Transfer into SIPP or stay?

qbazdz

My wife has a pretty dormant pension plan from her previous employeer. Its very low annual charge at about £25 and its not performing badly. Over recent years 20%/annum on average and since she left to become self employeed its 100% up.
Its not mega bucks at about £15k but we want to start getting the benefit of the 20% tax relief to invest in it.
My understanding is that she can't pay into that old scheme to get the 20% gov top up, it would have to be a SIPP.
Is this correct? The fund choice is clearly decent and I am not sure I'd be able to outperform it with my limited investment knowledge just yet - I'd likely mirror my workplace pension setup which gives approx 23% annualy.

molerat

You would need to check with the provider if you can pay in, some you can some you can't so there is no definite answer.

DRS1

You say you understand she can't contribute to the old employer's scheme.  Has she asked?  It would not be unusual for the scheme to say you have to be an active employee of the employer to contribute to it but some schemes may allow it - or allow her bit of the scheme to be hived off into a stand alone scheme for her.  She should ask the question of the scheme provider (not her old employer).  If they say no new contributions then yes she will need to set up a new pension (which could be a SIPP).

Presumably she hasn't set up a SIPP before because she wasn't making any money from her self employment?  Is she now making enough to afford to put some of it away in a pension (where it is locked away until she is 55 or more likely 57)?

She needs to set up a SIPP first (before she thinks about a transfer).  That will mean looking at fees and investment choice and how user friendly the website is.  On investments if you want to have the same investment as in your workplace pension or her old employer's pension you need to see if that is something which is generally available.  Some investments are linked to eg an insurance company and you won't find them generally available in the market but you may find something similar eg if she is currently in the Scottish Widows Blackrock XYZ fund then she may find there is a Blackrock XYZ fund out there.

dunstonh

My understanding is that she can't pay into that old scheme to get the 20% gov top up, it would have to be a SIPP.

It isnt a 20% top up.  It is 20% relief.

 I'd likely mirror my workplace pension setup which gives approx 23% annualy.

Please tell us what you are investing in that gives 23% annually?   That seems highly unrealistic unless you are looking at one or two years in isolation.   The long-term average on market cap investing is 11%.  Be wary of recency and not looking at a complete cycle.

qbazdz

DRS1 said:

You say you understand she can't contribute to the old employer's scheme.  Has she asked?  It would not be unusual for the scheme to say you have to be an active employee of the employer to contribute to it but some schemes may allow it - or allow her bit of the scheme to be hived off into a stand alone scheme for her.  She should ask the question of the scheme provider (not her old employer).  If they say no new contributions then yes she will need to set up a new pension (which could be a SIPP).

Presumably she hasn't set up a SIPP before because she wasn't making any money from her self employment?  Is she now making enough to afford to put some of it away in a pension (where it is locked away until she is 55 or more likely 57)?

I believe she will be able to contribute, but will have to check. If she can, I wasn't sure if it would auto qualify for the 20% relief as a 20% taxpayer.

She didn't have a SIPP so far, we opted to focus on maxing out in my pension pot which is a lot larger and I have good employer contributions, but somehow failed to spot the 20% relief.
She was earning enough from self employment to contribute, we just chose not to as per above. Likely poor decision at the time.

Marcon

qbazdz said:

My understanding is that she can't pay into that old scheme to get the 20% gov top up, it would have to be a SIPP.
Is this correct? The fund choice is clearly decent and I am not sure I'd be able to outperform it with my limited investment knowledge just yet - I'd likely mirror my workplace pension setup which gives approx 23% annualy.

No. It can be any sort of personal pension - and if you aren't a seasoned investor, a non-SIPP personal pension might be better, at least for now.

qbazdz

dunstonh said:

My understanding is that she can't pay into that old scheme to get the 20% gov top up, it would have to be a SIPP.

It isnt a 20% top up.  It is 20% relief.

 I'd likely mirror my workplace pension setup which gives approx 23% annualy.

Please tell us what you are investing in that gives 23% annually?   That seems highly unrealistic unless you are looking at one or two years in isolation.   The long-term average on market cap investing is 11%.  Be wary of recency and not looking at a complete cycle.

This is based on lat 5 years of return, as I had a look at the graphs on the app. This may be mis-reported as we had our pots transferred in to new provider 1.5 years ago, but my reading of it is that they report actual return for the fund porfolio on the chart - for example YTD, 22.6% up, 2YTD 64.2% up, 5YTD 110.4% up, 10YTD 192.2% up.
I will need to log in to online account check what the mix is but happy to share.

QrizB

qbazdz said:

... its not performing badly. Over recent years 20%/annum on average and since she left to become self employeed its 100% up.

So you're only looking at the last 4-5 years?

What's the name of the fund(s) she's invested in?

qbazdz said:

I'd likely mirror my workplace pension setup which gives approx 23% annualy.

And the name of your fund(s)?

Albermarle

You say you understand she can't contribute to the old employer's scheme.  Has she asked?  It would not be unusual for the scheme to say you have to be an active employee of the employer to contribute to it but some schemes may allow it - or allow her bit of the scheme to be hived off into a stand alone scheme for her.  She should ask the question of the scheme provider (not her old employer).  If they say no new contributions then yes she will need to set up a new pension (which could be a SIPP).

My last two DC workplace pensions were both  Group Personal Pensions. So they just stayed with me when I left employment. No need for them to be changed at all.
I could continue to add to either and have full access to the websites etc.
Of course this would not always be the case and the OP just needs to give the pension provider a call.

Albermarle

My wife has a pretty dormant pension plan from her previous employeer. Its very low annual charge at about £25 and its not performing badly. Over recent years 20%/annum on average and since she left to become self employeed its 100% up

OP - It does not sound very dormant !