes my preference is VWRL going forward. 
  • AlbermarleAlbermarle Forumite
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    I'm not singling out BC&E specifically as a racket.  All pension providers which don't allow transfers are rackets imho. What happened to competition and free markets?

    You can transfer out of Peoples Pension ( or any other DC scheme) once you leave that employer.

    The PP has very low charges, so they have to keep costs down by keeping things as simple as possible. The large majority of their customers are better off with low charges and limited choice/flexibility.

  • PrismPrism Forumite
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    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. 
    Scottish Widows, a major supplier of workplace pensions, does allow transfers out but I would bet almost nobody does it. Its not a feature that many people want as one platform is very much like another unless you want to access to a wide variety funds - something thing Vanguard doesn't offer but other SIPPs do.
  • gm0gm0 Forumite
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    Partial transfer was never that common a feature of the pre-A day occupational pension then annuity scene. 

    And trusts have been slow to get drawdown added and the market has been slow to offer it to them as an admin service at a good common platform price. Can get away with pointing to the full transfer out exit door.  So chicken and egg.  
    Offering limited.  Trustees not pushing hard. 

    Partial transfer can turn up when drawdown is added at regular admin contract renewal.  My own main DC scheme has been around for 33 years.  For 30 of them it did not support partial transfer.  But now it does.
    I used it for exit to multiple drawdown destinations leaving some as is.  I don't know for sure how they handle existing employees over it and whether it can now be used for reinvestment sweeps to SIPP while maintaining membership). But the feature clearly now exists.

    My overall take is that one can be in too much of a hurry to move through a one way door. 

    I quite like my old restricted range occupational trust scheme.  It's the cheapest pension investment platform I have - so why not use it.  And one of the reasons it is so cheap for the member is that the trustees have *not* been in a hurry to specify a more feature rich service which competes with marketed to consumer DIY platforms.  It does what it needs to.  And not a lot more.
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