Pension switching incentives

artyboy

Lots of coverage on incentives for current account switching, but none that I've seen for pensions. 

I kind of get it - bank accounts are a well oiled process, don't involve long waits, differing paperwork requirements, and potentially large sums needing to move. 

But given that the demographic of this board is made up of a fair few who have big pots, I'm surprised that there's no real talk about the substantial sums that can be made here. For example:

1) Hargreaves Lansdowne - £1500 for a £125k+ transfer
2) II - £300 for a £100k+ transfer
3) Bestinvest - £1000 for a £100k+ transfer

I've just started looking so there may well be more. And these are just examples for each provider, they give different amounts for different values of transfer. There are minimum holding periods, but even with varying fees between providers, there's a substantial net incentive to be made here. Plus if transfers are done in specie, then there's no market risk during the transfer.

For the sake of doing some paperwork, and having some patience, this seems like a nice little earner - would be interested to know if anyone else has taken advantage and if there are any pitfalls I've not considered?

Ultimately I see myself consolidating everything in one place, so this is also a good opportunity to see the relative features and service levels of each provider along the way, rather than simply settle on the cheapest...

Pat38493

I was wondering this too - is there anyboty who switches their provider regularly to take advantage  of special offers, like people do with credit cards or mobile phone provider or whatever?  If there are no exit charges I guess it could be a growing tendency.

I guess you have to be a bit careful as I think that in many cases your fund holding is not transferred but it involves selling and buying?

We should be careful what we wish for though as I'm not sure I would relish the prospect of being forced to move my pension every year by them focussing only on how to get new customers.

artyboy

Pat38493 said:

I was wondering this too - is there anyboty who switches their provider regularly to take advantage  of special offers, like people do with credit cards or mobile phone provider or whatever?  If there are no exit charges I guess it could be a growing tendency.

I guess you have to be a bit careful as I think that in many cases your fund holding is not transferred but it involves selling and buying?

We should be careful what we wish for though as I'm not sure I would relish the prospect of being forced to move my pension every year by them focussing only on how to get new customers.

Hence why I said 'in specie' as I wouldn't want to do this if there was market risk.

dunstonh

Lots of coverage on incentives for current account switching, but none that I've seen for pensions. 

Unlike current accounts, pensions are charged explicitly rather than implicitly.     So, you need to look at the cost of the gimmick vs what you are paying.  When you are one of the most expensive platforms in the UK, you can afford to run gimmicks that give cashbacks.  But remember, they are only giving you back some of what you are going to be paying in charges.

A lot of the DIY platforms and robo-services are loss making.   They need market share growth to obtain sugar daddy financing or get potential buyers in the future.    So, do they spend their borrowing on lowering charges, brand awareness or gimmicks.

Albermarle

artyboy said:

Lots of coverage on incentives for current account switching, but none that I've seen for pensions. 

I kind of get it - bank accounts are a well oiled process, don't involve long waits, differing paperwork requirements, and potentially large sums needing to move. 

But given that the demographic of this board is made up of a fair few who have big pots, I'm surprised that there's no real talk about the substantial sums that can be made here. For example:

1) Hargreaves Lansdowne - £1500 for a £125k+ transfer
2) II - £300 for a £100k+ transfer
3) Bestinvest - £1000 for a £100k+ transfer

I've just started looking so there may well be more. And these are just examples for each provider, they give different amounts for different values of transfer. There are minimum holding periods, but even with varying fees between providers, there's a substantial net incentive to be made here. Plus if transfers are done in specie, then there's no market risk during the transfer.

For the sake of doing some paperwork, and having some patience, this seems like a nice little earner - would be interested to know if anyone else has taken advantage and if there are any pitfalls I've not considered?

Ultimately I see myself consolidating everything in one place, so this is also a good opportunity to see the relative features and service levels of each provider along the way, rather than simply settle on the cheapest...

I fully switched two ex workplace pensions and a part transfer of another and an ISA to Fidelity . Two seperate moves at different times - £500 for each . I am considering transferring the ISA to HL for a £1000, It is mainly invested in ETF's so HL's higher platform fee will be capped at £45. Then maybe transfer it back to Fidelity at some point for another cashback.
Probably I would not be that bothered to keep switching around, except the current HL cashback for bigger amounts is rather generous....

dealyboy

... I suppose you need to take into account how long transfers take and potential delays (I've read 1 or 2 horror stories).

Of course CASS current account switches are guaranteed 7 days.

artyboy

dealyboy said:

... I suppose you need to take into account how long transfers take and potential delays (I've read 1 or 2 horror stories).

Of course CASS current account switches are guaranteed 7 days.

But on the flip side, if I'm happy to stay invested in the same funds, and can transfer in specie, playing the long game is hardly a problem - after all, not like I can access my pension for another 7 years or so.

And a nod to Albermarle - yes, I'd noticed ISA xfrs have similar generous incentives, that may be a parallel exercise...

Albermarle

dealyboy said:

... I suppose you need to take into account how long transfers take and potential delays (I've read 1 or 2 horror stories).

Of course CASS current account switches are guaranteed 7 days.

Yes this is a potential issue, as even if not needing access, it would be frustrating if it dragged on for months and you had to keep chasing it up. Hence the need for a decent incentive to think about doing it.
My previous pension transfers were in cash but my ISA was in specie and went through quite quickly.

artyboy

Well, having done the sums, it's worth the effort (and likely patience) on my part. I can get £1500 from HL, £300 from II, and £1125 from Bestinvest (mix of TCB for new money plus transfer incentive). Plus I can throw in another £400 from fidelity/TCB for putting £20k of new money in an ISA with them..

Given the minimum holding periods, and calculating the deltas in fees versus my 'default' long term consolidation option (which is II), it should net me about £2500 in incentives. And I've still got more to move in case there are any more incentives to be announced. 

I'm specifically avoiding Wealthify and other robo/non-SIPP options as I am intending to keep the investments homogenous across platforms - probably vanguard world all cap. I think I've exhausted all the major incentives out there for now...

Albermarle

Well, having done the sums, it's worth the effort (and likely patience) on my part. I can get £1500 from HL, £300 from II, and £1125 from Bestinvest (mix of TCB for new money plus transfer incentive). Plus I can throw in another £400 from fidelity/TCB for putting £20k of new money in an ISA with them

A free holiday for you !

I was not aware of a £400 offer from Fidelity. Only aware of this

£50 ISA Cashback Offer | Get cashback when you invest | Fidelity

artyboy

Albermarle said:

Well, having done the sums, it's worth the effort (and likely patience) on my part. I can get £1500 from HL, £300 from II, and £1125 from Bestinvest (mix of TCB for new money plus transfer incentive). Plus I can throw in another £400 from fidelity/TCB for putting £20k of new money in an ISA with them

A free holiday for you !

I was not aware of a £400 offer from Fidelity. Only aware of this

£50 ISA Cashback Offer | Get cashback when you invest | Fidelity

Well yes, these are numbers that make it well worth the effort - more than I got out of a lot of bank switches a few years ago... and anyone that thinks that is a piece of cake should have tried opening an HSBC Advance account - slow and bureaucratic are 2 words....

Fidelity is through TCB - I thought £400 for a £20k investment was pretty generous! Thanks for pointing out the extra £50, not spotted that...