Considering partial transfer of uncrystalised employer pension to Interactive Investor

Pat38493

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

LHW99

You could always do a transfer to Aegon in a few years time, when the charges are becoming larger than you like.

The advantage of keeping separate pots is that if one platform has an IT issue that stops you accessing the funds, you have an emergency backup.

Triumph13

The simplest solution would seem to be to transfer to II, take the TFLS and immediately invest it in an II SIPP, in your desired investments ?

Linton

Pat38493 said:

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

You can maintain what is effectively 2 separate pots in the same II account just by buying the appropriate % funds.  You dont need II to keep the pots physically distinct.

I think it makes sense to put the 20+ year money into 100% equities provided you aren't phased by the occasional crash.  The money needed in the shorter term should be held in less volatile funds.

Pat38493

Linton said:

Pat38493 said:

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

You can maintain what is effectively 2 separate pots in the same II account just by buying the appropriate % funds.  You dont need II to keep the pots physically distinct.

I think it makes sense to put the 20+ year money into 100% equities provided you aren't phased by the occasional crash.  The money needed in the shorter term should be held in less volatile funds.

Yes - but wouldn’t it be the case that for example if my II pot is 20% cash an 80% equities, my drawdown and UC parts, will increase over time according to the average growth rate across all my investments?

On the other hand if I keep the UC in a completely different pot, the UC pot (and by implication the TFC available) will increase at the full growth rate of the high growth assets.  

On the flip side of course, if there is an equity crash my UC account will crash by more.

The other point though which I was not fully thinking through, is that if I take drawdown withdrawals first before UC withdrawals, the % of my II account that is UC will gradually go up, so this will again dilute the effect in a different way.

Unfortunately cash flow planning tools like Voyant Go can’t simulate this - I suspect the impact is not that great even over 20+ years, and it would be almost impossible to bre sure which was best as the impact of overall returns and economic cycles would far outweigh this, probably?

Linton

Pat38493 said:

Linton said:

Pat38493 said:

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

You can maintain what is effectively 2 separate pots in the same II account just by buying the appropriate % funds.  You dont need II to keep the pots physically distinct.

I think it makes sense to put the 20+ year money into 100% equities provided you aren't phased by the occasional crash.  The money needed in the shorter term should be held in less volatile funds.

Yes - but wouldn’t it be the case that for example if my II pot is 20% cash an 80% equities, my drawdown and UC parts, will increase over time according to the average growth rate across all my investments?

On the other hand if I keep the UC in a completely different pot, the UC pot (and by implication the TFC available) will increase at the full growth rate of the high growth assets.  

On the flip side of course, if there is an equity crash my UC account will crash by more.

The other point though which I was not fully thinking through, is that if I take drawdown withdrawals first before UC withdrawals, the % of my II account that is UC will gradually go up, so this will again dilute the effect in a different way.

Unfortunately cash flow planning tools like Voyant Go can’t simulate this - I suspect the impact is not that great even over 20+ years, and it would be almost impossible to bre sure which was best as the impact of overall returns and economic cycles would far outweigh this, probably?

II just work in terms of % crystallised.  So if you have a total of say £500K of which 40% ( £200K) is crystallised then £300K is uncrystallised giving a maximum TFLS available of £75K.  What those pots are invested in is totally irrelevent to that calculation. 

If the total pot increases by 20% to £600K  you would have £240K crystallised  and £360K uncrystallised leaving you with a maximum TFLS of £90K.

As you effectively have 2 different pots with 2 different objectives I dont see it making much sense to look at the asset allocation overall.  What is important is your split between the long and shorter term tranches and your asset allocation within the tranches. The overall allocation is then just what it happens to be.

There is no connection between asset allocation and the TFLS calculation.   You can make the decision as to how much of each drawdown is TFLS and how much is taxable as you wish as long as you dont exceed the total limits.

Pat38493

Linton said:

Pat38493 said:

Linton said:

Pat38493 said:

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

You can maintain what is effectively 2 separate pots in the same II account just by buying the appropriate % funds.  You dont need II to keep the pots physically distinct.

