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  • FIRST POST
    • starkiwi26
    • By starkiwi26 9th Mar 18, 9:26 PM
    • 60Posts
    • 13Thanks
    starkiwi26
    Can I move some of current employer pension pot
    • #1
    • 9th Mar 18, 9:26 PM
    Can I move some of current employer pension pot 9th Mar 18 at 9:26 PM
    Dear fellow MSE members,

    I make regular monthly contribution by salary sacrifice to my pension. My company use Legal and General.
    I am not happy with the default option of the pension funds because apparently my ISA is doing a lot better than it. Therefore I would like to switch the pension funds, but then I immediately noticed the "similar index funds" is much higher at Legal and General (compared to my ISA). "similar index funds" because I could not find the same funds at Legal & General, but it is passive index fund, should perform similar.

    For example, LEGAL & GENERAL (PMC) UK EQUITY INDEX FUND. charge 0.15%
    But my ISA on Fidelity, Fidelity Index UK Fund P-Acc. charge only 0.06%

    I did some google, there are plenty of guides on how to move pension of previous employer into your current employer - for easy management. But, I cannot find any guide or article mentions about moving some of the current employer pension to a personal pension fund or SIPP.

    I am still working with my current employer and make regular monthly contribution by salary sacrifice to this pension. Therefore, I only want to move, let's 80% of the pension pot to a cheaper personal pension platform. But I will still maintain our current employer Legal and General pension.
    a) Can this be done?
    b) Any implication of doing this? (Because if this is a norm, then MSE must have recommended it )

    Appreciate your reading and many thanks for the answers in advance.
    Last edited by starkiwi26; 09-03-2018 at 9:52 PM. Reason: Typo
Page 1
    • AnotherJoe
    • By AnotherJoe 9th Mar 18, 9:47 PM
    • 9,364 Posts
    • 10,318 Thanks
    AnotherJoe
    • #2
    • 9th Mar 18, 9:47 PM
    • #2
    • 9th Mar 18, 9:47 PM
    It depends on your scheme. There is no obligation for them to let you do this. With my last employer it wasn't possible until they changed schemes and then it became possible.
    • Dox
    • By Dox 9th Mar 18, 10:00 PM
    • 497 Posts
    • 298 Thanks
    Dox
    • #3
    • 9th Mar 18, 10:00 PM
    • #3
    • 9th Mar 18, 10:00 PM
    Check with your employer/scheme booklet whether you can 'leave' the scheme and then rejoin. If you can, it would mean that you have considerably more freedom with the funds you've built up, although future funds would have the same restrictions as you have now.
    • Alexland
    • By Alexland 9th Mar 18, 10:07 PM
    • 2,387 Posts
    • 1,785 Thanks
    Alexland
    • #4
    • 9th Mar 18, 10:07 PM
    • #4
    • 9th Mar 18, 10:07 PM
    Yes you can phone your employer's pension provider and ask them if a partial transfer would be possible with the rules if the plan and if so to send you the transfer and discharge paperwork. By doing a partial transfer you are leaving it open for future contributions.

    I make most of my pension contributions into my workplace pension to benefit from automatic higher rate tax relief and salary sacrifice but I have transferred around half of my total pension pot (including current employer contributions) into a SIPP for self investment. I then only contribute 12 into the SIPP which is boosted by 3 basic rate relief to pay the 180 platform fee.

    I am unsure if the pension provider even made my employer aware that I did this.

    However managing your own pension via a SIPP is a serious undertaking and you should have a clear understanding of the research, risk management, asset allocation and financial discipline you will need to apply to be successful.

    Both pensions are low six digits but I still have 20 years work ahead before I can draw on them.

    Alex
    Last edited by Alexland; 09-03-2018 at 10:33 PM.
    • starkiwi26
    • By starkiwi26 9th Mar 18, 10:21 PM
    • 60 Posts
    • 13 Thanks
    starkiwi26
    • #5
    • 9th Mar 18, 10:21 PM
    • #5
    • 9th Mar 18, 10:21 PM
    Yes you can phone your employer's pension provider and ask them if a partial transfer would be possible with the rules if the plan and if so to send you the transfer and discharge paperwork. By doing a partial transfer you are leaving it open for future contributions.

