Partial transfer of workplace pension with Aviva to Vanguard SIPP

bd10

Hi all,

My workplace pension (salary sacrifice DC with no further benefits) is with Aviva which I intend to transfer to Vanguard (I started my own SIPP with them recently). My employer would not redirect my future salary sacrifice and their contributions to Vanguard so, the pension account with Aviva would still need to stay in place.

I read here on previous and similar threads that Aviva does allow transfers out and are pretty swift doing so. Could I assume similiar experience when requesting a partial transfer, i.e. the invested balance up to the date of transfer? I'll quiz them in detail on any exit charges and transaction costs as they would have to sell my investments to transfer it in cash. I'll deal with that next week.

Meanwhile, how do I go about instructing Vanguard? They outlined the process in a straight forward way but I could not see anything mentioned regarding a partial transfer in. How can I make sure that if Vanguard is initiating the process that they do not request a complete transfer?

Thanks in advance!

Albermarle

 My employer would not redirect my future salary sacrifice and their contributions to Vanguard so, the pension account with Aviva would still need to stay in place.

That is entirely normal. Employers do not want the hassle of sending contributions to multiple different schemes. Plus they will have some sort of agreement with Aviva.

I read here on previous and similar threads that Aviva does allow transfers out and are pretty swift doing so. Could I assume similiar experience when requesting a partial transfer, i.e. the invested balance up to the date of transfer? I'll quiz them in detail on any exit charges and transaction costs as they would have to sell my investments to transfer it in cash. I'll deal with that next week

Probably no transfer charges or transaction costs, but IF they do allow partial transfers, I am pretty sure you would have to name a figure, rather than 'invested balance at the time of transfer' 

Meanwhile, how do I go about instructing Vanguard? They outlined the process in a straight forward way but I could not see anything mentioned regarding a partial transfer in. How can I make sure that if Vanguard is initiating the process that they do not request a complete transfer?

First you need to be sure they accept partial transfers and then discuss the mechanics with them. When I did a partial transfer into another provider there was the facility to enter a value other than the full value.

Out of interest what is the motivation for transferring? Often employer schemes with rebates can be quite competitive on charges, and Aviva pensions have a reasonable choice of investment funds.

Pat38493

Have you checked that the Aviva fund you are using allows partial transfers out?  I've read on other threads here that some older schemes don't, and just saying it's "Aviva" doesn't confirm one way or the other as Aviva have lots of different legacy or acquired schemes with various different rules.

dunstonh

 My employer would not redirect my future salary sacrifice and their contributions to Vanguard so, the pension account with Aviva would still need to stay in place.

That is normal.   You would need to opt out of the workplace pension and the employer would have to volunteer to pay into your pension directly.  That would increase their administration. 

In addition, Vanguard is quite a restricted offering and they do not accept employer contributions.

I read here on previous and similar threads that Aviva does allow transfers out and are pretty swift doing so. Could I assume similiar experience when requesting a partial transfer

No you cannot assume that.    Aviva are very quick at doing full transfers but not all of the schemes they have offer partial transfers.

 I'll quiz them in detail on any exit charges and transaction costs as they would have to sell my investments to transfer it in cash. I'll deal with that next week.

So, you don't actually know the terms of your workplace pension but have chosen to transfer it anyway. Have you checked to see if there are suitable investments in the workplace pension (most offer trackers nowadays along with a range of multi-asset funds with underlying passives).  It may be cheaper than Vanguard.  I have seen Aviva plans invested in trackers at a total cost of under 0.2%.

bd10

Thanks for your input!

@Albermarle

One factor is costs. I know Aviva does offer rebates, I even asked HR to look into this and get our rates down, nothing came of it. So we're paying 45bp pa. Aviva does have a nice selection of funds which I like per se. I also noticed that when switching between their funds, they charge a fee. It was never explicit stated but the sold amounts were greater than the amounts re-invested. If our corporate fee stucture with them would only be a touch better, then I'd not consider a partial transfer.

I know Vanguard's choice is a bit limited but this clip of my retirement savings will be sitting in a global tracker, cheap and cheerful. Cost comparison over 30 years is this: Aviva with their private label Blackrock tracker at 45bp all in and Vanguard with theirs at 31bp over the course of 30 years, assuming a nominal rate of return of 5% pa and discounting at 3% would give me a overall 7% cost advantage in today's money. With bit over £60k sitting in there, yes, I'll take that. Unless of course Aviva have some steep exit fees/charges. That I'll get confirmed.

