Lowest fees for workplace pension pots after leaving work?

rhedyn

Albermarle said:

What are the investments you hold with these pension providers? I suspect they maybe be funds of government bonds, which have done particularly badly

The Royal London pot is in RLP/BlackRock Over 5 years Index Linked Gilt Index; 

So my guess was right for the RL pension pot anyway . This is strange for a default option, which are normally a mix of equities and binds, unless you are in some kind of annuity lifestyle fund and you are close to your retirement age ?

I'm coming 57 and am in practice already retired and living within my dividend income from index funds plus a few other small income streams like FIT payments.  For my purposes these UK pension fragment pots are tax deferred backup savings accounts serving as extra insurance for future unknowns.  I have not to date made any active choices in part because my first experience was Vanguard and I had no reason to think I could improve on their defaults, so I expected that companies holding pension funds would default to reasonable and conservative choices.  In fact I would have expected that to be a regulatory requirement, so my attention was elsewhere.

It seems to me that the most likely explanation is that the pots being fragmented and passed from provider to provider, undoubtedly via automated processes, allowed them to land in some unfortunate defaults, perhaps even by coding error.  I think it reflects badly on the providers that they allowed this to happen, especially since most pension owners don't know anything about investing and should not be expected to in order to protect their own interests.  And I don't like that their management fees are so high even if the pot is invested in the simplest passive option.  So 0.27 at Dodl seems the best option, once I have triple-checked that I understand the USA reporting requirements for a SIPP.

dunstonh

 so I expected that companies holding pension funds would default to reasonable and conservative choices.  In fact I would have expected that to be a regulatory requirement, so my attention was elsewhere.

There are different views on what would be best but most tend to be in the medium risk band. (circa 60-85% equity)

It seems to me that the most likely explanation is that the pots being fragmented and passed from provider to provider, undoubtedly via automated processes, allowed them to land in some unfortunate defaults, perhaps even by coding error. 

That is unlikely.   Most providers will continue to offer the funds that were originally held for a number of years and then look to consolidate overlaps within their range.   i.e. a UK equity fund with the legacy company being moved to a UK equity fund with the new one.   They would not move risk profiles or investment sectors.

Any changes would also be communicated to you with the ability for you to change the funds at any time.

  I think it reflects badly on the providers that they allowed this to happen, especially since most pension owners don't know anything about investing and should not be expected to in order to protect their own interests.

As it didn't happen, its irrelevent.

rhedyn

Bob_8472 said:

rhedyn said:

I've done no choosing on any of these, they are as whatever they defaulted to when I left work.  These are basically leftover fragments of my retirement savings and I haven't paid them much attention so far as they are just fragments, but now I'd like to tidy them up.  The Vanguard 401k is in a sensible spread of index trusts with global coverage, reflecting the fact that Vanguard's default set up is good, whereas Royal London and Aviva appear to have defaulted to something predatory and idiotic.

In any case, after some more hours of research it looks to me like a SIPP with AJBell or possibly their subsidiary Dodl, basically just wrapping a Vanguard index such as the Europe ExUK one Dodl offers, is my best bet.  It seems my dual citizenship allows a SIPP and AJBell will support.  All I want is to put it in a sensible passive index and leave it there, so Dodl 0.15 plus 0.12 for the fund making 0.27 charges is a hell of a lot better than anything Royal London or Aviva offers, unless I'm badly misunderstanding something.

I'm also looking at moving my pension and I've been looking at the ii SIPP - I like the fact that they just charge a flat fee plus trading fees for the platform (plus fund fees of course).  Currently I am paying 0.28% plus fund fees and I get very little for the 0.28%.  Not made any decisions yet, I want to look at the options properly before I move.

Perhaps unlike many on this forum, I am a firm believer in passive investment.  I will always choose to put my money in large index funds, as globally diversified as possible, and leave it there for as long as possible.  I am not a betting person and I don't want to pay fees for active management.  And I want my tax accounting to be as simple as possible, especially as I already have to file in two countries with tax years that don't align.  This approach has worked extremely well for me over the past 20 years.  So a low fee SIPP as a wrapper on a passive investment in a large Vanguard index fund, which I hope to not touch or mess with for at least the next 10-20 years, seems to be the closest to ideal that I can get in the UK.

