Low amount transfer

Aegis

Good morning all!

This is my first adventure into the Pensions area of the site. Normally I hang out in the Investments area and harp on at great length about things like Premium Bonds and the pros and cons of trackers...

However, this particular forray is something of a fact-find for my own personal finances. I'm leaving my company next month for (hopefully!) bigger and better things, and need to work out what to do with my stakeholder pension when this happens. While I have been employed by my current company, I have enjoyed employer contributions into my Zurich stakeholder plan which exceeded my own, meaning that I was ok with having to make do with the Zurich pension funds instead of my own preferred options!

On leaving my current company, however, the employer contributions will cease, making this a fairly bog-standard trading account with a limited selection of funds to choose from. I would prefer not to have to deal with their website any more either, as it's appallingly bad!

My first thought was to transfer to a Hargreaves Lansdown SIPP, as I already use them to deal in unit trusts and OEICs and quite like their low charges and easy-to-use website. However, they have a minimum transfer in of £5000, which I'm somewhat short of with this current pension pot. I've had a look around further and have seen other SIPPs mentioned (SIPPDeal, for example), and thought I could probably get in there with this amount, but then I wondered if this was even a good idea. Can I really make the most of a SIPP with a fairly low balance? Would I be better off leaving this stakeholder where it is and hoping that it grows in the time I work with my new company, then play with it some more in 2 or 3 years after (hopefully) some good growth?

Is there another option that I've not considered yet because of random tunnel vision?

Or are there any completely out of the blue suggestions that people just want to give me for the hell of it?

Thanks all, hope this hasn't been covered too many times before!

EdInvestor

If it's a low cost SIPP, should be no problem with a small fund.If you want the best funds and have some investment experience you shiuld be fine with a SIPP, and the difference in online performance is massive

Has the fund got any protected rights money it it though? That can't go into a SIPP yet, should be OK after October.

dunstonh

My first thought was to transfer to a Hargreaves Lansdown SIPP, as I already use them to deal in unit trusts and OEICs and quite like their low charges and easy-to-use website.

Their amcs arent discounted on their SIPP. So its not as low cost as often suggested.

Would I be better off leaving this stakeholder where it is and hoping that it grows in the time I work with my new company, then play with it some more in 2 or 3 years after (hopefully) some good growth?

What about the middle option of a personal pension. You are looking at both extremes at the moment. The stakeholder at the simplified end. Low cost, limited investment options, ideal for the inexperienced investor and SIPPs at the experienced investor end with higher charges but greater investment choice. In the middle you have personal pension which can utilise stakeholder funds as well as the major external funds. Assuming you would do execution only, you should find the charges on a balanced spread would be lower on a personal pension than a SIPP investing in unit trusts.

EdInvestor

SIPP charges vary a lot depending on what you want to invest in.If you like trackers, the ETF option (not available in personal pensions, only in SIPPs) may be worth a look as it often giives you geneuine access to the low costs of trackers, which pensions usually don't..Quite a lot of PPs charge more than SIPPs for external funds and of course the online side is usually woeful.

Aegis

EdInvestor wrote: »

SIPP charges vary a lot depending on what you want to invest in.If you like trackers, the ETF option (not available in personal pensions, only in SIPPs) may be worth a look as it often giives you geneuine access to the low costs of trackers, which pensions usually don't..Quite a lot of PPs charge more than SIPPs for external funds and of course the online side is usually woeful.

Not a fan of trackers to be perfectly honest, so I'm not too concerned about the cost of those. Good to know for future reference though.

Aegis

dunstonh wrote: »

Their amcs arent discounted on their SIPP. So its not as low cost as often suggested.

I had noticed that in their terms, but had assumed (evidently incorrectly) that this would be a common feature of SIPPs and not something I coulod easily change by looking elsewhere.

What about the middle option of a personal pension. You are looking at both extremes at the moment. The stakeholder at the simplified end. Low cost, limited investment options, ideal for the inexperienced investor and SIPPs at the experienced investor end with higher charges but greater investment choice. In the middle you have personal pension which can utilise stakeholder funds as well as the major external funds. Assuming you would do execution only, you should find the charges on a balanced spread would be lower on a personal pension than a SIPP investing in unit trusts.

I've heard people discussing personal pensions, but in all honesty I don't even have the first clue where to look at getting one! I don't feel I have enough to warrant speaking to an IFA about, especially since this would be a transfer-and-abandon (for a while anyway) pension rather than one I would contribute to regularly. I am moving to a job with another company pension, so I imagine I won't be contributing to a personal pension as well as those until I have enough of a salary to comfortably allow me to do so!

I'm certainly not ruling them out because if they have the funds I want and are cheaper it's a fairly easy decision to make!

What would be a good example of a typical low cost personal pension, and would I need to go via an IFA in order to get one?

Thanks for the information to go on, very good food for thought!

dunstonh

I had noticed that in their terms, but had assumed (evidently incorrectly) that this would be a common feature of SIPPs and not something I coulod easily change by looking elsewhere.

There are some fund supermarket pensions which allow discounting but with £5k you wont get that. Typically you need £100k for those to beat HLs SIPP.

What would be a good example of a typical low cost personal pension, and would I need to go via an IFA in order to get one?

You dont need an IFA and I would assume you would go DIY so someone like Cavendish may be worth you using.

Scot Wid and AXA may have enough funds for you on their PPPs. All of which have no initial charges and offer stakeholder funds at 1% (before discounting) and a range of external funds with the major funds. L&G has a more limited range but can be cheaper with larger fund values (not really in your case). NU need a minimum of 10k in their PPP.

Aegis

dunstonh wrote: »

There are some fund supermarket pensions which allow discounting but with £5k you wont get that. Typically you need £100k for those to beat HLs SIPP.



You dont need an IFA and I would assume you would go DIY so someone like Cavendish may be worth you using.

Scot Wid and AXA may have enough funds for you on their PPPs. All of which have no initial charges and offer stakeholder funds at 1% (before discounting) and a range of external funds with the major funds. L&G has a more limited range but can be cheaper with larger fund values (not really in your case). NU need a minimum of 10k in their PPP.

Thanks again, I'll check out your suggestions.

EdInvestor

Scot Wid and AXA may have enough funds for you on their PPPs. All of which have no initial charges and offer stakeholder funds at 1% (before discounting) and a range of external funds with the major funds.

It would be interesting to see a direct charges comparison with a selection of quality funds common to both these PPs and the HL SIPP.

dunstonh

EdInvestor wrote: »

It would be interesting to see a direct charges comparison with a selection of quality funds common to both these PPs and the HL SIPP.

I did an L&G stakeholder with a fund spread that had beaten every MM fund HL had to offer on performance. The AMC on that one was 0.7%.

EdInvestor

Hardly surprising if you're comparing MM funds.