    I make most of my pension contributions into my workplace pension to benefit from automatic higher rate tax relief and salary sacrifice but I have transferred around half of my total pension pot (including current employer contributions) into a SIPP for self investment. I then only contribute 12 into the SIPP which is boosted by 3 basic rate relief to pay the 180 platform fee.

    I am unsure if the pension provider even made my employer aware that I did this.

    However managing your own pension via a SIPP is a serious undertaking and you should have a clear understanding of the research, risk management, asset allocation and financial discipline you will need to apply to be successful.

    Alex
    Originally posted by Alexland
    Your comment on SIPP scared me... Please, anything I should pay more attention to?
    I am currently 35 years old, I need at least 20 years before I am allowed to withdraw the money, though most probably I need to work until at least 60 years old before I have sufficient money to retire.
    Therefore, my pension for a 20-30 years of long term investment. In my opinion, the long term investment should be relatively easy because how bad the market crash, it is likely to recover in this timeframe. I just need to take care when I am nearer to retirement age.

    Also, why you need to contribute 12 for the SIPP fee? couldnt it deduct from your pension fund?
    Sorry, I am newbie to it.

    Both pensions are low six digits but I still have 20 years work ahead before I can draw on them.
    => You are rich!!
    Last edited by starkiwi26; 09-03-2018 at 10:25 PM.
    • Alexland
    • By Alexland 9th Mar 18, 10:32 PM
    • 2,387 Posts
    • 1,785 Thanks
    Alexland
    • #6
    • 9th Mar 18, 10:32 PM
    • #6
    • 9th Mar 18, 10:32 PM
    Your comment on SIPP scared me... Please, anything I should pay more attention to?
    I am currently 35 years old, I need at least 20 years before I am allowed to withdraw the money, though most probably I need to work until at least 60 years old before I have sufficient money to retire.
    Therefore, my pension for a 20-30 years of long term investment. In my opinion, the long term investment should be relatively easy because how bad the market crash, it is likely to recover in this timeframe. I just need to take care when I am nearer to retirement age.

    Also, why you need to contribute 12 for the SIPP fee? couldnt it deduct from your pension fund?
    Sorry, I am newbie to it.
    Originally posted by starkiwi26
    There's lots to learn about the world of DIY investing which starts with choosing a SIPP provider. Some work on a percentage fee (which works well for lower balances) and others work on a fixed fee (which works well for higher balances). They generally expect you to maintain a cash balance alongside the investments to pay their platform fees. Some even charge a penalty if there is insufficient cash in the account and they have to force sell investments to cover their fees. Then there's the transaction fees...

    In terms of the investments you could go for an easy multi asset fund or build your own portfolios with periodic rebalancing, etc. There is a lot of choice on the DIY platforms so it takes research and reflection to choose wisely. Then finally there is behavioural risk that causes people to buy high and sell low.

    Ps I don't feel rich - you need a massive pension to have a comfortable retirement these days. If you retire for 30 years that's 360 missing paydays!