Albermarle

Bob_8472 said:

rhedyn said:

I've done no choosing on any of these, they are as whatever they defaulted to when I left work.  These are basically leftover fragments of my retirement savings and I haven't paid them much attention so far as they are just fragments, but now I'd like to tidy them up.  The Vanguard 401k is in a sensible spread of index trusts with global coverage, reflecting the fact that Vanguard's default set up is good, whereas Royal London and Aviva appear to have defaulted to something predatory and idiotic.

In any case, after some more hours of research it looks to me like a SIPP with AJBell or possibly their subsidiary Dodl, basically just wrapping a Vanguard index such as the Europe ExUK one Dodl offers, is my best bet.  It seems my dual citizenship allows a SIPP and AJBell will support.  All I want is to put it in a sensible passive index and leave it there, so Dodl 0.15 plus 0.12 for the fund making 0.27 charges is a hell of a lot better than anything Royal London or Aviva offers, unless I'm badly misunderstanding something.

I'm also looking at moving my pension and I've been looking at the ii SIPP - I like the fact that they just charge a flat fee plus trading fees for the platform (plus fund fees of course).  Currently I am paying 0.28% plus fund fees and I get very little for the 0.28%.  Not made any decisions yet, I want to look at the options properly before I move.

Just so you aware, 0.28% platform fee is not expensive. especially if it is an 'all in ' cost with no extra charges for anything.  There are cheaper platforms but sometimes there are extra charges for certain items, or they charge more for a SIPP than an ISA for example. 
For sure you can get fees lower, especially for a large fund, but you need to look carefully at the small print and how you will use the platform.
Some platforms have a higher fee than 0.28% but have a cap the fee  on certain types of investments .

Steve_666_

rhedyn said:

Bob_8472 said:

rhedyn said:

I've done no choosing on any of these, they are as whatever they defaulted to when I left work.  These are basically leftover fragments of my retirement savings and I haven't paid them much attention so far as they are just fragments, but now I'd like to tidy them up.  The Vanguard 401k is in a sensible spread of index trusts with global coverage, reflecting the fact that Vanguard's default set up is good, whereas Royal London and Aviva appear to have defaulted to something predatory and idiotic.

In any case, after some more hours of research it looks to me like a SIPP with AJBell or possibly their subsidiary Dodl, basically just wrapping a Vanguard index such as the Europe ExUK one Dodl offers, is my best bet.  It seems my dual citizenship allows a SIPP and AJBell will support.  All I want is to put it in a sensible passive index and leave it there, so Dodl 0.15 plus 0.12 for the fund making 0.27 charges is a hell of a lot better than anything Royal London or Aviva offers, unless I'm badly misunderstanding something.

I'm also looking at moving my pension and I've been looking at the ii SIPP - I like the fact that they just charge a flat fee plus trading fees for the platform (plus fund fees of course).  Currently I am paying 0.28% plus fund fees and I get very little for the 0.28%.  Not made any decisions yet, I want to look at the options properly before I move.

Perhaps unlike many on this forum, I am a firm believer in passive investment.  I will always choose to put my money in large index funds, as globally diversified as possible, and leave it there for as long as possible.  I am not a betting person and I don't want to pay fees for active management.  And I want my tax accounting to be as simple as possible, especially as I already have to file in two countries with tax years that don't align.  This approach has worked extremely well for me over the past 20 years.  So a low fee SIPP as a wrapper on a passive investment in a large Vanguard index fund, which I hope to not touch or mess with for at least the next 10-20 years, seems to be the closest to ideal that I can get in the UK.

