Transfer personal pension to a SIPP or my NHS pension

bertiebile007

Hello everyone. I’m a little conversant with pensions but far from an expert, and wonder if anyone could give me some advice re the following:

I’m age 58. 

I work nhs and have done for twenty years, paying into pension since then. 

I have a prudential DC pension worth 31k. 

I have just started process of transferring that to a vanguard SIPP (pru’s fees were 3% compared to vanguards 0.15% and 0.23% management fees)
I haven’t signed the paperwork on this transfer yet and I’m wondering:

Should I go with the transfer or consider transferring my pru pension into my nhs pension?
I am about to buy property as I currently rent, plan is to mortgage seven years till paid. 

Have just accessed an old DB pension which gave me a lump sum to put as deposit towards property, and yearly income just over 6k (this will be going towards monthly mortgage payments). 

If transferring to SIPP, plan was to access this at end of year and take annual draw down over seven years and pay that into mortgage, either monthly or annually. 

As I’m over 55 I can access my nhs pension from now onwards (but plan to leave it till about 65…basically seven years after I estimate the SIPP would run out). 

I’m not intending retiring and plan on working till state pension age. 

Any thoughts and help would be greatly appreciated. Thanks. 

xylophone

consider transferring my pru pension into my nhs pension?

Aren't you too late ?

https://www.nhsbsa.nhs.uk/member-hub/transferring-scheme

dunstonh

I have just started process of transferring that to a vanguard SIPP (pru’s fees were 3% compared to vanguards 0.15% and 0.23% management fees)

That is unlikely.  Prus pensions legacy pension book (i.e. original Pru pensions and not the current M&G/Pru retirement account) are between 0.5-1.5%.

Some of their S226 Retirement annuity contracts can give the impression of higher charges due to flaws in the methodology. For example, plans from a different era trying to fit with modern disclosure requirements will show the charge in the disclosure but will not include the rebate.    So, a plan that has a charge taken for the first 5 years but then that charge is rebated after 5 years, wouldn't include that rebate and would falsely appear more expensive.

In all my years, I have never seen a pru plan with an annual charge of 3% and I have seen an awful lot of them.

That isn't to say it should not be moved.     Although the old Pru plans in With Profits have been stready eddies at low risk and that can be very attractive for some people.

Should I go with the transfer or consider transferring my pru pension into my nhs pension?

Which best fits your retirement plan? 
That is effectively what it will boil down to. Earlier than scheme age retirement without reduction can favour having standalone pensions or ISAs that you can draw on.   Retiring at scheme age or where there is no longer a reduction can favour putting it in the NHS scheme.

However, you have a snag:

I work nhs and have done for twenty years, paying into pension since then. 

you can only do transfers into the NHS pension in your first year.

bertiebile007

Dunstonh thanks for your detailed reply, although I’m not fully understanding it sorry. I’ve not explained myself very well either, when I refer to prudential’s fee, I was meaning the mandg adviser said if I went for their annuity the fee for setting that up would be 3%. 

This pension I have with pru originated from when I contracted out of serps many years ago. I liked the thought of the vanguard SIPP with it having the potential to pay more ultimately (as if I went for annuity I was planning fixed seven years) but I’m aware that it could go down as well. I’m just looking to get the highest annual income I can to pay towards mortgage payments, either by directly drawing from the pension monthly, or use my savings and then take an annual draw that I can pay back into them if that makes sense? Thanks.

dunstonh

Dunstonh thanks for your detailed reply, although I’m not fully understanding it sorry. I’ve not explained myself very well either, when I refer to prudential’s fee, I was meaning the mandg adviser said if I went for their annuity the fee for setting that up would be 3%. 

M&G don't have advisers.   Their process is non-advised.  They are a sales rep and the 3% is an initial charge (not ongoing).   In your first post you gave the ongoing charges with the SIPP. Hence why I thought you were referring to the 3% as ongoing.    And for the benefit of others, 3% for a non-advised sales process that limits you to Pru's retirement account is expensive and the product is restricted and the software feels more like late 1990s.  

This pension I have with pru originated from when I contracted out of serps many years ago. I liked the thought of the vanguard SIPP with it having the potential to pay more ultimately (as if I went for annuity I was planning fixed seven years) but I’m aware that it could go down as well. I’m just looking to get the highest annual income I can to pay towards mortgage payments, either by directly drawing from the pension monthly, or use my savings and then take an annual draw that I can pay back into them if that makes sense?

It makes sense but don't assume that the old Pru plan is bad.  Whilst their modern plan is a bit rubbish some of their legacy plans are little gems which are worth holding onto as long as possible.   Although some are not.

If yours is one of the better ones in their legacy With Profits fund, you could use that as the defensive side of your portfolio allowing the SIPP to invest more in equities.    The older plans can be held up to age 74 before they need to be moved.