Multiple DC pensions and review/consolidation

noclaf

My wife has 4 DC pension plans from prior roles. She does not have much knowledge/interest in pensions hence I am reviewing them on her behalf. She has at least 20 years till retirement 

Below are the ballpark figures and fund details, my wife never made any changes when she was enrolled onto the plans so assuming these were the 'default' fund options:

Royal London balanced lifestyle strategy (drawdown) £3,539.69

Aegon Retiready Universal Lifestyle Collect £6,703.55

Scottish Widows Pension Portfolio 2

£5,021.37

Scottish Widows Pension Portfolio 2

£9,650.56

The RL fund appears to have fees of around 0.7% and has been a relatively poor performer recently Vs the SW PP2 plans which have performed well(IMO), assuming this is due to the higher equities component in the SW funds.

My initial thoughts are that we need to confirm the fees being charged for each fund and whether there are any additional/special benefits associated with each plan, but also need to review the other available fund options especially if there are competitively priced Equities options available.

I quite like the SW PP2 fund for it's diversification with Equities Dev/EM and a smaller bond allocation so one option could be to combine all the pensions into the cheaper SW plan ( assuming one is cheaper and SW will allow this into what is an old plan as my old pension plans don't allow further contributions once you have left the employer).

My own old DC pensions are now consolidated into a Fidelity SIPP (100% Equities ETF's) however not sure I want to move my wife's pensions all the way up the risk scale to 100% Equities hence considering if we use one of the SW plans for now. If we did consolidate into a SIPP, for a £25k investment Vanguard would be fairly cheap for platform fees but limited on investment choices e.g: VLS 80 for an equivalent fund to the SW PP2.

Would appreciate any thoughts on the above if you have read this far and if I have missed anything from my thought process? 

TIA.

JohnWinder

for a £25k investment Vanguard would be fairly cheap for platform fees but limited on investment choices e.g: VLS 80 for an equivalent fund to the SW PP2.

What choice do you feel you are missing out on, or do you not yet have a specific investment mix in mind?

noclaf

JohnWinder said:

for a £25k investment Vanguard would be fairly cheap for platform fees but limited on investment choices e.g: VLS 80 for an equivalent fund to the SW PP2.

What choice do you feel you are missing out on, or do you not yet have a specific investment mix in mind?

Good question: VLS for example has a high UK weighting, whether that's a good or bad thing who knows, additionally on Vanguard we miss out on the rest of market e.g : HSBC Global Strategy range which I believe has out-performed VLS like for like over the last few years. However I am not sure if there is any other platform that will be as cost effective as Vanguard for this size/value of portfolio.

I have wrappers on Vanguard, Ajbell and Fidelity so would consider those 3 as decent platforms that are easy to use...would consider others too of course if the fee structure makes sense.

Albermarle

noclaf said:

JohnWinder said:

for a £25k investment Vanguard would be fairly cheap for platform fees but limited on investment choices e.g: VLS 80 for an equivalent fund to the SW PP2.

What choice do you feel you are missing out on, or do you not yet have a specific investment mix in mind?

Good question: VLS for example has a high UK weighting, whether that's a good or bad thing who knows, additionally on Vanguard we miss out on the rest of market e.g : HSBC Global Strategy range which I believe has out-performed VLS like for like over the last few years. However I am not sure if there is any other platform that will be as cost effective as Vanguard for this size/value of portfolio.

I have wrappers on Vanguard, Ajbell and Fidelity so would consider those 3 as decent platforms that are easy to use...would consider others too of course if the fee structure makes sense.

On the size of those funds, the platform charges of those three are unlikely to make a significant difference.
However you may consider that the HSBC GS funds are slightly cheaper than Vanguard LS.
Probably all will be easier to use and deal with than SW or Aegon.

noclaf

@Albermarle On a overall pot size of £25k how do we make it is as hassle-free as possible such that we can easily maintain a small balance to cover fees annually? For my Fidelity SIPP the overall investments value and using distributing ETF's which reinvest divis means a small balance is always left over which just about covers fees each quarter.
Fidelity are currently running a promotion that would provide a £100 cashback for opening a new SIPP so using a similar approach with ETF's is one option but not sure if it's worthwhile rather than just going with say a Vanguard SIPP and keeping a small balance in cash to cover fees.

Albermarle

No need to keep a cash balance with Fidelity as they will just sell a small part of the investment to cover it. No charge but I think AJ Bell do charge.
Not sure about Vanguard, although I thought you wanted to invest in the HSBC funds ?

dunstonh

On a overall pot size of £25k how do we make it is as hassle-free as possible such that we can easily maintain a small balance to cover fees annually?

