Pension consolidation and risk - a bit overwhelmed

MEM62

October22Mover said:

The financial advisor did however push very hard for me to go for a high risk fund, saying I had plenty of time to recoup any losses if the fund hit a rocky patch. My dad is screaming at me to ignore him

This is why you employ an expert, so you do not have to rely on your dad's flawed advice.  

JohnWinder

Or you could read a decent book!

dunstonh

Pat38493 said:

dunstonh said:

Aegon Retire Ready is not a SIPP.

It's not a SIPP by the technical definition, but they seem to call it a SIPP on a marketing level, and the range of funds available is quite large (but not full market) - at least that's the case with mine.

Retireready has just five funds unless it was ported over Scottish equitable (where they retain Scot Eq funds in addition to those five funds).   

Its Aegon Retirement Choices that has a larger fund range (comparable to an old fashioned fund supermarket pension - which is effectively what it is).

Pat38493

dunstonh said:

Pat38493 said:

dunstonh said:

Aegon Retire Ready is not a SIPP.

It's not a SIPP by the technical definition, but they seem to call it a SIPP on a marketing level, and the range of funds available is quite large (but not full market) - at least that's the case with mine.

Retireready has just five funds unless it was ported over Scottish equitable (where they retain Scot Eq funds in addition to those five funds).   

Its Aegon Retirement Choices that has a larger fund range (comparable to an old fashioned fund supermarket pension - which is effectively what it is).

Strange thing about my Aegon account is that I can log in to both retireready, and ARC.  It seems like Retireready is the front end of my pension reporting (which is labelled as a SIPP), but if I want to make any fund decisions, I have to log into ARC.

I don't really know how this was set up as of course my employer did it.

I also set up an ISA a couple of years ago from the Retireready interface, which with hindsight was probably a mistake, and indeed as you say I think I  only had a choice of a few funds.  With the ISA, I can see the balances in ARC, but if I try to do anything beyond that it tells me I don't have sufficient gate access (which is probably just an error because I set it up in Retireready). 

October22Mover

JohnWinder said:

You’re probably the right age to get a lot out of Hollow’s book How to fund the Life you Want, or other UK pension guide books.
Less on pension rules, but plenty about choosing the right funds for you is Hale’s book Smarter Investing.
Online forums like this are good, but there’s plenty of dross, and all jumbled together in an unsystematic way. Read a decent book; they’re written by people who know the ropes, they’ve been edited to reduce the dross, and backed by a publisher putting money up for them. Whatever else you do read some books, you won’t need an advisor then, or will you muck it up badly.

Thank you, this is great long term advice and reading up on all this sounds like something I'll need to set as a goal. In the immediate term though I just need to make a decision about moving all my pots into one place so I can start topping it up on top of what's already coming off my payslip. If an employer doesn't allow early opt-in I can lose three months of workplace contributions every time I start a new contract, which is often, so I need to get a regular arrangement going asap.

It sounds though like I might as well just transfer the balances into the one I'm currently paying into? (ie. Aegon). Since selecting a SIPP sounds like a big undertaking that I'm going to need to spend some time on. Or shall I just leave them where they are until I select a longer term fund?

Pat38493 said:

dunstonh said:

Aegon Retire Ready is not a SIPP.

It's not a SIPP by the technical definition, but they seem to call it a SIPP on a marketing level, and the range of funds available is quite large (but not full market) - at least that's the case with mine.

Weird! Yeah it's explicitly called SIPP when I log into my account online so glad to have the clarity that it actually isn't one.

xylophone

https://moneytothemasses.com/saving-for-your-future/pensions/the-best-cheapest-sipps-low-cost-diy-pensions

https://monevator.com/low-cost-index-trackers/

https://monevator.com/passive-fund-of-funds-the-rivals/

dunstonh

Weird! Yeah it's explicitly called SIPP when I log into my account online so glad to have the clarity that it actually isn't one.

SIPPs are fashionable.   So, you see several providers referring to their product as a SIPP.   They would call it chocolate banana sweet pensions if they felt they would sell more.    We have seen certain providers retail their DIY pension as "low cost SIPP" despite being one of the most expensive SIPPs.   Marketing can add to the confusion.

And to add to the other side, you have a number of SIPP providers that go out of their way to avoid using the SIPP word when describing their product despite actually being SIPPs.  Mainly as full SIPPs are often complicated and have a menu of charges that can be pages long.

Pipthecat

In pension terms, high risk isn't that high risk.  It usually means close to or at 100% equities.  

Just to give this point some context look at how Vanguard themselves compare the risk of two of their LifeStrategy Funds.  An IFA may describe the first and moderate risk and the latter as high risk.  You ask most people on this forum and they would probably tell you that at your age, where you are investing over 30 years, that you need to be taking risk if you want to beat inflation and that any 20% fund is too conservative.

• LifeStrategy 20% Equity Fund (80% *cough* safe bonds) as 4 out of 7 risk
• LifeStrategy 100% Equity Fund (0% bonds) as 5 out of 7 risk

Also remember whist your dad did not have to think about how his DB pension was invested, it certainly gave the scheme Trustees some sleepless nights balancing the risk reward of the underlying investments.

SpacemanMoses

What's everyone thoughts here? Should I just go for it and consolidate into one of my existing pots just to simplify things, then worry about trying to optimise where the money is once there's a bit more in there?

Hi, a little late to the party, but I work in finance, so thought I should clarify a few things.

a) Consolidation is not always a great idea. While exit fees are becoming less common, they are an issue, as are the ongoing platform fees and fund fees, e.g. you don't want to pay 1% exit fee to leave a platform with a 1% platform charge and 1% tracker fund to move to a platform with a 2% platform charge and 3% tracker fund. You also want to check how the money is being transfered as funds can have fees to buy and sell, and if you are selling down with one platform and buying with another, that'll cost you money along with any losses from being out of the market for however long the transfer takes. Doing that after every job is going to impact what you'll end up with compared to just consistently choosing to invest in low fee trackers.

b) Advisers shouldn't be pushing you. Most investment platforms have a risk assessment tool, you can use them on yourself and see your own appetite for risk. Keep in mind risk ratings will differ between providers, but most providers will have similar tools you can use. E.g. there is no point going into a high risk fund if, like now, you are concerned about your balance while (thinking back to July) there's a war going on and a cost of living crisis. You want a fund you can invest in for the long term, not one that will make you skittish and want to sell down with all the associated costs.

Albermarle

) Consolidation is not always a great idea. While exit fees are becoming less common, they are an issue, as are the ongoing platform fees and fund fees, e.g. you don't want to pay 1% exit fee to leave a platform with a 1% platform charge and 1% tracker fund to move to a platform with a 2% platform charge and 3% tracker fund. You also want to check how the money is being transfered as funds can have fees to buy and sell, and if you are selling down with one platform and buying with another, that'll cost you money along with any losses from being out of the market for however long the transfer takes. Doing that after every job is going to impact what you'll end up with compared to just consistently choosing to invest in low fee trackers.

Exit fees are now rather uncommon for mainstream providers. In fact some providers offer you cashback for transferring to them.

You will not find many people on this forum paying a 1% platform fee and a 1 % for a tracker fund. ( never mind 2% and 3% ) In fact I am not sure that is even possible to pay that much.

Many platforms have fees between 0.15% and 0.45% and one has no fees at all.

An index tracker is typically in the 0.15% to 0.25% range

Of course the cost of actively managed funds with some wealth management providers/advisors can add up to more.

Many transfers are done in specie, so no buy or sell costs or time out of the market. Even if in cash the buy sell costs on most platforms are zero, or not that much.