I think it makes sense to put the 20+ year money into 100% equities provided you aren't phased by the occasional crash.  The money needed in the shorter term should be held in less volatile funds.

Yes - but wouldn’t it be the case that for example if my II pot is 20% cash an 80% equities, my drawdown and UC parts, will increase over time according to the average growth rate across all my investments?

On the other hand if I keep the UC in a completely different pot, the UC pot (and by implication the TFC available) will increase at the full growth rate of the high growth assets.  

On the flip side of course, if there is an equity crash my UC account will crash by more.

The other point though which I was not fully thinking through, is that if I take drawdown withdrawals first before UC withdrawals, the % of my II account that is UC will gradually go up, so this will again dilute the effect in a different way.

Unfortunately cash flow planning tools like Voyant Go can’t simulate this - I suspect the impact is not that great even over 20+ years, and it would be almost impossible to bre sure which was best as the impact of overall returns and economic cycles would far outweigh this, probably?

II just work in terms of % crystallised.  So if you have a total of say £500K of which 40% ( £200K) is crystallised then £300K is uncrystallised giving a maximum TFLS available of £75K.  What those pots are invested in is totally irrelevent to that calculation. 

If the total pot increases by 20% to £600K  you would have £240K crystallised  and £360K uncrystallised leaving you with a maximum TFLS of £90K.

As you effectively have 2 different pots with 2 different objectives I dont see it making much sense to look at the asset allocation overall.  What is important is your split between the long and shorter term tranches and your asset allocation within the tranches. The overall allocation is then just what it happens to be.

There is no connection between asset allocation and the TFLS calculation.   You can make the decision as to how much of each drawdown is TFLS and how much is taxable as you wish as long as you dont exceed the total limits.

Let’s take an example.

Aegon pension 100% equities started at 100K and grows by 20%
II pension in drawdown £100K invested is in cash and earns zero interest (to hopefully make the maths easy).

TFC available grows from 25K to £30K.

On the other hand, if I had merged the Aegon pension into II,  the total amount is the same - £220K, but my TFC available only went up to £27500 (50% of £220K x 25%).

Triumph13

Pat38493 said:

Linton said:

Pat38493 said:

Linton said:

Pat38493 said:

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

You can maintain what is effectively 2 separate pots in the same II account just by buying the appropriate % funds.  You dont need II to keep the pots physically distinct.

I think it makes sense to put the 20+ year money into 100% equities provided you aren't phased by the occasional crash.  The money needed in the shorter term should be held in less volatile funds.

Yes - but wouldn’t it be the case that for example if my II pot is 20% cash an 80% equities, my drawdown and UC parts, will increase over time according to the average growth rate across all my investments?

On the other hand if I keep the UC in a completely different pot, the UC pot (and by implication the TFC available) will increase at the full growth rate of the high growth assets.  

On the flip side of course, if there is an equity crash my UC account will crash by more.

The other point though which I was not fully thinking through, is that if I take drawdown withdrawals first before UC withdrawals, the % of my II account that is UC will gradually go up, so this will again dilute the effect in a different way.

Unfortunately cash flow planning tools like Voyant Go can’t simulate this - I suspect the impact is not that great even over 20+ years, and it would be almost impossible to bre sure which was best as the impact of overall returns and economic cycles would far outweigh this, probably?

II just work in terms of % crystallised.  So if you have a total of say £500K of which 40% ( £200K) is crystallised then £300K is uncrystallised giving a maximum TFLS available of £75K.  What those pots are invested in is totally irrelevent to that calculation. 

If the total pot increases by 20% to £600K  you would have £240K crystallised  and £360K uncrystallised leaving you with a maximum TFLS of £90K.

As you effectively have 2 different pots with 2 different objectives I dont see it making much sense to look at the asset allocation overall.  What is important is your split between the long and shorter term tranches and your asset allocation within the tranches. The overall allocation is then just what it happens to be.

