Moving a Virgin Pension

ericpode

One of my pensions is an ancient Virgin stakeholder. I will probably want to draw from it in the next few years, and in doing a bit of reading around on the forums here it seems it has been poorly performing for the past 10-15 years and I should have moved it years ago.:(

Oh well, nothing I can do about that, but I've also seen that they won't allow you to draw the 25% tax free amount - you can only draw the whole thing and take a tax hit, or transfer it all somewhere else. I'm not sure that the sale of Virgin pensions to Octopus in a few months is necessarily a good thing either.

So I would like to move it now to another fund that WILL allow me to take the 25% tax free amount when the time comes (probably within the next 5 years or so). It would also be nice if the pension fund I move it to is better perfoming than Virgin and with lower fees - though with only a few years to go it probably won't matter so much than if I'd moved it 15 years ago!

There have been no payments into it for years, so it's just a matter of moving the whole thing.

Any ideas which funds would be worth looking into that would fit the bill?

Albermarle

You are mixing up 'investment fund' and ' pension provider' a bit ( quite a common issue) 

The Virgin stakeholder pension will hold your money in an investment fund ( there will be a choice of investments but if you make no choice it goes into a default fund) .
It is the investment that produces the returns ( or not)
It is the pension provider that deals with withdrawals etc 
They are two different items.

To get more flexibility on withdrawals, you will need to move to a more modern pension that allows more flexibility.
When you move to a new pension provider, you will need to decide what investment fund(s)  the money should go into.

For example it is very possible to have an old pension with restrictions on withdrawals, but still have good returns from the investment(s) within it. On the other side you could have a modern pension with lots of flexibility on withdrawals, but it could have poor returning investments in it. 

squirrelpie

Albermarle said:

You are mixing up 'investment fund' and ' pension provider' a bit ( quite a common issue) 

[snip]

To get more flexibility on withdrawals, you will need to move to a more modern pension that allows more flexibility.
When you move to a new pension provider, you will need to decide what investment fund(s)  the money should go into.

For example it is very possible to have an old pension with restrictions on withdrawals, but still have good returns from the investment(s) within it. On the other side you could have a modern pension with lots of flexibility on withdrawals, but it could have poor returning investments in it. 

To be clear, you need to move to a modern pension from another pension provider. You pick a provider and just ask them to move your pension to them. Ask to do it as cash. Then you need to choose what investments you want. People here may be able to help with that if you say a bit more about what you're looking for.

gm0

There are a few things to consider.  

One.  Is it invested correctly for your age and plans.  Risky enough. Too risky. About right

Example if you want to take tax free cash soon.  Or indeed income.   Then being 100% all in on equities just now. Or moving from something lower risk to that.  Would be.....odd - still right for some people with specific circumstances - but not the default for many many others......

Given you are unhappy with look back performance - I suspect that's not the case here.  And that there is a lower risk mix of investments with a fairly big chunk of bond funds alongside equities.  Bond funds that took a hit in recent years when interest rates snapped back post qe. And some "equity" funds which will take a hit sometime but have been on a long roll - US, tech, AI etc.  Contributing fairly postiviely to a lot of recent performance. 

You need to dig into what you have.  In what mix.  And why it behaves the way it does.  Is it right for you.

The general guidance approaching accessing a pension via drawdown (i.e. staying invested while taking income) is to be configured in investments that you can hold long term and suit the deaccumulation and sustain income adequately whatever happens.  And suit your risk appetite (which is a mix of attitude, income need and other income sources).  How much you try to stretch a pot to deliver a given income rate - influences you of course in how much risk you have to take. Or choose to.  Recognising the possible negative consequences of taking too much risk if markets don't co-operate during the spending down capital and new returns era.  You can work this out yourself. DIY Drawdown.  Or an independent adviser can help you do it - for their fee.

If buying an annuity the problem is a slightly different shape.  The tax free cash (if wanted) doesn't need to be hostage to the markets after a certain point close to the date.  And the money for the annuity itself can be held in a way that locks in the "value" vs annuity price movements - and insulates against an equity market drop at an inconvenient time around the buy.  Or you can stay invested speculatively until the last minute.  Your pot. Your choice which way to do it.  The typical pension product provider doesn't sort this out for you.

Two - how do you wish to access the benefits of it.  Annuity?  Drawdown?  What kind of drawdown?  Occasional. Regular.  Monthly?.  Do you plan to take tax free cash as part of income along the way. Or a lump upfront for a special purpose.  

Where you move to is influenced - to a secondary degree by some of these choices.  Product features.  That you must have, prefer, and fees.

Basically.  Any modern personal pension provider, robo, or platform SIPP.  Will "do the job".  Some will have different options and make different things easier or simpler.   So new entrants like PensionBee.  SIPPs like iWeb, Fidelity, AJ Bell etc. will all have a product - sometimes with a transfer cashback offer for new customers.  Some with limited investment ranges.  SIPPs with thousands.

Costs will also vary a lot.  With pot size. With type of investments used (funds, etfs), how much trading goes on as opposed to a simple income draw against fairly fixed investments etc.   The fee sheets are all on the web but require a point of view from you on what you will do - to make sense of them.  And cashback offers that net off fees.

Picking the new provider arguably comes after the other choices about what you want. 

So the rough sequence is 

"review current investments and options" and consider if a switch is or is not needed

Think about how you wish to access these pension benefits

Filter possible new providers on that

Look for cashback offers and other things which could influence your choice - digital stuff - apps etc.

Open the new account and ask them to pull the pension across

Or if it all seems too much apply the effort to finding a good independent adviser.

ericpode

Thanks all.

The Virgin pension is their Growth fund that is "100% invested in FTSE All-Share Index".

I also have a 'managed' pension, originally Cannon Lincoln, eventually became Sun Life Assurance Company of Canada that became part of the Phoenix Group a couple of years ago.

I don't need any income from these for the time being, so I'm just leaving them invested for maybe another 5 years or so. Delaying the decision I guess!

It's tempting to move both of them into a something simple and cheap such as a FTSE All-Share fund for the next few years until I'm clearer on what I want to do, but maybe I need to see an adviser sooner rather than later. A lot to consider.

As an aside, Virgin are currently driving me nuts over a sudden requirement to prove my identity by sending them docs - they've rejected everything I've sent so far. Until I can provide docs that satisfy them they have restricted my account so I can't move or draw from it. But it's providing more motivation to transfer away from them ASAP.

Albermarle

The Virgin pension is their Growth fund that is "100% invested in FTSE All-Share Index".

It is more normal to be invested globally, rather than just in the UK. 

dunstonh

It's tempting to move both of them into a something simple and cheap such as a FTSE All-Share fund for the next few years until I'm clearer on what I want to do, but maybe I need to see an adviser sooner rather than later. A lot to consider.

So, switching the Virgin stakeholder wouldnt make an awful lot of difference then as you intend to use the saem investment that you are already holding despite you saying:  " it seems it has been poorly performing for the past 10-15 years"

You are poorly invested now but intend to continue that with the alternative.

ericpode

The underperformance was more to do with tracking error (and maybe the fee) - see

https://forums.moneysavingexpert.com/discussion/comment/81620728/#Comment_81620728

dunstonh

ericpode said:

The underperformance was more to do with tracking error (and maybe the fee) - see

https://forums.moneysavingexpert.com/discussion/comment/81620728/#Comment_81620728

You need to deduct the platform charge if you are using UT/OEICs.   The Virgin Stakeholder pension is bundled pricing (ie provider charge is bundled with the fund charge).

So, that chart is not comparing like for like as it's overstating the HSBC fund as you are not deducting the platform charge.