Considering a pension move due to charges

mrs_slapshot

I'm looking for some advice about potential options for moving my pension. I am currently employed in an educational institute and paying into the USS scheme. I have a previous pension with LGPS. I am not planning on doing anything with those pensions currently. I'm 58 and have a mortgage of £33k. I am single with a grown up son who is financially independent due to inheritance from his dad.

I have an amount of about £260k managed by a Financial Adviser. Intelligent Money are the provider, it's a Hubwise Personal Pension invested in the Tatton Core Active portfolio. I withdrew £62.5K from it (part of the 25% tax free lump sum) to pay off most of my mortgage and have some work done on the house - this was about 20% of the value at the time (312k).

The pension charges are the reason I am considering moving my pension - these were around £5k in 2022 - 1.693% to be exact. This consisted of .80% adviser annual charge, 0.15% discretionary fund management charge, 0.17% custody and admin fee, 0.386% fund charges and a couple of other small percentage charges. Looking at options such as the Vanguard SIPP, charges would be much lower. Intelligent Money have just advised they are increasing their charges and applying a one-off 1% fee. 

I am hoping to 'retire' as soon as I can - my aim is to pay off my mortgage completely (psychologically this would make me happy although it may not be the best option) - I would still do some form of work, just less stressful but to bring in extra money for holidays and nice things.

How easy is it to move my pension from my current provider to one such as Vanguard (I know they offer a DIY version or they can manage it for a higher fee)? What other options are there? Is there anything else I should consider? I am not a pension expert as a lot are on here!

Marcon

mrs_slapshot said:

I'm looking for some advice about potential options for moving my pension. I am currently employed in an educational institute and paying into the USS scheme. I have a previous pension with LGPS. I am not planning on doing anything with those pensions currently. I'm 58 and have a mortgage of £33k. I am single with a grown up son who is financially independent due to inheritance from his dad.

I have an amount of about £260k managed by a Financial Adviser. Intelligent Money are the provider, it's a Hubwise Personal Pension invested in the Tatton Core Active portfolio. I withdrew £62.5K from it (part of the 25% tax free lump sum) to pay off most of my mortgage and have some work done on the house - this was about 20% of the value at the time (312k).

The pension charges are the reason I am considering moving my pension - these were around £5k in 2022 - 1.693% to be exact. This consisted of .80% adviser annual charge, 0.15% discretionary fund management charge, 0.17% custody and admin fee, 0.386% fund charges and a couple of other small percentage charges. Looking at options such as the Vanguard SIPP, charges would be much lower. Intelligent Money have just advised they are increasing their charges and applying a one-off 1% fee. 

I am hoping to 'retire' as soon as I can - my aim is to pay off my mortgage completely (psychologically this would make me happy although it may not be the best option) - I would still do some form of work, just less stressful but to bring in extra money for holidays and nice things.

How easy is it to move my pension from my current provider to one such as Vanguard (I know they offer a DIY version or they can manage it for a higher fee)? What other options are there? Is there anything else I should consider? I am not a pension expert as a lot are on here!

Do you actually want/need ongoing advice? What are you getting for your money? How well have your funds performed? Do you know enough to make your own well-informed choices (not clear from your question that you do).

Once you've answered those questions, you might have a better idea of whether your belief that moving to reduce charges would be a good idea.

It's normally easy enough to transfer a DC pension provided it has no 'safeguarded benefits' (basically some sort of promise or guarantee).

When you say 'what other options are there?' the answer is: very many indeed, so although you might have a chance to get lower charges and a better outcome, there's also plenty of scope for making the wrong decisions and getting a much worse outcome...

Linton

Physically moving the pension is straightforward. You register with a platform, Vanguard being one but far from the only one.  You then simply ask your chosen platform to transfer-in your current pension, probably as a cash lump sum. 

The trickier problem is what happens next.  You will need to chose and buy some funds - Vanguard will only sell you Vanguard funds, other latforms will be able to let you access far more.  Having chosen your funds you will then need to manage them over time to ensure they continue to be appropriate for your needs and that your withdrawal policy does not deplete the pot too quickly.

None of this need be rocket science but you will require a basic understanding of pensions, investing in general, tax, and generally should be moderately numerate.  There are a number of books available which perhaps other contributors can suggest as particularly appropriate.

Albermarle

The pension charges are the reason I am considering moving my pension - these were around £5k in 2022 - 1.693% to be exact. This consisted of .80% adviser annual charge, 0.15% discretionary fund management charge, 0.17% custody and admin fee, 0.386% fund charges and a couple of other small percentage charges.

There are regular questions on the forum similar to yours. In fact sometimes the total fees are higher than yours.

