Leaving my pension as-is or moving to a SIPP?

gadgeteer_2

Hi all

I've had a defined contributions pension with a company i worked for until about 3 years ago when I left.  Since leaving, I just left the pension with the same provider (L&G) since I never really knew much about pensions other than I put some in and the company matched it....

Since turning 50, I've been looking at things closer.  The pot is worth £190k and looks like it has risen by 1% in the past 3 years!

Am I better off transferring the entire pot to a SIPP?  I am not expecting to retire until I'm 65 and have savings should I want to earlier.  So given I don't think I'll need to dip into the pension for another 15 years, am I better off going for an ETF world tracker?  Or should I stick with my current managed pension?  

I cannot for the life of me find what the charges are on the current pension with L&G which itself bothers me.

TIA

QrizB

gadgeteer_2 said:

Since turning 50, I've been looking at things closer.  The pot is worth £190k and looks like it has risen by 1% in the past 3 years!

What funds have you chosen within your pension?

gadgeteer_2 said:

I cannot for the life of me find what the charges are on the current pension with L&G which itself bothers me.

Do you not get an annual statement of charges?

Marcon

gadgeteer_2 said:

Hi all

I've had a defined contributions pension with a company i worked for until about 3 years ago when I left.  Since leaving, I just left the pension with the same provider (L&G) since I never really knew much about pensions other than I put some in and the company matched it....

Since turning 50, I've been looking at things closer.  The pot is worth £190k and looks like it has risen by 1% in the past 3 years!

Am I better off transferring the entire pot to a SIPP?  I am not expecting to retire until I'm 65 and have savings should I want to earlier.  So given I don't think I'll need to dip into the pension for another 15 years, am I better off going for an ETF world tracker?  Or should I stick with my current managed pension?  

I cannot for the life of me find what the charges are on the current pension with L&G which itself bothers me.

TIA

Could you specify exactly which of the managed fund(s) you are in? There's more than one!

Whether you are 'better off' going with an ETF world tracker depends on your objectives, including your risk tolerance.

gadgeteer_2

QrizB said:

gadgeteer_2 said:

Since turning 50, I've been looking at things closer.  The pot is worth £190k and looks like it has risen by 1% in the past 3 years!

What funds have you chosen within your pension?

gadgeteer_2 said:

I cannot for the life of me find what the charges are on the current pension with L&G which itself bothers me.

Do you not get an annual statement of charges?

Actually that helps. Ignore the other figures.  No idea what I was looking at to get the 1%.
 I've managed to find the statements online.  Looks like I paid management charges of £292 in 2023 and £267 in 2022.

Looks like the pot was worth £203k at Aug 2021 before a drop to £174k at the start of 2023 and only now clawing it's way back to £190k this year.  

The funds seem to mixed together and a real rag tag bag of equities, bonds, gilts etc.

As for my risk tolerance, it seems from what I've seen/read.  That over the long run, a all world tracker is likely to beat a managed fund.  That's why I'm thinking about switching because it seems my pension has done worse than if I just used a SIPP.

Am I being niave? (Sorry I've only recently been learning more about pensions and SIPP's)

xylophone

Are you currently a member of a workplace pension scheme?

gadgeteer_2

xylophone said:

Are you currently a member of a workplace pension scheme?

Not anymore.  I left the company three years ago.  The pension's just with the same provider but I've not made any contributions since I left

xylophone

I am not expecting to retire until I'm 65

You have opted out of joining your current employer's workplace pension?

Or you are self employed since leaving your previous employer three years ago and haven't set up a pension for yourself?

Albermarle

gadgeteer_2 said:

QrizB said:

gadgeteer_2 said:

Since turning 50, I've been looking at things closer.  The pot is worth £190k and looks like it has risen by 1% in the past 3 years!

What funds have you chosen within your pension?

gadgeteer_2 said:

I cannot for the life of me find what the charges are on the current pension with L&G which itself bothers me.

Do you not get an annual statement of charges?

Actually that helps. Ignore the other figures.  No idea what I was looking at to get the 1%.
 I've managed to find the statements online.  Looks like I paid management charges of £292 in 2023 and £267 in 2022.

Looks like the pot was worth £203k at Aug 2021 before a drop to £174k at the start of 2023 and only now clawing it's way back to £190k this year.  

The funds seem to mixed together and a real rag tag bag of equities, bonds, gilts etc.

As for my risk tolerance, it seems from what I've seen/read.  That over the long run, a all world tracker is likely to beat a managed fund.  That's why I'm thinking about switching because it seems my pension has done worse than if I just used a SIPP.

Am I being niave? (Sorry I've only recently been learning more about pensions and SIPP's)

There is a common misconception that a SIPP is somehow magically better than a workplace pension, when in fact they are very similar . Normally the only big difference is that the workplace pension has a more restricted choice of investments, but as most people never change anything in their pension, this is not really an advantage or disadvantage. I would imagine anyway that a L& G pension will have quite a reasonable choice?

Regarding recent performance, most pension funds have been pretty flat over the last couple of years, and those with a higher % of gilts and bonds will be in negative territory.

You are right that in the long run a world tracker should perform well, but in the short/medium term there could be some dizzying drops. The worst possible scenario would be if you panicked and sold, following say a 40% drop. If there is any possibility that you might do this then better to stick to a mix of assets.

dunstonh

Since turning 50, I've been looking at things closer.  The pot is worth £190k and looks like it has risen by 1% in the past 3 years!

Not sure why you have the exclamation mark. That is quite normal after a negative period.

As for my risk tolerance, it seems from what I've seen/read.  That over the long run, a all world tracker is likely to beat a managed fund.

Wrong.   You are mixing things up.  Managed vs passive is one thing.  Where you invest (region/asset class or style) is another.

<div></div><div>&nbsp; That's why I'm thinking about switching because it seems my pension has done worse than if I just used a SIPP.</div>

Also wrong.  SIPPs have around 30,000 investment options.   Some of those would have done better. Some of them worse.     Your L&G pension will have funds that would have done better and would have done worse.  

Gilts had their worst period in over 100 years during 2022 until a month ago.   So, anything with gilts in suffered a loss.   When looking at alternatives without gilts, then they are likely to have done better.  However, All it takes is a 45% drop in global equities and you would be wishing you were in gilts.

Going from one investment style that had a short term loss period to another that has had a short term growth period could mean you go into it just before the next loss period for that new one comes along.

So, before you make changes, you need to understand how the different investments work and that looking at short term periods of 18-24 months is not going to help you.

Am I being niave? (Sorry I've only recently been learning more about pensions and SIPP's)

A little bit.  But don't worry.   Keep engaged in the thread and you will learn.

SIPPS are not some magic product that is better than alternatives.  If you put a global tracker in your L&G pension or a SIPP then you are going to get similar performance.  If you had a similar multi-asset fund in a SIPP, then you would have got similar performance.    The logo in the corner of the statement doesn't change the returns.   

You have had a mild loss of 14% and you are using an exclamation mark during a period that suffer a 1 in 100 year event.   What you are proposing moving into can lose 50% in a year during a major loss (three major loss periods in the last 25 years around 43%, 45% and 35%).    Plus, a 1 in 100 year event, it could lose 80%.

So, if 14% has unnerved you, what will a 45% loss do?

Now, that is not to put you off.   You need to understand that everything goes up and down and often at different times and by different amounts.   You need to be aware of the pros and cons. Especially when moving up the risk scale.  15 years without paying in regular contributions is not a long timescale and the lack of regular means you are not taking advantage of the negative periods.   Going 100% equity would likely be the best option in most periods but not all.  What you have may be the best option in a 15 year period (it may not be).