Pension switching incentives

dharm999

Was looking at doing something similar, particularly in relation to Bestinvest.  Don't forget they are also offering a £100 refer a friend incentive paid to both the friend and referrer, so if you know someone with an account with them, get them to refer you, get £100, and then do the transfer in to get another £1000, maximum.  Their fees are higher than others, but their T&Cs say you only hve to have the account for around six months, so still worth it, after factoring in potentially higher charges for those six months.

IdrisJazz

It is quite easy to compare bank accounts and make a decision that the new one is suitable for your needs.

How easy is it for the average punter to work out whether they are better off keeping separate pensions or consolidating them? If a firm offers incentives that encourage consolidation, and it then can be proved that the customer is worse off as a result of transferring(which on a pension could be tens of thousands of pounds), presumably the firm would be liable for some sort of compensation. 

I understand the desire to have a single pot, but it won't be the best thing to do in all circumstances.

Any decision to carry out a pension transfer should be based on the financial position only, not convenience of a single pot.

Albermarle

IdrisJazz said:

It is quite easy to compare bank accounts and make a decision that the new one is suitable for your needs.

How easy is it for the average punter to work out whether they are better off keeping separate pensions or consolidating them? If a firm offers incentives that encourage consolidation, and it then can be proved that the customer is worse off as a result of transferring(which on a pension could be tens of thousands of pounds), presumably the firm would be liable for some sort of compensation. 

I understand the desire to have a single pot, but it won't be the best thing to do in all circumstances.

Any decision to carry out a pension transfer should be based on the financial position only, not convenience of a single pot.

What mainly determines how a DC pension performs, is the choice of the investments that you choose within the pension. Some pension providers have thousands of choices, some hundreds and some just a handful. However in all cases it is you who chooses the investment(s). ( in some cases if you do not make a choice, there is a default investment option, but that is still a choice you have made by not choosing anything)
Most pension providers will not advise you which investments to choose, so is not responsible for how they perform, so they can not be held liable for poor investment performance. Some robo pensions, will point you towards an investment based on a few questions.

The motivation for transferring to another pension provider ( ignoring any cashback for now) can be 
Lower charges
Better choice of investments
Easier to use website
Better customer service
More withdrawal flexibility

A pension provider is basically an administrator, dealing with contributions, withdrawals, buying and selling investments on your behalf, tax, running a website and customer service centre etc and charging a fee for doing all that.

They will not take any responsibility for investment performance. Even if you employ an IFA, you can only claim from them if they had recommended unsuitable investments for your circumstances. You can not claim just because the investments underperform by some criteria.

noclaf

My SIPP is with Fidelity, I received a platform discount via an ex-employer and as it's purely invested in ETF's the platform fee was capped at £45 (now increased to £90) so made a lot of sense. My ISA is with Vanguard and I have been thinking that at some point soon might be worth moving for a better range of funds as well as cheaper funds and overall costs but I wouldn't want both SIPP and ISA with Fidelity as would be concerned if any issues with access (cyber attack etc). This is partly why I use 3 different platforms to diversify.

The other aspect for me is that all my investment accounts need to be declared to my employer...it's just too much of a faff to keep changing due to the approvals required etc I am reasonably happy with Vanguard, AJBELL and Fidelity but at some point will move the ISA away from Vanguard once the numbers make sense.

Marcon

IdrisJazz said:

How easy is it for the average punter to work out whether they are better off keeping separate pensions or consolidating them? If a firm offers incentives that encourage consolidation, and it then can be proved that the customer is worse off as a result of transferring(which on a pension could be tens of thousands of pounds), presumably the firm would be liable for some sort of compensation. 

Unlikely, even in today's compensation culture. If you make the decision to move your fund based on an incentive, that's your choice (assuming you don't take regulated financial advice in the process). 'Proving' you were worse off as a result of your own freely taken decision, and that the outcome is somehow the fault of a pension provider, and you should therefore be compensated for your own stupidity/short-sightedness/greed/choice of investments held within the pension...

older_and_no_wiser

I have a workplace SIPP with HL which has monthly contributions going in. I also have a personal SIPP with Interactive Investor which I specifically opened to save on the HL platform fees. Every so often, I transfer my HL pension across in-specie to II. The first time I did this, I got cashback on the transfer.

The problem you may have with transfers and cashback is that as your pension grows, any cashback you get is negated by the platform fees so it's just not worth doing.

I always recommend II for anyone who has a larger pension pot - as they are a flat fee platform. I pay £20 a month for my SIPP, ISA and GIA which is great value  for me and a lot less than the percentage based platforms.

Albermarle

The problem you may have with transfers and cashback is that as your pension grows, any cashback you get is negated by the platform fees so it's just not worth doing.

I am planning on moving an approx £100K ISA to HL , which will give me a cashback of £1000.
The majority of the ISA is in ETF's/IT's, so I will be paying about  £100 pa in platform fees, maybe £25 in buy/sell fees.
Currently I pay about half of that with current platform. So I will lose £50+ pa and gain £1000. Plus I can transfer out again in 12 months.

The equation is a bit skewed as HL cashbacks for larger sums are unusually generous this time around.

vacheron

Albermarle said:

The problem you may have with transfers and cashback is that as your pension grows, any cashback you get is negated by the platform fees so it's just not worth doing.

I am planning on moving an approx £100K ISA to HL , which will give me a cashback of £1000.
The majority of the ISA is in ETF's/IT's, so I will be paying about  £100 pa in platform fees, maybe £25 in buy/sell fees.
Currently I pay about half of that with current platform. So I will lose £50+ pa and gain £1000. Plus I can transfer out again in 12 months.

The equation is a bit skewed as HL cashbacks for larger sums are unusually generous this time around.

I moved 125K to HL from my Scottish Widows pension just last week to take advantage of the £1500 cashback but primarily because of a move in my workplace pension provider.

As HL don't offer the SW "Pension Portfolio 2" fund, I switched to the HSBC Global Strategy Dynamic fund which seemed to have a suitable distribution.  

Doing the maths, the HL platform / fund charges will add up to £787 over the year which I need to keep the funds with them so they don't try to claw the cashback back, but the Scottish Widows fees would have been £937, so I'm actually another £150 better off.

L9XSS

I’m moving 135k to HL next week, will reinvest the £1500 back into my SIPP.

Sharktail

I too have transferred my sipp from vanguard to HL partly because of the £1500 incentive also more choice but mainly as the fee is capped at £200 for gilts & ETFs which will be the only products I’ll be buying making it cheaper than vanguard for me personally