Looking to consolidate my Dad's pensions and just want to sense check.....

demontec

My Dad is 74 and 75 in August 2025. He currently receives 2 annunity payments from pensions that he arranged a few years ago along with the state pension. He also has some smaller/older pots that I found out he hasn't touched for many, many years and that this thread is about.

Our thought process is to consolidate these pensions into a SIPP, probably with ii based on customer feedback/costs with the plan to keep these invested for another 5 years before starting to draw down on this. We were originally looking at Vangaurd but the feedback seems very hit and miss on the speed of drawdowns and pension transfers.

I have reviewed his current pensions frokm a cost perspective and it will actually end up being cheaper in fees with ii than his current ones. His current ones are also so old that they have no online access and getting up to date prices is slow via emails and letters along with avery limited choice of funds to invest in. They can also not be put into drawdown and so they need moving anyway.

Once they are consioldated into ii, we were going to put the money (c£80k) 50% into an ETF -Vanguard FTSE All-World UCITS ETF GBP and 50% into Vanguard LifeStrategy 80% Equity A Acc

We have discussed with an IFA and the fees they want 3% on all initial investments and 0.5% a year feels unneccessary for the size of the pot and the simple investments by Dad wants to hold.

Does that sound sensible or have I missed something that also needs considering? Also is the split between ETF and fund worth while or should we just go for 1 of the two or perhaps considering a couple of funds?

Just want to make sure that we aren't doing anything 

Clive_Woody

Can't comment on the fund choice, but I've consolidated pensions myself and it was simple and straighforward, no need for an IFA. I did use a Vanguard SIPP and everything went very smoothly. I'm a few years away from drawdown so no idea how well this works with VG.

I would not be paying 3% to an IFA to combine pots unless something weird and complicated that needs doing. I also wouldn't be paying an annual fee either, but that's just me and my comfort with my level of knowledge.

cfw1994

Hard to definitely comment on the funds, although they feel reasonable.

Moving them ought to be straightforward if both providers are part of Origo Options (& most are).

Doesn’t sound like the IFA would really be doing anything hard for their money: I & many here would DIY 🤷‍♂️

Good luck👍

LHW99

5 years is perhaps rather short for using funds. He wouldn't be taking it all in one go, so maybe look at keeping a couple of years in cash (or near cash such as the Royal London short term money market fund, or similar) and the rest in funds.

Then draw from the cash (like) part and top up from one of the funds periodically.

You would ask II to do the transfer and give them the details of the old pensions on the transfer form.

incus432

demontec said:

Once they are consioldated into ii, we were going to put the money (c£80k) 50% into an ETF -Vanguard FTSE All-World UCITS ETF GBP and 50% into Vanguard LifeStrategy 80% Equity A Acc

I wonder if this duplicating somewhat, given that the LS80 fund is presumably made up of many of the same holdings as the other.  Probably no big deal as you want to be mostly in equities I presume

Like others I can't see what value an IFA would add.

squirrelpie

You haven't said much about these old pensions. They are DC types rather than DB (final salary), I presume? And it's possible that they have some protected benefits of some kind, so have you checked them to be sure you're not going to lose something valuable by transferring them? Otherwise the process is simple as others have said, and you shouldn't need an IFA in most cases.

demontec

Thanks for the comments and for the reassurance that an IFA probably wouldn't be worth it assuming all goes ok on the transfers. The main ones are with Aviva who I think should be ok and are on the Origo platform assuming that works for all their policies (as these are old).

These old pensions are indeed DC pensions and they don't have any protected benefits so he is not going to lose out on anything.

Yea, I think diversified across equities would be good and hence the ETF and then the LS80 or even the LS60 as a slightly lower risk option.

demontec

LHW99 said:

5 years is perhaps rather short for using funds. He wouldn't be taking it all in one go, so maybe look at keeping a couple of years in cash (or near cash such as the Royal London short term money market fund, or similar) and the rest in funds.

Then draw from the cash (like) part and top up from one of the funds periodically.

You would ask II to do the transfer and give them the details of the old pensions on the transfer form.

I thought 5 years would be a reasonable time for funds....I don't like the idea of holding just cash as this would be losing value each year wouldn't it? He has a reasonable cash reserve in cash ISAs and so does have access to immediate cash if needed.

DRS1

demontec said:

LHW99 said:

5 years is perhaps rather short for using funds. He wouldn't be taking it all in one go, so maybe look at keeping a couple of years in cash (or near cash such as the Royal London short term money market fund, or similar) and the rest in funds.

Then draw from the cash (like) part and top up from one of the funds periodically.

You would ask II to do the transfer and give them the details of the old pensions on the transfer form.

I thought 5 years would be a reasonable time for funds....I don't like the idea of holding just cash as this would be losing value each year wouldn't it? He has a reasonable cash reserve in cash ISAs and so does have access to immediate cash if needed.

I think the idea is that what you are going to draw down should be in the cash fund so that you aren't selling the equities at a bad moment.  Of course there will always be the same issue whenever you decide to switch from the equities to a cash fund (or some other less volatile assets) to put that money aside for draw down.

5 years is perhaps a red herring because only part of the assets are going to get drawn down in 5 years the rest will continue for a bit longer.  But don't forget equities can go down as well as up!  The longer period helps if there is a crash the day after you set it all up.

LHW99

demontec said:

LHW99 said:

5 years is perhaps rather short for using funds. He wouldn't be taking it all in one go, so maybe look at keeping a couple of years in cash (or near cash such as the Royal London short term money market fund, or similar) and the rest in funds.

Then draw from the cash (like) part and top up from one of the funds periodically.

You would ask II to do the transfer and give them the details of the old pensions on the transfer form.

I thought 5 years would be a reasonable time for funds....I don't like the idea of holding just cash as this would be losing value each year wouldn't it? He has a reasonable cash reserve in cash ISAs and so does have access to immediate cash if needed.

It's likely to be OK, but there is no absolute guarantee. There have been significant drops (think Covid) some of which take several years to recover. I think the 2008 financial crisis took quite a few years for equities to get back to where they started. If that happened in year 4, he might have lost 20% or more of the original investment, so it would depend on whether that would panic him, or cause any ongoing income problems.

People here generally suggest 7-10 years is better.

The reason for suggesting a short term money market is that it will return an interest rate close to base rate (currently over 5% https://www.ajbell.co.uk/market-research/FUND:B3P2RZ5) which is better than II would give on cash.

Also be aware, II still won't take fees from a SIPP. They will take from a GIA or ISA if there are funds, otherwise they need to be paid from a current account by DD.

MK62

II take their fees from the cash balances of the SIPPs we have with them.......but as you say, there are other options to pay the fees too.