If you are going to solely invest in vanguard funds, then the UK Vanguard SIPP product charges 0.15%, cheap especially for small amounts

EDIT: Sorry, I didn't see this "Unfortunately I cannot have a Vanguard UK account because I am a US citizen"
can you enlighten me, is this something Vanguard impose?

rhedyn

Steve_666_ said:

If you are going to solely invest in vanguard funds, then the UK Vanguard SIPP product charges 0.15%, cheap especially for small amounts

EDIT: Sorry, I didn't see this "Unfortunately I cannot have a Vanguard UK account because I am a US citizen"
can you enlighten me, is this something Vanguard impose?

The USA is unusually intrusive and demanding about tax matters for US citizens outside the USA, for good reasons of trying to catch large scale tax evasion and money laundering, but it's still a great big pain.  For financial services companies like Vanguard that have a major base within the USA, the USA can force them to participate in complicated financial reporting for accounts held by US citizens outside the USA.  Understandably, this is not something those companies want to do, so they keep out of it by having their non-USA branches/subsidiaries just refuse accounts to US citizens.

Albermarle

rhedyn said:

Steve_666_ said:

If you are going to solely invest in vanguard funds, then the UK Vanguard SIPP product charges 0.15%, cheap especially for small amounts

EDIT: Sorry, I didn't see this "Unfortunately I cannot have a Vanguard UK account because I am a US citizen"
can you enlighten me, is this something Vanguard impose?

The USA is unusually intrusive and demanding about tax matters for US citizens outside the USA, for good reasons of trying to catch large scale tax evasion and money laundering, but it's still a great big pain.  For financial services companies like Vanguard that have a major base within the USA, the USA can force them to participate in complicated financial reporting for accounts held by US citizens outside the USA.  Understandably, this is not something those companies want to do, so they keep out of it by having their non-USA branches/subsidiaries just refuse accounts to US citizens.

Also Vanguard UK is only charging low fees in a competitive market, and is aimed squarely at the consumer market. So presumably avoid anything that is out of the ordinary. I presume a US citizen based in UK would need to go to a more specialised/expensive provider.

rhedyn

Albermarle said:

rhedyn said:

Steve_666_ said:

If you are going to solely invest in vanguard funds, then the UK Vanguard SIPP product charges 0.15%, cheap especially for small amounts

EDIT: Sorry, I didn't see this "Unfortunately I cannot have a Vanguard UK account because I am a US citizen"
can you enlighten me, is this something Vanguard impose?

The USA is unusually intrusive and demanding about tax matters for US citizens outside the USA, for good reasons of trying to catch large scale tax evasion and money laundering, but it's still a great big pain.  For financial services companies like Vanguard that have a major base within the USA, the USA can force them to participate in complicated financial reporting for accounts held by US citizens outside the USA.  Understandably, this is not something those companies want to do, so they keep out of it by having their non-USA branches/subsidiaries just refuse accounts to US citizens.

Also Vanguard UK is only charging low fees in a competitive market, and is aimed squarely at the consumer market. So presumably avoid anything that is out of the ordinary. I presume a US citizen based in UK would need to go to a more specialised/expensive provider.

Yes, I think that's right.  Thankfully HSBC, bless its black little heart, offers good options for dual citizens.  And it seems like the SIPP is a very specific carve out in the UK/USA tax treaty which is why Dodl/AJBell will offer it to US citizens (but not Canadians!).  I can't have an ISA or any other option with them, but I can have a SIPP, a very pleasant surprise.

JoeCrystal

The USA is unusually intrusive and demanding about tax matters for US citizens outside the USA

Tell me about it! To show how insane it is. I received a letter from Computershare Channel Islands last week to do tax self-certification for the share I once held over a decade ago. Even though I am no longer a shareholder of the fund since....

rhedyn

JoeCrystal said:

The USA is unusually intrusive and demanding about tax matters for US citizens outside the USA

Tell me about it! To show how insane it is. I received a letter from Computershare Channel Islands last week to do tax self-certification for the share I once held over a decade ago. Even though I am no longer a shareholder of the fund since....

Sympathy and solidarity, dude.  My partner is also a dual citizen, UK/NZ, and I'm very jealous of how easy he has it, with no NZ obligations as long as he's not resident there.  It's not that it's a tax burden, thanks to the tax treaties, it's just the overwhelming amount of paperwork and complicated spreadsheets!