SIPP or (cheapish) managed fund?

dancelikeamonkey

Hi - I've got a pension pot with St James Place that started as a workplace pension and they convinced me to consolidate other pots I had to them. With a little more knowledge these days it wasn't  the smartest of ideas but hindsight is great So I have a £240k pot with them with an encashment value of £238k.

It's about 12 months until there's no early withdrawal charge but getting the ducks in a row now - I'm a very lazy man and want a pension I can just stuck that money in and forget about it, but that still provides a decent return with low fees (not asking for much am I?).

I've seen people advocating a SIPP and Vanguard LifeStrategy/Target Retirement Funds, but then as many saying they invest too much in UK stocks and it just goes round and round.

My current workplace pension is with Aviva in the Aviva Pension My Future Growth FP fund and we've just had an email saying that they've negotiated an AMC rate of 0.33% for transferred in funds.

I know this sounds really lazy, but I have a stressful job and home life and worrying about pensions is one thing I could do without but in peoples opinions would I be crazy just to transfer it all to Aviva? I've thrown money away with St James so don't just want to throw slightly less money away.

Thanks in advance for any thoughts (sorry for a long post)

dunstonh

It's about 12 months until there's no early withdrawal charge but getting the ducks in a row now -

Its worth comparing the annual charge as you often end up paying less annually elsewhere and that can offset their exit charge and mean you dont need to wait.

I'm a very lazy man and want a pension I can just stuck that money in and forget about it, but that still provides a decent return with low fees (not asking for much am I?).

No you are not and there are plenty of options that do this.

I've seen people advocating a SIPP and Vanguard LifeStrategy/Target Retirement Funds, but then as many saying they invest too much in UK stocks and it just goes round and round.

You have already said that you dont want the best option.  Just a lazy option.       VLS is one of those options (assuming you dont want 100% equities).  HSBC Global Strategy is cheaper and better in many peoples eyes but virtually all pensions offer a multi-asset fund.

I know this sounds really lazy, but I have a stressful job and home life and worrying about pensions is one thing I could do without but in peoples opinions would I be crazy just to transfer it all to Aviva?

If lazy if your priority then that would be the option that ticks that box.

I've thrown money away with St James so don't just want to throw slightly less money away.

Staying with SJP is probably the laziest option!

Albermarle

My current workplace pension is with Aviva in the Aviva Pension My Future Growth FP fund and we've just had an email saying that they've negotiated an AMC rate of 0.33% for transferred in funds.

If I have found the right fund, it has grown 37% in 5 years, which is pretty good considering recent problems in markets, due to a reasonably high equity content of around 75%. Also 0.33% all in is quite a low charge.

Might be the best/easiest option. 

dancelikeamonkey

Hi both, thanks for the comments.

SJP "generously" knock 1% off the fund charge for the first 6 years so the charge at present isn't too bad. It's a valid point re cashing in early though, I'll have to dig through mountains of expensive looking, embossed documents to work out exactly what it is but I think it's somewhere between 0.5 and 0.8%. So glad I looked into this before that extra percent went on.

Glad to hear that neither of you yelled that going all in with Aviva was foolhardy either. I know that in reality I could/would potentially make more going the SIPP route but for my own peace of mind I think the complete hands off aproach may protect my sanity.

Yeah Albermarle that sounds like the fund. There's a few, but mine has the SEDOL of B8VC6L3 which says 23.9 the past 3 years and 38.8 the past 5 ( obviously not so great the last couple of years  )

Thanks again. I've still got a while to think things over but that's a great help.

Albermarle

dancelikeamonkey said:

Hi both, thanks for the comments.

SJP "generously" knock 1% off the fund charge for the first 6 years so the charge at present isn't too bad. It's a valid point re cashing in early though, I'll have to dig through mountains of expensive looking, embossed documents to work out exactly what it is but I think it's somewhere between 0.5 and 0.8%. So glad I looked into this before that extra percent went on.

