Which SIPP to use

[Deleted User]

Hi all,

Currently 51 and hoping to retire between 57 and 60. I have a company pension which I salary sacrifice the maximum 26% they allow (£51000 + £900 per month). I also fund a SIPP which I plan to use between retirement and State Pension with £800 net/£1000 gross per month which has £18000 so far held in the Legal and General Multi-Index 5 Fund - Medium Risk.

I was looking at an article for "best and cheapest SIPP" and Legal and General don't even get a mention. Looking at the list I was thinking I about moving my SIPP rom L & G to one of the Vanguard Retirement Fund options. Not interested in picking my own investments just want to pick a fund and let them do their thing.

Any opinions on whether this is a good strategy going forward or not would be much appreciated.

Thanks.

Sarahspangles

https://monevator.com/compare-uk-cheapest-online-brokers/

I asked recently and this article was recommended.  If you go with Vanguard then you choose one of their options but with other platforms you would need to decide whether to transfer in your L&G fund and then sell it or have them convert it to cash which is transferred.  The latter took just over a week earlier this month.

Pat38493

I'm curious why a company would artificially cap the % you can salary sacrifice to your pension.  Surely the admin for them is the same regardless as long as you don't breach the minimum wage regulations?

[Deleted User]

Pat38493 said:

I'm curious why a company would artificially cap the % you can salary sacrifice to your pension.  Surely the admin for them is the same regardless as long as you don't breach the minimum wage regulations?

I wasn't clear this is why it's 26%.

Pat38493

Deleted_User said:

Pat38493 said:

I'm curious why a company would artificially cap the % you can salary sacrifice to your pension.  Surely the admin for them is the same regardless as long as you don't breach the minimum wage regulations?

I wasn't clear this is why it's 26%.

What is the 51000?  Is that your gross income?  If so sacrificing 26% won’t take you anywhere close to mimimum wage (unless you are working a massive number of hours).

Anyway on your main question, I was looking at this last week and it seemed to me that Vanguard are good value for the situation you describe.  If the SIPP gets a lot larger you might look at others later on as Vanguard might not be best value for larger pots.

TimSynths

I transferred some pension savings into a Vanguard SIPP 3 years ago as I already had an S&S ISA with them and liked the way it all operates, no complaints from me so far.

Very quick too- took about a week and this was over Christmas. 

[Deleted User]

Pat38493 said:

Deleted_User said:

Pat38493 said:

I'm curious why a company would artificially cap the % you can salary sacrifice to your pension.  Surely the admin for them is the same regardless as long as you don't breach the minimum wage regulations?

I wasn't clear this is why it's 26%.

What is the 51000?  Is that your gross income?  If so sacrificing 26% won’t take you anywhere close to mimimum wage (unless you are working a massive number of hours).

Anyway on your main question, I was looking at this last week and it seemed to me that Vanguard are good value for the situation you describe.  If the SIPP gets a lot larger you might look at others later on as Vanguard might not be best value for larger pots.

The £51000 is what's in the pension at the moment. I asked to sacrifice 50% but payroll worked out I could only do 26% max. The SIPP would be £90000 in 6 years (£18000 plus 6x£12000 minus performance) before drawing down. 

Albermarle

I was looking at an article for "best and cheapest SIPP" and Legal and General don't even get a mention

They do not seem to promote it very much for some reason, but it is a perfectly OK cheap and cheerful option, with I think only 5 simple fund choices . Multi index 5 is a well known fund though, with about 60% equities.

The main drawback seems to be that they do not offer any facilities to withdraw the pension/drawdown, so you would have to transfer it at that point.

Also note that the Vanguard Target retirement funds reduce your equity % as you get older, which may or may not be a good thing .

dunstonh

I was looking at an article for "best and cheapest SIPP" and Legal and General don't even get a mention. 

That's probably as they dont offer a SIPP.

. I also fund a SIPP which I plan to use between retirement and State Pension with £800 net/£1000 gross per month which has £18000 so far held in the Legal and General Multi-Index 5 Fund - Medium Risk.

You dont mention the SIPP provider but L&G in this context is the fund house. Not the provider.

 Looking at the list I was thinking I about moving my SIPP rom L & G to one of the Vanguard Retirement Fund options. 

Vanguard Target return is a fund. it isnt a SIPP.   its available on SIPPs and other pension types, as is the L&GMI range.

Not interested in picking my own investments just want to pick a fund and let them do their thing.

What is wrong with what you have got?

I transferred some pension savings into a Vanguard SIPP 3 years ago as I already had an S&S ISA with them and liked the way it all operates, no complaints from me so far.

Although its not really a SIPP.  It is just the marketing that calls it a SIPP. (a common trend with other pretend SIPPs that are not SIPPs)

Albermarle

That's probably as they dont offer a SIPP

 They launched it just after they sold their main retail investment business to Fidelity, so never quite understood the logic of doing that. That is making a statement that they wanted to get out of the retail side, selling it all, then making a low key foray into retail pensions.

Originally they called it a SIPP, but as it has only five L&G investment options, then of course it is not really a SIPP and now they call it their personal pension.

Personal Pension | Private Pension | Legal & General (legalandgeneral.com)

gm0

L&G strategy for being in or not in the pensions business is one of life's mysteries.

L&G have their almost hidden consumer offering as described by Abermarle. 

They also offer master trust pensions - drawdown capable as an offer to the trustees of employer schemes. Those that they do or would like to do pensions admin for.  When the contracts come up.  Several life companies do this. 
Which lets existing occupational schemes add drawdown as a default option rather than just saying "transfer out as you approach retirement".  Although this sort of setup is often achieved in the form of a transfer to the MT and so little different to moving elsewhere.  Trust specific costs.  Use of insured funds.  Were the main differences that I observed.

I use one of these for part of my drawdown setup.   I do the colouring in around it on a different platform where there is wider range.

My take on it is that the terms negotiatied by trustees can be good or bad so far as costs go.  Mine were good. 
So it is worth finding out about if your existing pension is with L&G admin and they are going down this road.

The fund selections (~20-30) on the examples I saw waiting for ours to launch are adequate but narrow - mostly L&G range + a guest "active" or two from Threadneedle or similar.  So fine for fairly passive approaches. Less good for active ones as a wide range of "best of breed" active managers won't be available.

I find the service passable.  It's OK.   Everyone I have dealt with has been really nice and helpful. But the processes and team structures and visibilty via IT the teams use is a bit questionable. It isn't always very joined up. 
A lot of passing workflow items around is going on under the hood. 

The digital side of it can only be described as weak compared with most direct to consumer setups. Haven't invested enough in it to be at all competitive (or if they have for someone - then they have not rolled that out across a range of their customers that includes me).