Should I move my personal pension from Aviva to a SIPP due to my high AMC?

legalfreak

Basic rate Tax Payer self-employed on low income. I have a 'Pre -95 Personal Pension Plan' with Aviva, originally taken out with NU in April 1989. I have another smaller plan with Standard Life since 2000.

My selected retirement age is 69.

I was very derelict in taking care of my personal pensions and only 'woke up' a few years ago to my big mistake saving into ISAs instead - only thanks to an inheritance I started saving as much as possible into the two pensions. I live off my low work income and savings and haven't touched the two pensions.

The transfer value of the Aviva plan is £50,000 made up of non-protected rights and former protected rights. There is no GAR or other guarantee.
The AMC is 0.875%. No plan fee is being taken as I don't make regular payments.
There is no Early Transfer penalty.

I was told by Aviva that if I wanted to transfer to a SIPP I would not be able to do an in-specie transfer but would have to sell my funds first and transfer the cash into the SIPP and then buy the (same) funds if I wanted to.

If this is relevant, my fund consists of: Aviva UK equity; Aviva US equity; Aviva European Equity; Aviva With-Profit; Aviva With-Profit Guaranteed; Aviva Pacific Equity.

I believe from reading on here that my charges are higher than what other platforms offer and the charges for an Aviva SIPP would be cheaper. Should that be my preferred 
option or would I get a better deal elsewhere? I don't believe I could do an in-specie transfer because other platforms don't offer the same funds. I suppose that since there are no charges to transfer it should be a no-brainer...

Many thanks in advance.

dunstonh

I was told by Aviva that if I wanted to transfer to a SIPP I would not be able to do an in-specie transfer but would have to sell my funds first and transfer the cash into the SIPP and then buy the (same) funds if I wanted to.

Not quite.   You do not sell the funds first.  There is no cash facility on that plan.   

If this is relevant, my fund consists of: Aviva UK equity; Aviva US equity; Aviva European Equity; Aviva With-Profit; Aviva With-Profit Guaranteed; Aviva Pacific Equity.

The Aviva WPG has a guaranteed minimum growth rate.   

I believe from reading on here that my charges are higher than what other platforms offer and the charges for an Aviva SIPP would be cheaper. Should that be my preferred 
option or would I get a better deal elsewhere?

Depending on the alternatives you consider, it could be cheaper where it is or more expensive. For example, if you use the UK's largest DIY provider for the SIPP and their in-house funds, your charges could be double what they are now.   So, before you pick SIPP provider, you need to know how you are going to invest going forward.  Then you look a the charges comparison.

 I don't believe I could do an in-specie transfer because other platforms don't offer the same funds. 

insured funds are not available on SIPPs unless they are from the same provider (even then, many have dropped offering insured funds)

legalfreak

Thank you very much dunstonh.


'Not quite.   You do not sell the funds first.  There is no cash facility on that plan'

So do you mean that I can actually do an in-specie to the Aviva SIPP? It sounds from your response that the CS person at Aviva was wrong or that I misunderstood him.

'The Aviva WPG has a guaranteed minimum growth rate.'

I didn't know that. There is nothing about this on my Aviva personal pension webpage nor on my annual statement. Although, the word 'guarantee' should tell me something...I know there is a bonus which is at least 4% on both with profits funds but that is not guaranteed unless I am wrong. In any case My WPG is only 15% of my fund which means it's not significant by and large.

I need to do more research on my options.

dunstonh

So do you mean that I can actually do an in-specie to the Aviva SIPP? It sounds from your response that the CS person at Aviva was wrong or that I misunderstood him.

You cannot do in-specie transfers.  But you cannot sell to cash either as there is no cash account.     When Aviva receive the transfer request, they do all the work. Its a cash transfer but you don't sell the units you have to cash first.

I didn't know that. There is nothing about this on my Aviva personal pension webpage nor on my annual statement. Although, the word 'guarantee' should tell me something...I know there is a bonus which is at least 4% on both with profits funds but that is not guaranteed unless I am wrong. 

That 4% is the guaranteed minimum. The With profits fund without the guarantee doesn't have the word "guarantee" in its name.

legalfreak

dunstonh said:

So do you mean that I can actually do an in-specie to the Aviva SIPP? It sounds from your response that the CS person at Aviva was wrong or that I misunderstood him.

You cannot do in-specie transfers.  But you cannot sell to cash either as there is no cash account.     When Aviva receive the transfer request, they do all the work. Its a cash transfer but you don't sell the units you have to cash first.

I didn't know that. There is nothing about this on my Aviva personal pension webpage nor on my annual statement. Although, the word 'guarantee' should tell me something...I know there is a bonus which is at least 4% on both with profits funds but that is not guaranteed unless I am wrong. 

That 4% is the guaranteed minimum. The With profits fund without the guarantee doesn't have the word "guarantee" in its name.

Thank you so much.

Albermarle

I believe from reading on here that my charges are higher than what other platforms offer and the charges for an Aviva SIPP would be cheaper

As mentioned you have to make sure you are comparing like with like.

It can be like moving from Waitrose to Aldi because it is cheaper, but if you buy the more expensive stuff in Aldi you lose the advantage.

People pay a wide range of fees for pensions. Perhaps up to 2% with a fancy wealth management company, down to 0.1% for the investor who has very low fees as a priority. More typically you are looking at 0.3% to 0.8% . You can usually get lower rates if you have a big pot.

Novice_investor101

Aviva won’t charge extra for the funds. So 0.875% is the full charge. The With Profit Guaranteed fund has a minimum growth rate of 4% per annum. If growth is higher than that you’ll see it in the final bonus rate (which isn’t guaranteed). 

If you transfer to a SIPP you’d need to tot up the platform charge, fund charges & any transaction charges to see how they add up in comparison to that 0.875% all in. 

Lastly, how close to retirement are you & how do you plan to use the money? It’s likely that old Aviva plan doesn’t facilitate flexible drawdown so if that’s your route you’d need to transfer out eventually anyway. 

legalfreak

Novice_investor101 said:

Aviva won’t charge extra for the funds. So 0.875% is the full charge. The With Profit Guaranteed fund has a minimum growth rate of 4% per annum. If growth is higher than that you’ll see it in the final bonus rate (which isn’t guaranteed). 

If you transfer to a SIPP you’d need to tot up the platform charge, fund charges & any transaction charges to see how they add up in comparison to that 0.875% all in. 

Lastly, how close to retirement are you & how do you plan to use the money? It’s likely that old Aviva plan doesn’t facilitate flexible drawdown so if that’s your route you’d need to transfer out eventually anyway. 

The Aviva SIPP has three types of charges: 'Aviva Charge' which is tiered and in my case will be a combination of 0.40% on up to £50,000 and 0.35% on the next tier relevant to me; 'Aviva Share Charge' for holding among others ETFs which is 0.40% and is capped at £120 per year; the 'Fund Manager' charge.

It looks like that on charges alone I am not really that better off moving to an Aviva SIPP although this could encompass moving to a third party platform too. On choice of funds, better to move because I would have more choice of funds than in my current plan...not sure how to compare the funds.

I am 6 years from drawing a full SP and still working  but I don't know yet when I would want to start drawing from the Aviva pension.

I believe my current plan actually does facilitate flexible drawdown -  from what I see online.