There is no connection between asset allocation and the TFLS calculation.   You can make the decision as to how much of each drawdown is TFLS and how much is taxable as you wish as long as you dont exceed the total limits.

Let’s take an example.

Aegon pension 100% equities started at 100K and grows by 20%
II pension in drawdown £100K invested is in cash and earns zero interest (to hopefully make the maths easy).

TFC available grows from 25K to £30K.

On the other hand, if I had merged the Aegon pension into II,  the total amount is the same - £220K, but my TFC available only went up to £27500 (50% of £220K x 25%).

And you avoid that issue if you immediately crystalise the Aegon when you transfer it and put your TFLS of £16k in an ISA, invest both it and the remaining £48k in equities and forget about them for 20m years.  It all grows happily and the existing cash portion has no impact on it whatsoever.

Pat38493

Triumph13 said:

Pat38493 said:

Linton said:

Pat38493 said:

Linton said:

Pat38493 said:

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

You can maintain what is effectively 2 separate pots in the same II account just by buying the appropriate % funds.  You dont need II to keep the pots physically distinct.

I think it makes sense to put the 20+ year money into 100% equities provided you aren't phased by the occasional crash.  The money needed in the shorter term should be held in less volatile funds.

Yes - but wouldn’t it be the case that for example if my II pot is 20% cash an 80% equities, my drawdown and UC parts, will increase over time according to the average growth rate across all my investments?

On the other hand if I keep the UC in a completely different pot, the UC pot (and by implication the TFC available) will increase at the full growth rate of the high growth assets.  

On the flip side of course, if there is an equity crash my UC account will crash by more.

The other point though which I was not fully thinking through, is that if I take drawdown withdrawals first before UC withdrawals, the % of my II account that is UC will gradually go up, so this will again dilute the effect in a different way.

Unfortunately cash flow planning tools like Voyant Go can’t simulate this - I suspect the impact is not that great even over 20+ years, and it would be almost impossible to bre sure which was best as the impact of overall returns and economic cycles would far outweigh this, probably?

II just work in terms of % crystallised.  So if you have a total of say £500K of which 40% ( £200K) is crystallised then £300K is uncrystallised giving a maximum TFLS available of £75K.  What those pots are invested in is totally irrelevent to that calculation. 

If the total pot increases by 20% to £600K  you would have £240K crystallised  and £360K uncrystallised leaving you with a maximum TFLS of £90K.

As you effectively have 2 different pots with 2 different objectives I dont see it making much sense to look at the asset allocation overall.  What is important is your split between the long and shorter term tranches and your asset allocation within the tranches. The overall allocation is then just what it happens to be.

There is no connection between asset allocation and the TFLS calculation.   You can make the decision as to how much of each drawdown is TFLS and how much is taxable as you wish as long as you dont exceed the total limits.

Let’s take an example.

Aegon pension 100% equities started at 100K and grows by 20%
II pension in drawdown £100K invested is in cash and earns zero interest (to hopefully make the maths easy).

TFC available grows from 25K to £30K.

On the other hand, if I had merged the Aegon pension into II,  the total amount is the same - £220K, but my TFC available only went up to £27500 (50% of £220K x 25%).

And you avoid that issue if you immediately crystalise the Aegon when you transfer it and put your TFLS of £16k in an ISA, invest both it and the remaining £48k in equities and forget about them for 20m years.  It all grows happily and the existing cash portion has no impact on it whatsoever.

True that is a good point that you made in your original reply - however this is really only for the next couple of years during which I don't have any unallocated ISA allowances so I would probably havce to wait till about 2026 or 2027 to do that - maybe that's what I will do in the end.

Linton

Pat38493 said:

Linton said:

Pat38493 said:

Linton said:

Pat38493 said:

I have an II pension in 100% drawdown, with about £160K in it, and an Aegon pension which is my employer pension but it's basically a SIPP that the employer pays into, currently worth about £64K.