A typical DIY charge would be between 0.4% and 0.7% but it could be a lot more if you picked  expensive actively managed investments.

One school of thought is that paying a  financial advisor makes more sense if you have a complicated life. Such as a very large pot, special tax issues, complicated family issues, business ownership etc.. It could be argued that it is not necessary to have an advisor, if it is just for investing/pension as this is someone you can do yourself. 

However as said already by @Linton

None of this need be rocket science but you will require a basic understanding of pensions, investing in general, tax, and generally should be moderately numerate.

I would not rush into anything, and spend some time looking into the subject, and regular reading of this forum can be helpful.

Qyburn

mrs_slapshot said:

The pension charges are the reason I am considering moving my pension - these were around £5k in 2022 - 1.693% to be exact. This consisted of .80% adviser annual charge, 0.15% discretionary fund management charge, 0.17% custody and admin fee, 0.386% fund charges and a couple of other small percentage charges. Looking at options such as the Vanguard SIPP, charges would be much lower. Intelligent Money have just advised they are increasing their charges and applying a one-off 1% fee. 

None of the more experienced members have mentioned whether moving a partly crystalised pension is an issue. Maybe it isn't but worth checking with your propose receiving scheme.

In the charges, what's the justification for this one-off fee? That seems odd for an established account and I'm surprised they are allowed. It's entirely different to a one off transfer or setup charge as you'd be made aware before committing.

caveman8006

This is the low-down on the IM fees - looks very dodgy all round, although it does seem that the one-off fee of 1% only applies to non-advised accounts, so shouldn't impact the OP

https://citywire.com/new-model-adviser/news/sipp-provider-s-one-off-1-fee-for-advised-clients-leaves-ifas-outraged/a2432522

mrs_slapshot

Thanks for all replies.

I've asked my advisor to clarify what charges will apply to my portfolio, because the email from IM was not at all clear.

In answer to some of the points raised:

I don't feel my situation is complicated at all, and my regular (annual) check in with the advisor is basically just taking down any updated information like salary, whether any material changes etc. No changes are made to my portfolio. So I don't feel I need ongoing advice as such - and I am happy to research more - so if any of you could recommend books/websites to use (in addition to this one) I'd be grateful.

Does anyone have any thoughts on the fact I've taken a proportion of the 25% tax free lump sum already - how would that be dealt with going forward?

dunstonh

No changes are made to my portfolio.

There should be as you are paying for a DFM.  DFMs tend to make changes quarterly.  However, the adviser is responsible for the actions of the DFM in most cases.

Marcon

mrs_slapshot said:

Does anyone have any thoughts on the fact I've taken a proportion of the 25% tax free lump sum already - how would that be dealt with going forward?

If you're paying for advice, then this is precisely the sort of information which should have been made clear to you before you took tax free cash.

Plenty of info on the internet (but that assumes you know the right search term, which might not be the case) - see https://adviser.royallondon.com/technical-central/pensions/transfers/transfers-in-drawdown---our-top-five-frequently-asked-questions/

MK62

mrs_slapshot said:

Does anyone have any thoughts on the fact I've taken a proportion of the 25% tax free lump sum already - how would that be dealt with going forward?

Your current provider will have placed about 80% of your pension into drawdown (aka crystallised), in order to pay 25% of that out as tax free cash. So, at the time around 250k of the 312k would have been placed into drawdown, and the 62.5 k taken from there, leaving 187.5k in your drawdown pot, and 62k (312k - 250k) in your  non-drawdown (uncrystallised) pot. In percentage  terms (as with some providers the split is notional, ie the pots are not physically separate.),  it would be around 75% drawdown, 25% non-drawdown (ie 75% crystallised, 25% uncrystallised). Further contributions, if any, would have been added to the uncrystallised pot, so by now those percentages might be different.
You shouldn't have any problems transferring if you simply move it all (both pots) from one provider to another. You might have the option to transfer each of these pots to different providers......however this is probably moot in your case (and I've never done it myself either).
I recently transferred a pension in partial drawdown from Standard Life to Interactive Investor, and had no issues (that's not a plug for Interactive Investor, though I've been happy with them).........and I transferred one to Vanguard around 2 years ago, again, no issues (but that one wasn't in drawdown).
One thing to check is whether the provider you are transferring to, charges extra for drawdown....many don't now, but I believe some still do, and if you do decide to transfer, watch out for offers too.....there are some decent cashback offers available atm......though this shouldn't be the deciding factor in any way, if you are going to transfer to a provider anyway and they have an offer on, you might as well take advantage of it.

Albermarle

I know with one provider ( Fidelity) that you can transfer an uncrystallised pension on line , but if it is fully or partly crystallised you have to speak to them first.