Scottish Widows stakeholder pension, best funds

Cumbrianlad

Hello, Following my divorce I received half of a small pension pot. My share when last valued was almost £40k. I tried to get financial advice but as I hadn’t got £250k to invest, no one was interested as I’d pay to much in fees. I decided to stick with SW, as this has been going on for some time. My question is, which is the best fund to choose to put my funds in? I’m 56 and hope to leave the funds in for 5 yrs or more. I’d say I was somewhere between cautious and mildly adventurous, risk wise. I’m aware that SW has poor customer service and probably not the most successful funds. I’m also aware that I could take 25% out tax free but it would have to be moved into my pot first and then I’d only do it if no other option remained. I pay £25 a month into the Big Exchange ethical investment fund. I could transfer the payments and small amount built up, into my SW pension if that was a good idea or do the reverse with the tax free 25% from the SW fund? I can’t afford to pay any more in currently due to a very low income.

dunstonh

My question is, which is the best fund to choose to put my funds in?

The SW stakeholder is an old fashioned product with a very limited fund range.   Its pricing means its expensive compared to modern options.   Investigating alternatives would probably be worthwhile.

I pay £25 a month into the Big Exchange ethical investment fund.

As you have ethical concerns, you will find the SW stakeholder unsuitable.  So, again, looking at alternatives is likely to be better.

Albermarle

Transferring a pension is pretty easy nowadays. 
You pick a new provider.
You ask them to transfer your old pension.
The transfer will come over in cash from SW
You decide how to invest the cash with the new provider. Ideally in a low cost investment.
Best SIPP: Build a low cost DIY pension - MoneySavingExpert

I’m 56 and hope to leave the funds in for 5 yrs or more.
Five years is really a minimum period for investing. The longer you leave them the better the chance of them growing.

Cumbrianlad

Thankyou Dunstonh & Abermarle,

The problem is that I was told I’d need an advisor to get the funds out and at the moment they’re not in my name but still in my ex’s pot. If I can move the pot myself do you have any suggestions  as to where to put it?  I’ve heard of Hargreaves Lansdown and AJ Bell but know little about investing in stocks and shares and so am  unsure what funds would be appropriate and cost effective. Ideally, (like everyone else), I’d like it to earn as much as possible but with the rider that I’d prefer ethical investments. 
 

I know 5 yrs is not long but by then I’ll be approaching 62 and may need an injection of capital. If I can, I will leave it in as long as possible. 

Many thanks for your help, Cumbrianlad

Linton

The basic process is:
1) Get the pension registered in your name
2) Choose your platform and set up a SIPP account.
3) Ask the new platform to transfer-in the old pension as cash.  This should not require an advisor,
4) Buy the funds you need and off you go.

However I do know whether there are extra hassles arising from it being a divorce settlement.

All the mainstream plaforms are very similar.  They all (except Vanguard) sell every fund you could reasonably want.  The only real difference is in the charges and the functionality of the platform/website.  Each year platforms either charge a fixed % of your investments or a fixed fee.  As your pot is pretty small a % charging plaform will probably be cheaper.  Both HL and AJBell well-established % based with HL being more expensive.

Funds are more of a problem in that as others have said 5 years is a very short time period.  If you invested a major amount in share funds there is a reasonable possibility that after 5 years you could have less money than when you started.  On the other hand if you are too cautious you could be better off using a bank savings account or similar.

You could come up with a rough plan showing how much and when you will want to withdraw money and people here could suggest something appropriate.

engagedandopen

Cumbrianlad said:

Hello, Following my divorce I received half of a small pension pot. My share when last valued was almost £40k. I tried to get financial advice but as I hadn’t got £250k to invest, no one was interested as I’d pay to much in fees. I decided to stick with SW, as this has been going on for some time. My question is, which is the best fund to choose to put my funds in? I’m 56 and hope to leave the funds in for 5 yrs or more. I’d say I was somewhere between cautious and mildly adventurous, risk wise. I’m aware that SW has poor customer service and probably not the most successful funds. I’m also aware that I could take 25% out tax free but it would have to be moved into my pot first and then I’d only do it if no other option remained. I pay £25 a month into the Big Exchange ethical investment fund. I could transfer the payments and small amount built up, into my SW pension if that was a good idea or do the reverse with the tax free 25% from the SW fund? I can’t afford to pay any more in currently due to a very low income.

In fact the Scottish Widows individual stakeholder pension does have both an Ethical fund and an Environmental fund.  The Ethical fund has returned 11.8% cumulative over May 2019-April 2024 (based on 1% charge, series 3).  Almost entirely comprised of UK equities, actively managed by Schroders for Scottish Widows.  Its volatility has been 15% over 5 years, 11.6% over 3 years; you might prefer something with less volatility (e.g. more like 8%) and more diversification if you're talking about being cautious-mildly adventurous.

dunstonh

In fact the Scottish Widows individual stakeholder pension does have both an Ethical fund and an Environmental fund. 

It has an off the shelf ethical fund.   Real ethical investors decide their screening and pick from those that match their screening.   SW's offering is for those who are not really ethical but want to feel warm about selecting it.