Pension thoughts ....

JayJay999

Hi All,
Hope your doing well.
I have a thought / dilemma in so far as my employers pension scheme.
It's getting a large pot size now in which AMC's are getting equally sizeable and my concerns and aim is to reduce or manage this better.
Now here's my thoughts...
1 - Close current employer pension account and move full pot out to a SIP scheme and self select investments etc drastically reducing charges.
I don't believe there is any other pension bolt ones I loose doing so, but advice appreciated.
2 - Start up new employers pension with drastically reduced AMCs in terms of monetary value. ( I have enquired and this can be done ) still keeping my salary sacrifice nic benefits.

Thanks, that's it - really appreciate any advice as these pension providers have bigger houses than me 😉

jaypers

As with anything pension related, you need to get advice from an IFA. First consultation will be free so I would strongly suggest you take this route before deciding anything. Pensions are incredibly complex and different for every individual. 

cloud_dog

JayJay999 said:

Hi All,
Hope your doing well.
I have a thought / dilemma in so far as my employers pension scheme.
It's getting a large pot size now in which AMC's are getting equally sizeable and my concerns and aim is to reduce or manage this better.
Now here's my thoughts...
1 - Close current employer pension account and move full pot out to a SIP scheme and self select investments etc drastically reducing charges.
I don't believe there is any other pension bolt ones I loose doing so, but advice appreciated.
2 - Start up new employers pension with drastically reduced AMCs in terms of monetary value. ( I have enquired and this can be done ) still keeping my salary sacrifice nic benefits.

Thanks, that's it - really appreciate any advice as these pension providers have bigger houses than me 😉

Who is your workplace scheme with?

What are the actual charges of the scheme; some can be really quite low?

Have you asked if you are able to undertake a partial transfer out whilst remaining an active member of the scheme?  (wording important)

If you are then you could transfer most of the holding to a personal pension.  This assumes you are comfortable with identifying an investment strategy (investments to hold).

dunstonh

1 - Close current employer pension account and move full pot out to a SIP scheme and self select investments etc drastically reducing charges.

You say drastically reduce but that doesnt seem that likely.  Its going to be in the 0.x% range as auto-enrolment schemes are capped to 0.75% but most are in the 0.3-0.5% range.

What are the actual charges?

Linton

AMCs are solely dependent on the funds you choose to invest in. The charges are a % of the amount invested.  If you invest in exactly the same funds with a new portfolio the AMCs will be the same (there can be different versions of funds with different AMCs available from different platforms).

What high AMC funds is your pension invested in? What choice do you have in your employer's pension?

Note that the published performance of a fund is after deduction of fund charges.

JayJay999

Sorry delay guy's. It's with Standard Life with a whopping 0.85% AMC's. Like I said I believe employee & provider gets a very healthy cut here.

Thanks @Linton I didn't know different investments attract different charges, I've requested this etc. I don't quite understand the principle behind this but I'll await.
I believe there's a bit of flexibility in funds, thanks.

So guys what's the drawback of pulling out and restarting employment pension to benefit from salary sacrifice NI contribution savings but with the current  large pot withdrawn and going to new sip provider say invested into vanguard 1 fund, from what I see there's only one charge and vanguard's 40/60 is a safe'ish location.
Employment pension AMC's at the mo very roughly 3.5k per year !
Sip scheme can't be as much as this surely ??

Thanks again guys ... appreciate your time/thoughts 

jimjames

JayJay999 said:

So guys what's the drawback of pulling out and restarting employment pension to benefit from salary sacrifice NI contribution savings but with the current  large pot withdrawn and going to new sip provider say invested into vanguard 1 fund, from what I see there's only one charge and vanguard's 40/60 is a safe'ish location.

I've done similar but don't close the current employer pension scheme, just remove enough to allow it to stay open. With mine keeping 1% of the funds there was enough and the rest was moved to my SIPP. But as above check the fund charges not just the overall amount. 0.85% might include fund and platform so you might not save as much as you think.

jaypers said:

As with anything pension related, you need to get advice from an IFA. 

I disagree. You might choose to get an advice from an IFA but you certainly don't need to get advice.

dunstonh

Sorry delay guy's. It's with Standard Life with a whopping 0.85% AMC's. Like I said I believe employee & provider gets a very healthy cut here.

I suspect you are misreading it as there is a cap of 0.75% on auto-enrolment schemes unless you are using external funds.  Or that the 0.85% includes transaction charges.

The provider gets a cut because it's their product.  The employer doesn't get anything.  The employee doesnt get anything (although they may get rebates on the charge).

If you are looking at the charges on the fund factsheets, then they are not necessarily the charges you are paying.  They will be the pre-discounted rate.    Most SL workplace pensions I come across are in the 0.3-0.5% range after discount.

So guys what's the drawback of pulling out and restarting employment pension to benefit from salary sacrifice NI contribution savings but with the current  large pot withdrawn and going to new sip provider say invested into vanguard 1 fund, from what I see there's only one charge and vanguard's 40/60 is a safe'ish location.

There isn't one charge.  There are four.
Vanguard platform 0.15%
Vanguard LS OCF: 0.22%
Vanguard LS TC: 0.05%
Vanguard LS IC: 0.00%

Most people ignore TC (transaction charges) as its a synthetic figure.   However, if you include it on the Standard Life plan then you should include on the Vanguard option.  Or disregard it with both.

Albermarle

If you are looking at the charges on the fund factsheets, then they are not necessarily the charges you are paying.  They will be the pre-discounted rate.    Most SL workplace pensions I come across are in the 0.3-0.5% range after discount.

When I first started investigating my pensions more closely, it was not at all clear how much my Standard Life one was costing me. Only after calling them did I find out for sure ( and had it confirmed by E mail) that my ex employer had negotiated a discount of 0.55% . The  cost for management charge and investment was 1.05% so in fact I was paying 0.5%.
The discount has since been increased to 0.65% .

dunstonh

Albermarle said:

If you are looking at the charges on the fund factsheets, then they are not necessarily the charges you are paying.  They will be the pre-discounted rate.    Most SL workplace pensions I come across are in the 0.3-0.5% range after discount.

When I first started investigating my pensions more closely, it was not at all clear how much my Standard Life one was costing me. Only after calling them did I find out for sure ( and had it confirmed by E mail) that my ex employer had negotiated a discount of 0.55% . The  cost for management charge and investment was 1.05% so in fact I was paying 0.5%.
The discount has since been increased to 0.65% .

That charge of 1.05% was probably 1% AMC and 0.05% TC.  Pension funds started to show an equivalent to the MiFID II requirements even though they are not caputured by the EU directive.  (although it could be that it was an external fund).

So, if we assume it was 1.00% AMC plus 0.05% TC and the OP is doing similar, then the alternative (Vanguard in this case) should include the 0.05% TC figure for a like for like comparison.

Rich1976

I wish my SL pension was in the charging range of upto 0.5%. My workplace one, the default fund is the lowest charging at 0.64% and is the only one which attracts a discount. All of the other funds are at least 1% and do not attract a discount so I would say it is entirely possible for someone to be paying 0.85%.