Should I move old Standard Life pension to Vanguard SIPP?

loosely123

Hi,
Husband hoping to retire in 5 years at 55. He has £200K in an old workplace scheme with SL. It's in the default scheme with retirement age set to 65 but is already starting to derisk. It is slightly down on value from a year ago. I'm thinking we should move to his Vanguard SIPP which is currently 100,% Global All Cap. Is this a good idea? SL charge is 0.45% so not excessive, it's the lack of growth which is main concern. The main thing putting me off moving is time out of the market. Any thoughts would be appreciated 👍

Marcon

loosely123 said:

Hi,
Husband hoping to retire in 5 years at 55. He has £200K in an old workplace scheme with SL. It's in the default scheme with retirement age set to 65 but is already starting to derisk. It is slightly down on value from a year ago. I'm thinking we should move to his Vanguard SIPP which is currently 100,% Global All Cap. Is this a good idea? SL charge is 0.45% so not excessive, it's the lack of growth which is main concern. The main thing putting me off moving is time out of the market. Any thoughts would be appreciated 👍

Have you looked at any other options he has within SL? He doesn't have to stay in the default fund.

Also...when is his birthday? Minimum pension age increasing for most people on 6 April 2028 from age 55 to age 57. 

dunstonh

SL charge is 0.45% so not excessive, it's the lack of growth which is main concern.

That isn't down to the pension or SL.  That is down to the fund choice.  If you have the same funds in the SL pension as you do in the Vanguard personal pension then you would have the same returns (or close if similar funds are used rather than exact).

Vanguard trackers are not the best trackers in many areas.  No single fund house has the best funds in all areas.  So, how does the SL pension fund offering compare to Vanguard?

Pat38493

dunstonh said:

Vanguard trackers are not the best trackers in many areas.  No single fund house has the best funds in all areas.  So, how does the SL pension fund offering compare to Vanguard?

How does one assess the performance of a tracker / index fund?

Is there a single measure you can look at?  I tended to look at the long term training returns but this might not be the right thing to check?

Also does the "best" change over time?  Since investments are long term I guess once you have picked one you have to stick with it for at least some years?

For example is there a "best" all round Global all world equity tracker and if so which one?  I was looking at the HSBC one and the Vanguard one recently.

DavidT67

loosely123 said:

Hi,
Husband hoping to retire in 5 years at 55. He has £200K in an old workplace scheme with SL. It's in the default scheme with retirement age set to 65 but is already starting to derisk. It is slightly down on value from a year ago. I'm thinking we should move to his Vanguard SIPP which is currently 100,% Global All Cap. Is this a good idea? SL charge is 0.45% so not excessive, it's the lack of growth which is main concern. The main thing putting me off moving is time out of the market. Any thoughts would be appreciated 👍

Note that the Standard Life fee is all-in, no separate platform or dealing fees.  Vanguard has a platform fee plus fund fee, so ensure you are comparing like for like.  Additionally, Standard Life gives significant discounts on the listed fund fees, so check your actual charges on your personal statement.

Rich1976

Does your husband have the risk appetite for being 100% in equities especially being so close to retirement?

you are worried about transferring it due to market movements but what if the markets went down say 50% in the next few years before he is due to claim the pension, how would that effect retirement?

dunstonh

How does one assess the performance of a tracker / index fund?

Compare other trackers using the same benchmark.    Vanguard often only partially replicate an index and that can cause a bit more volatility than other trackers with full replication.    Vanguard also use slightly different benchmarks to the majority of others with some of their trackers.  So, getting an exact like-for-like is not always possible.

Effectively, the differences (of same benchmark trackers) will be down to tracking error and charges.

Vanguard has one of the widest ranges of trackers available but in the mainstream areas, they are not necessarily the cheapest or best.  Differences will be tiny though.

Albermarle

loosely123 said:

Hi,
Husband hoping to retire in 5 years at 55. He has £200K in an old workplace scheme with SL. It's in the default scheme with retirement age set to 65 but is already starting to derisk. It is slightly down on value from a year ago. I'm thinking we should move to his Vanguard SIPP which is currently 100,% Global All Cap. Is this a good idea? SL charge is 0.45% so not excessive, it's the lack of growth which is main concern. The main thing putting me off moving is time out of the market. Any thoughts would be appreciated 👍

So with SL he is invested in a relative low risk option, and in Vanguard a high risk option. So you can not compare them, and at his age having all his pension in a high risk 100% equity fund would be very 'brave' 
It would probably be better to be in a more middle ground investment portfolio, whether with SL or Vanguard( or both)
The choice of pension provider is much less important than the the choice of investments within the pensions.

Expotter

Useful little video here for comparing investment returns

https://www.youtube.com/watch?v=4UzfgPTkktg