    Alex
    Last edited by Alexland; 09-03-2018 at 10:42 PM. Reason: Typo
    • Brynsam
    • By Brynsam 10th Mar 18, 12:01 AM
    • 916 Posts
    • 602 Thanks
    Brynsam
    • #7
    • 10th Mar 18, 12:01 AM
    • #7
    • 10th Mar 18, 12:01 AM
    You don't have to have a SIPP. A simple personal pension should do the trick!
    • starkiwi26
    • By starkiwi26 10th Mar 18, 11:37 AM
    • 60 Posts
    • 13 Thanks
    starkiwi26
    • #8
    • 10th Mar 18, 11:37 AM
    • #8
    • 10th Mar 18, 11:37 AM
    You don't have to have a SIPP. A simple personal pension should do the trick!
    Originally posted by Brynsam
    you are right. SIPP is too complex for a layman like me.
    simple personal pension should do the the trick. I just want to take control which funds to invest and lower funds charges, platform charges
    • crv1963
    • By crv1963 10th Mar 18, 12:39 PM
    • 287 Posts
    • 689 Thanks
    crv1963
    • #9
    • 10th Mar 18, 12:39 PM
    • #9
    • 10th Mar 18, 12:39 PM
    You will need to check with Legal and General first- the scheme that I am joining that the employer uses for Salary Sacrifice will not allow transfers out or partial transfers out while still contributing to it. I will need to leave employment and then re-join if I want to transfer out.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • dunstonh
    • By dunstonh 10th Mar 18, 1:17 PM
    • 92,556 Posts
    • 59,837 Thanks
    dunstonh
    For example, LEGAL & GENERAL (PMC) UK EQUITY INDEX FUND. charge 0.15%
    But my ISA on Fidelity, Fidelity Index UK Fund P-Acc. charge only 0.06%
    Why are you not comparing like for like?

    The pension is bundled and is the total charge.
    The funds in your ISA are unbundled and need the platform charge to be added on top. If you only include some of the costs of your ISA then you are not comparing like for like.

    Fidelity platform charge is 0.25%. So, your charges on your ISA are 0.31%. The pension is 0.15% and therefore cheaper.

    I am not happy with the default option of the pension funds because apparently my ISA is doing a lot better than it.
    Again, not comparing like for like. The default fund in most schemes is a medium risk multi-asset fund. The funds you mention you hold in the ISA are all high risk. If we were using a risk scale of 1-10 of conventional options, your pension fund is likely to be around risk 5-6. Your ISA funds you mention are risk 9/10. Its no wonder they are going up more in positive periods. They will also go down more in negative periods.

    In context, your ISA funds would lose around 40-50% during a repeat of the credit crunch whereas your pension fund would lose around 15-20%.

    Also, unless you are holding around 10 funds, it is unlikely your ISA is invested well. i.e. you are probably being selective in your sectors and have little or no exposure in all the major sectors. That is bad investing if its the case. When you use single sector funds rather than multi-asset funds, you are in control and making the management decisions of what and where you invest. So, what investment strategy are you using for your ISA? How much do you have allocated to Asia, Emerging Markets, Corp Bonds, Gilts, High Yield Bonds, Japan, Property and all the others?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Asghar
    • By Asghar 10th Mar 18, 1:41 PM
    • 165 Posts
    • 91 Thanks
    Asghar
    I then only contribute 12 into the SIPP which is boosted by 3 basic rate relief to pay the 180 platform fee.
    Alex
    Originally posted by Alexland
    Do you mind telling me if that is with Hargreaves Lansdown?
    With the Hargreaves Lansdown SIPP I normally just add cash once a year to cover the fee and with the added tax relief it effectively brings the platform fee down to 0.36%.

    Just wondering if you are using a different, cheaper platform that allows this. To add cash with tax relief to pay the fee.
    • dunstonh
    • By dunstonh 10th Mar 18, 2:20 PM
    • 92,556 Posts
    • 59,837 Thanks
    dunstonh
    With the Hargreaves Lansdown SIPP I normally just add cash once a year to cover the fee and with the added tax relief it effectively brings the platform fee down to 0.36%.
    That is not how charges work. Otherwise you would have to apply that principle to every pension there is.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Alexland
    • By Alexland 10th Mar 18, 2:48 PM
    • 2,387 Posts
    • 1,785 Thanks
    Alexland
    Do you mind telling me if that is with Hargreaves Lansdown?
    With the Hargreaves Lansdown SIPP I normally just add cash once a year to cover the fee and with the added tax relief it effectively brings the platform fee down to 0.36%.

    Just wondering if you are using a different, cheaper platform that allows this. To add cash with tax relief to pay the fee.
    Originally posted by Asghar
    I am with Halifax SD and they deduct the fee from within the SIPP which is pretty normal. I just mentioned it to start the OP thinking about how they would operate a SIPP if that was the direction they ended up going down.
    Last edited by Alexland; 10-03-2018 at 2:51 PM.
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