I am looking to decide whether to do a partial transfer again to save charges.

I have not triggered MPAA - only taken TFC from the II pension so far.

The II charges are £12.99 per month fixed.  Aegon charges are I think 0.22% - currently running at about £11 per month so about the same as the Aegon one but increasing.  

I have just gone part time in January (hooray) and I plan to stop work completely "soon" - possibly as early as the end of May but definitely in the next couple of years.

Last year did a partial transfer of the entire balance from Aegon to II in order to save about 90% in platform charges.  Since then I have taken the TFC from the II fund.

If I do another transfer, II does not allow you to choose different investments - everything is mixed together and they keep track of the % of your fund that is invested.

My current cash flow plan is to keep the uncrystallised money back and it would not be drawn until 2048 (according to my cash flow planning software).

If I was plannig to leverage the tax free cash from the uncrystallised part any time soon, I would think that it would be an advantage to put the money in II as I am hedging my bets on any financial crash - my TFC will get less impacted by negative returns, and I will still get at least some of the benefit from high growth.

However if I am not going to crystalise that money for 20+ years, I am wondering if this means it makes more sense to keep that as a separate fund and put it entirely in equities.  What do you all think?  The other downside is the charges as they will grow with the pot in the Aegon pension.

You can maintain what is effectively 2 separate pots in the same II account just by buying the appropriate % funds.  You dont need II to keep the pots physically distinct.

I think it makes sense to put the 20+ year money into 100% equities provided you aren't phased by the occasional crash.  The money needed in the shorter term should be held in less volatile funds.

Yes - but wouldn’t it be the case that for example if my II pot is 20% cash an 80% equities, my drawdown and UC parts, will increase over time according to the average growth rate across all my investments?

On the other hand if I keep the UC in a completely different pot, the UC pot (and by implication the TFC available) will increase at the full growth rate of the high growth assets.  

On the flip side of course, if there is an equity crash my UC account will crash by more.

The other point though which I was not fully thinking through, is that if I take drawdown withdrawals first before UC withdrawals, the % of my II account that is UC will gradually go up, so this will again dilute the effect in a different way.

Unfortunately cash flow planning tools like Voyant Go can’t simulate this - I suspect the impact is not that great even over 20+ years, and it would be almost impossible to bre sure which was best as the impact of overall returns and economic cycles would far outweigh this, probably?

II just work in terms of % crystallised.  So if you have a total of say £500K of which 40% ( £200K) is crystallised then £300K is uncrystallised giving a maximum TFLS available of £75K.  What those pots are invested in is totally irrelevent to that calculation. 

If the total pot increases by 20% to £600K  you would have £240K crystallised  and £360K uncrystallised leaving you with a maximum TFLS of £90K.

As you effectively have 2 different pots with 2 different objectives I dont see it making much sense to look at the asset allocation overall.  What is important is your split between the long and shorter term tranches and your asset allocation within the tranches. The overall allocation is then just what it happens to be.

There is no connection between asset allocation and the TFLS calculation.   You can make the decision as to how much of each drawdown is TFLS and how much is taxable as you wish as long as you dont exceed the total limits.

Let’s take an example.

Aegon pension 100% equities started at 100K and grows by 20%
II pension in drawdown £100K invested is in cash and earns zero interest (to hopefully make the maths easy).

TFC available grows from 25K to £30K.

On the other hand, if I had merged the Aegon pension into II,  the total amount is the same - £220K, but my TFC available only went up to £27500 (50% of £220K x 25%).

Your maths seems rather confused.  After 1 year the II portrfolio would have risen to £120K equities and £100K cash giving the same result as if the funds were held separately. I dont see where the 50% of £220K comes from. I guess you could be thinking of rebalancing but if so you simply change £10K of equity for £10K of cash ending up with the same result.

NoMore

Its because II use notional splits for tracking uncrystallised / crystallised amounts, as opposed to separate pots so its the overall performance that dictates the TFC available rather than just the performance of a uncrystallised pot.

Notional split - ii