Old Pension - Options/What Would You Do?

MeteredOut

I'm currently helping my wife sort out some financial affairs and she's tracked down an old DC pension from a job she had some years ago. It only ever had contracted out payments made into it (so pre-dates auto-enrollment etc) and has a unit value of a little under £8.8K. 

She also has a SIPP and she'd quite like to transfer this old pension value into that SIPP for simpler management.

The pension was originally with Windsor Life and is now managed by ReAssure. It's a Scope (COPPS) pension and fully invested in their Managed Pension Accumulator Series 03 fund.

Now the dilemma. The fund has some fairly high charges. We don't have the original fact sheet (just the policy document) but based on the ReAssure fund page, it has the following charges

Fees and charges

Product AMC %                                   1.2

Investment Management Charge %.   0.1114

Total expense ratio %.                         1.39

Transaction costs %.                            0.1

But, her online account also has this clause:

Your current value includes

The amount deducted from your policy for taking your money early. £525

She contacted ReAssure and they confirmed this charge would apply if she transferred her fund value to another provider.

We've had a quick looked at other funds that ReAssure offer on the same platform, but have not delved into these yet. There is around a 5% bid/offer spread on the existing fund price should it come to that.

She has 15 years to NRA.

She still wants to transfer to her SIPP, for the sake of simplicity, but that would lose almost 6% of the current fund value. I'm more of a mind to find another fund on that platform with a lower charges but with a similar risk profile, or perhaps a bit higher, since this £8.8K is a small (single-digits) percentage of our overall planned retirement funding.

Other than just making a decision, is there anything else we're missing or should consider?

MallyGirl

maybe wait for the next round of transfer incentives so it doesn't feel so bad paying the fee. It is a one-off fee rather than paying high charges every year

Albermarle

One Sipp provider at least offers to pay any exit charges if you transfer to them ( Fidelity) .
Others may do the same, I am not sure.

MeteredOut

MallyGirl said:

maybe wait for the next round of transfer incentives so it doesn't feel so bad paying the fee. It is a one-off fee rather than paying high charges every year

Can you elaborate on the incentives - never heard of those?

I'm trying to work out how many years of lower charges would make up for the one of 6% hit.

MeteredOut

Albermarle said:

One Sipp provider at least offers to pay any exit charges if you transfer to them ( Fidelity) .
Others may do the same, I am not sure.

Thanks. Her SIPP is with Vanguard at present, so that wouldn't sort the simplicity issue, but should help her move to a platform to reduce the overall management fees. I'll look into that.

EDIT: Looks like minimum £10K investment for Fidelity to refund up to £500

https://www.fidelity.co.uk/media/PI UK/pdf/forms/general/reclaim-exit-fee.pdf

Will have to see whether its worth getting her existing pension to that level ahead of a transfer, though it also looks like topping up the Fidelity pension post-transfer (within 6 months) might allow the refund too.

MallyGirl

MeteredOut said:

MallyGirl said:

maybe wait for the next round of transfer incentives so it doesn't feel so bad paying the fee. It is a one-off fee rather than paying high charges every year

Can you elaborate on the incentives - never heard of those?

I'm trying to work out how many years of lower charges would make up for the one of 6% hit.

you do see offers from the big providers (HL, ii, AJ Bell and the like) - transfer your pension to us and we give you £x. Just like the incentives to switch banks. Some can be quite generous although they are often tiered based on the value being transferred. I can't see any good ones at the moment but they do recur and people post about them on here.

MeteredOut

MallyGirl said:

MeteredOut said:

MallyGirl said:

maybe wait for the next round of transfer incentives so it doesn't feel so bad paying the fee. It is a one-off fee rather than paying high charges every year

Can you elaborate on the incentives - never heard of those?

I'm trying to work out how many years of lower charges would make up for the one of 6% hit.

you do see offers from the big providers (HL, ii, AJ Bell and the like) - transfer your pension to us and we give you £x. Just like the incentives to switch banks. Some can be quite generous although they are often tiered based on the value being transferred. I can't see any good ones at the moment but they do recur and people post about them on here.

Thanks, I'll keep a look out for those.

MeteredOut

In the short term, rather than incurring the exit fee, we're looking at what other fund options are available on the ReAssure platform. The answer is: not a lot!

Here's the totality of what's on offer:


We're thinking of moving her from the current fund to the only other equivalent fund mix - the second one below (the first one is what her SIPP is already invested in).



Looking at the fact sheets, the existing fund is a bit more heavy in the Americas and Asia (25% and 20% versus 20% and 15% with the proposed fund). Existing fund is 75/22/21/3% stocks/bonds/cash/other versus 60/33/6/1% for the proposed fund. There's some commonality across the top 10 holdings for both. We'd be comfortable with the overall mix of the proposed fund.

The charges are still high in my view, but less than the current levels.

Can anyone see anything we're missing?