Transferring to a SIPP - fund in one go or several chunks?

NotDeniseCoates

I've opened a SIPP and will be transferring in a personal pension. It will have to be a cash rather than an in-specie transfer.

It's unclear exactly how long I will be out of the market, but a couple of weeks looks like a fair estimate. I thought doing this as say 4x separate chunks would help smooth out any market dips or gains, but chatgpt is telling me that would actually increase volatility. Does that sound right?

dunstonh

Transferring a SIPP - fund in one go or several chunks?

You may wish to edit your title as you have said SIPP in the title and personal pension in the message.

It's unclear exactly how long I will be out of the market, but a couple of weeks looks like a fair estimate. 

A couple of days is most likely. You don't sell to cash on a personal pension. The units are sold at the point of transfer with providers pre-funding any settlement period.

What you don't get control of is the day the transfer takes place.

 thought doing this as say 4x separate chunks would help smooth out any market dips or gains, but chatgpt is telling me that would actually increase volatility. Does that sound right?

AI is only as good as the input, the model you are using, and the number of sources it draws on. Give Perplexity a try. It is not an LLM but a front end to multiple LLMs. It will select what it thinks is the best LLM for a specific query. It is also very good at interpreting what it thinks you mean. They are all trained to do that, but Perplexity, I find, does it best. (Note, I pay for the Pro version. I also have access to Copilot, but only because Microsoft gave a heavy discount on my M365 that effectively gave it free for 18 months - I won't be keeping it at renewal. I also have Gemini because of the business package we use. Gemini likes to make things up, and I don't use it much beyond making charts or infographics, as you cannot trust it. I also like the Comet Browser (Chromium-based), which integrates Perplexity into search results. Anyway, way off subject…….

I suspect your AI is looking up pound cost averaging and applying it to the transfers. Where there are identical funds, exactly the same time out of the market for each tranche, no extra frictions on investing then four 25% transfers are not statistically worse than one 100% transfer; they are effectively equivalent in expected outcome.

However, if the investments have fewer equities in the ceding scheme and/or the charges are lower in the receiving scheme, phasing will be statistically more likely to result in a lower valuation.

DRS1

I wouldn't have thought 4 chunks was a good idea - surely it is better to get it all done at once? Or do you think they might need the practice to get it right by the final transfer?

If you are worried about being out of the market let the transferring pension provider deal with encashing the investments - they will probably leave that till the last minute. Then it is just a matter of how long does the SIPP take to tell you the money has arrived. If it was me I'd be logging in once a day!

Notepad_Phil

https://forums.moneysavingexpert.com/discussion/comment/81877899#Comment_81877899

I wouldn't have thought 4 chunks was a good idea - surely it is better to get it all done at once? Or do you think they might need the practice to get it right by the final transfer?

I'd say that it depends on how much the transfer is worth. E.g. given some of the recent market gyrations I'd be extremely reticent in moving a 6 figure sum in cash in one go and would much rather take a more considered approach.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81878221#Comment_81878221

That is the quandary that only hindsight will tell you what was best.

Do you move 100% and bet out of the market for say 5 days. Or do you do four phases of 25% and have a quarter of your portfolio out of the market for 20 days.

Maybe if the portfolio is 60% equities, then fund switch the existing allocation to 100% equities and then transfer 40%. That way, the equities portion remains in the market, and only the bonds portion is out, which, given the low returns on bonds, would not be an issue. When that segment arrives at the receiving scheme, do the next transfer and so on.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81877899#Comment_81877899

If you are worried about being out of the market let the transferring pension provider deal with encashing the investments - they will probably leave that till the last minute. Then it is just a matter of how long does the SIPP take to tell you the money has arrived. If it was me I'd be logging in once a day!

The OP is transferring from a personal pension, where there will be no facility for the client to sell investments to cash. So you have no choice but to let the provider convert the pension to cash.

Yes you need to keep checking what is happening, as despite there often being large sums involved, the providers often seem not to inform you when the transaction is complete. Which I always think is a bit odd.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81878325#Comment_81878325

Fair point. I read the OP as saying they would need to cash out before the transfer. Some personal pensions do have cash funds (which may be cash equivalents rather than pounds shillings and pence). At least my s226 policy had one.

CountingPenniesClaire

I’ve just been through exactly this scenario. I’d been putting it off for ages due to “market volatility” but I initiated a pensions transfer at end of Feb from standard life to ii, which required converting 100% equities to cash.

I called sl to find out what was going on (apparently the letter was in the post lol!), as the Iran conflict turned the markets red. More luck than judgement but fund was £395k when transfer requested, sold at £397k (the high was £400k) but boy did I breathe a sigh of relief! 2/3 days later would have seen a more substantial drop. I’m not out of the woods yet as waiting for the cash to land and then reinvest, but I’m relieved to have got the transfer part done. My mantra is time in the market not timing the market so this was uncomfortable for me.

If you have bitten the bullet I hope it has gone smoothly. If you haven’t yet, good luck for when you do!

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81916665#Comment_81916665

Standard Life is very quick with most transfers. Typically, the transfer within 2 days of receipt. They pre-fund the unit price on sale. i.e. it the receiving scheme requested it on Monday, the funds would be with them by Wednesday. There is no letter in the post. It's all electronic via Origo Options.

You say you initiated it at the end of February. I would have expected the receiving scheme to have had the money weeks ago. However, based on other posts, the slow link has been II taking their time to request it (possibly due to increased demand from people leaving ii). But you want to make sure they are not sitting on the cash after they receive it either.

Marcon

You say you initiated it at the end of February. I would have expected the receiving scheme to have had the money weeks ago.

Weeks ago? If the transfer was initiated at the end of February, and it's 10 March now, that's hardly 'weeks' - possibly as little as 6 working days.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81916915#Comment_81916915

If it had been requested via Origo on Friday the 27th, the last working day of the month, then you would expect it to have arrived by Tuesday 3rd.

So, not quite weeks, assuming the last day of the month, but the point stands that it should have arrived by now, unless there was a delay in requesting it.