Some platforms will auto-sell to cover charges.

Fidelity are currently running a promotion that would provide a £100 cashback for opening a new SIPP so using a similar approach with ETF's is one option but not sure if it's worthwhile rather than just going with say a Vanguard SIPP and keeping a small balance in cash to cover fees.

Fidelity is a platform SIPP.   Vanguard is a SIPP in name only (it has no SIPP functionality).  Vanguard does not offer investments outside of its own fund house.

noclaf

Albermarle said:

No need to keep a cash balance with Fidelity as they will just sell a small part of the investment to cover it. No charge but I think AJ Bell do charge.
Not sure about Vanguard, although I thought you wanted to invest in the HSBC funds ?

Thanks for highlighting the charge difference between Fidelity and AJBELL...I wasn't aware of this and use both platforms but I make a point to ensure there is a small cash balance....more a habit 

Re. using HSBC funds I do like the HSBC global strategy funds however the dilemma I face is that on a overall £25k valuation I'm not aware of a platform where the cost will be reasonable and those funds are available e.g: AJBELL is 0.25% and Fidelity is 0.35% for OEIC platform fees, Fidelity will be a minimum £90 for ETF's so given we don't have a valuation that makes it worthwhile for now, maybe we just go with Vanguard for now, FTSE Global ALL Cap (0.15% platform fee) and once the valuation has hopefully increased over time, can consider whether it's worth moving to a capped fee platform such as Fidelity? I am moving further up the risk scale than I initially envisaged but my wife has 20 years to run till retirement age so for at least 10-15 of those years 100% Equities can't be a bad thing.....hopefully that makes sense?

noclaf

dunstonh said:

On a overall pot size of £25k how do we make it is as hassle-free as possible such that we can easily maintain a small balance to cover fees annually?

Some platforms will auto-sell to cover charges.

Fidelity are currently running a promotion that would provide a £100 cashback for opening a new SIPP so using a similar approach with ETF's is one option but not sure if it's worthwhile rather than just going with say a Vanguard SIPP and keeping a small balance in cash to cover fees.

Fidelity is a platform SIPP.   Vanguard is a SIPP in name only (it has no SIPP functionality).  Vanguard does not offer investments outside of its own fund house.

Thanks dunstonh, I should of said I am aware Vanguard won't cover whole of market however their low platform fee is quite attractive for smaller amounts.

Interesting point re. Vanguard's SIPP.....I assumed it was a SIPP and not just in name! 
Since my post above re. Fidelity's cashback I've concluded it's not worth it for a £25k valuation, their capped fees are great for me personally but Vanguard would edge it for quite a few years on platform fees till the valuation hits circa + £60k so I think it might be easier to just bring all her pensions into Vanguard for now. I use them for my S&SISA and it's very easy to use, least cluttered platform IMO so that will work for my wife. 

dunstonh

Thanks dunstonh, I should of said I am aware Vanguard won't cover whole of market however their low platform fee is quite attractive for smaller amounts.

But HSBC GS is cheaper than VLS.    It has had better performance too, but that is mainly due to asset allocation at the right time.   There is the possibility that UK equity will go through a golden age in future and that may swing it to VLS! (not many predict that at the moment with so many models being underweighted in the UK).
 

Interesting point re. Vanguard's SIPP.....I assumed it was a SIPP and not just in name! 

Vanguard flit between personal pension and SIPP in their marketing.      There is no official definition of a SIPP

The FCA say:
an arrangement which forms all or part of a personal pension scheme, which gives the member the power to direct how some or all of the member's contributions are invested....

SIPPs are generally personal pensions where the consumer has more choice around the investment options than a normal personal pension.
--

This has tended to lean more towards SIPPs being "whole of market" where the member gets to choose from the marketplace.  Whereas pensions that restrict options from the provider's own fund range are not thought of as SIPPs.

There are also open architecture SIPPs (often known as full SIPPs) which allow absolutely anything allowed by HMRC.  Most SIPPs that get discussed on here allow any asset quoted on the LSE or investment funds from the whole of market.

AlanP_2

Costs are important I know but, to me at least, making the "right" investment choice is more important.

If I thought the HSBC option would be a better going forwards than VLS then that is what I would want to use, I would then start to consider platform costs for where to hold it.

Starting from "what is the cheapest platform for what I don't really want to use" seems back to front.