Of course I could of transfer into my own SIPP with AJB. Could hold a global tracker as ETF, that would be cheaper than Vanguard of course as I am already paying max £120 pa flat and the extra £60k would not incur additional platform fees. Costs aside, I prefer to diversify my pension holdings a little bit, so not adding to my AJB SIPP makes sense for me.

@dunstonh:

Thanks. I am familiar with the terms of our workplace pension with the exception of exit charges. And my transfer would be dependent on cost structure which is not in any of the docs they either sent us or that I can obtain online. Before I do anything I'll get those confirmed.

ShowMeTheDough

Following this as I'm looking to do the same, albeit from Aegon into Vanguard. 

I have messaged Vanguard and asked what the best way is to make regular partial transfers, as my plan will be to manually transfer each month after my employer has uploaded the contributions.

When I hear back from Vanguard I'll share the info here.

Edit: Should have mentioned that it may (possibly) be more straightforward for me as I'm looking to transfer Vanguard funds in specie. 

bd10

A quick update if I may. Have discussed the mechanics of the transfer out with Aviva and they said that would be possible with no exit charges, invested funds would be sold at market value and that market value would be transferred. To complicate things a litle however is this: The pension policy is split into 9999 segments. So for a say £50k market value each segment would be just over £5.00 each. I would need to keep at least one segment with Aviva to keep the policy active so that my employer can continue contributing to it. Sounds easy enough at first, so to transfer say £45k, I just request a transfer of 8999 segments. But the value of the policy and therefore of each segment changes daily.

So I contacted Vanguard whether I can specify the number of segments I would like to transfer and they said they only work on the basis of cash/market value.

To make doubly sure that I a sufficient number of segments remains in place with Aviva, I am thinking of requesting a transfer of £45k from the total £50k. The funds I hold with Aviva are very low risk and should not fluctuate that much. All I want to really avoid is to issue the transfer request for £45k, market dips in fluke event, the plan current worth £50k would be worth £44k and then what...

Or shall I convert the invested funds manually to one of their deposit funds (de facto cash interest). That number cannot change, specify that cash value to Vanguard when initiating the partial transfer?

Thanks!

Novice_investor101

Something to note with the segments is that when you transfer out partially you cancel segments. 9999 segments may sound a lot but it’s not. 

For instance you have £200 in your pension & 100 segments. Each segment is worth £2. Your value doubles in a year to £400 but you still only have 100 segments, each now worth £4. If you partially transfer out at this point, say you transfer out £200, you’ll cancel 50 segments. Then you’re left with 50 segments & £200. Let’s say it doubles again & you do the same, transfer out £200. You’re now left with 25 segments. 

These continue to go down every time you transfer out until you eventually get to 2 segments, & each will be worth 50% of the total pension value. Your choice then is to transfer out 1 segment (50% of the pension value) & leave 1 segment behind to keep the pension open but never do anymore partial transfers out. Or a full transfer & the policy closes. You’re employer would have to re-enrol you but check if you’d be on the same contribution levels from them & same deal with Aviva. It’s not always guaranteed. 

Transferring out 8999 segments will leave you with few left to do any future transfers out if you need to. 

bd10

Many thanks Novice_Investor101, my overall plan is not to make transfers out on a regular basis at all. Been enrolled for quite a few years now and while the pot was small, I didn't mind too much the cost structure. It has grown a bit over time and this sideways market at the moment looks like a good opportunity to make a first transfer.

Realistically speaking, the next transfer would be maybe in 10 years or when I move on from my current employer, then a full transfer. More frequent transfers would also make little sense as I'd be out of the market for a few weeks and any potential postive returns would outweigh the fees saved.

Pat38493

bd10 said:

The pension policy is split into 9999 segments. So for a say £50k market value each segment would be just over £5.00 each. 

Thanks!

Huh?  Is this yet another new "obvious" thing about pensions that I am not aware of - pension providers split your pension into arbitrary "segments"?

Is this yet another thing I need to learn about?

dunstonh

Huh?  Is this yet another new "obvious" thing about pensions that I am not aware of - pension providers split your pension into arbitrary "segments"?

 Its an obsolete way that some pension schemes used to be set up.   You don't see many pensions like that.   It looks like this workplace pension is an old one.    Possibly an ex Friends Provident GPPP (as FP used segments).