Glad to hear that neither of you yelled that going all in with Aviva was foolhardy either. I know that in reality I could/would potentially make more going the SIPP route but for my own peace of mind I think the complete hands off aproach may protect my sanity.

Yeah Albermarle that sounds like the fund. There's a few, but mine has the SEDOL of B8VC6L3 which says 23.9 the past 3 years and 38.8 the past 5 ( obviously not so great the last couple of years  )

Thanks again. I've still got a while to think things over but that's a great help.

For inexperienced investors, the thousands of funds choice in a SIPP can be a disadvantage. Even for more experienced ones, the temptation to tinker can be a problem. For sure there is no specific reason why being in a SIPP will bring more growth.

barnstar2077

You don't have to use a LifeStrategy/Target Retirement fund if you go with Vanguard.  You could use their FTSE Global All Cap index fund instead for instance.  It does not have as much UK exposure and seems to be a bit better balanced globally.  It is what I use on the Vanguard platform for both my ISA and SIPP.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

FIREDreamer

barnstar2077 said:

You don't have to use a LifeStrategy/Target Retirement fund if you go with Vanguard.  You could use their FTSE Global All Cap index fund instead for instance.  It does not have as much UK exposure and seems to be a bit better balanced globally.  It is what I use on the Vanguard platform for both my ISA and SIPP.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

Is VWRL the ETF equivalent of this? Thanks.

LHW99

If you did go with Vanguard, it does give the advantage down the line that you have two separate pots (they need not stay where they are by retirement, because moving strightforward DC pensions is fairly easy).

So if one provider gets IT issues, you should still have access to the other pot.

Albermarle

barnstar2077 said:

You don't have to use a LifeStrategy/Target Retirement fund if you go with Vanguard.  You could use their FTSE Global All Cap index fund instead for instance.  It does not have as much UK exposure and seems to be a bit better balanced globally.  It is what I use on the Vanguard platform for both my ISA and SIPP.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

The OP has not indicated an appetite for 100% equity funds. Although commonly mentioned on this forum, they are a bit too volatile for the average investor, and a steep drop could induce panic. 
The Aviva fund mentioned is around 75% equities and has an almost identical 5 year performance with a global index fund anyway.

dancelikeamonkey

Hi, thanks all for the further replies. Yeah I have a S&S ISA with an S&P 500 Fund and an HSBC World fund. I'm hopefully only 10 years or so until retirement and the "excitement" of watching them just the last couple of years isn't something I'd like to experience with a wholly invested chunk of my pension 🙂.

The idea of a separate SIPP for some of the funds is an interesting idea. I think the first plan is to get it out of SJP then might look to put a relatively small part of it into SIPP for a couple of years and see how it performs.

Thanks again

barnstar2077

Albermarle said:

barnstar2077 said:

You don't have to use a LifeStrategy/Target Retirement fund if you go with Vanguard.  You could use their FTSE Global All Cap index fund instead for instance.  It does not have as much UK exposure and seems to be a bit better balanced globally.  It is what I use on the Vanguard platform for both my ISA and SIPP.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

The OP has not indicated an appetite for 100% equity funds. Although commonly mentioned on this forum, they are a bit too volatile for the average investor, and a steep drop could induce panic. 
The Aviva fund mentioned is around 75% equities and has an almost identical 5 year performance with a global index fund anyway.

The OP did not say either way about their preference, but thank you for highlighting a potential pitfall that people should be aware of.

As for them being a bit too volatile for the average investor, that really is an individual thing, and of course the time frame that they have in mind.  It only really becomes an issue if you need to access a large portion of the pot at a very specific date.   Most people I know take no interest in their pensions so if they were invested in a similar fund for a good length of time they probably wouldn't notice the ups and downs anyway.

However, in short, people should do their own research and decide if they are going to be comfortable with more volatility, even if that usually increases their pot in the end.