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    • brunoportia
    • By brunoportia 4th Aug 18, 2:47 PM
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    brunoportia
    SIPP Platform switching
    • #1
    • 4th Aug 18, 2:47 PM
    SIPP Platform switching 4th Aug 18 at 2:47 PM
    I have a doctor's NHS pension which will be my main pension, some taken at 60 (1995 version) the remainder at 68. I am 45.

    I also have a SIPP designed to bridge the gap - partially - currently valued at 14K . 8300 moved 3.5 years ago from an old AVC fund that was making no money due to high charges. I have since done very well with 4 funds I have chosen

    Current SIPP with Best Invest who at the time were recommended as cheapest charges wise for my sum money. 0.3% annual and lowish trading charges. They've now announced an additional 25 a quarter! AJBell now recommended as the cheapest by MSE but won't cover the cost of switching platforms unless the value of my fund is over 20,000
    Cost to move; 75 + VAT and either 75 + vat if switch to cash or 150 + vat to move the funds as they are

    Question: Is it worth switching? Clearly nearly 3 years worth of charges cost to do so.
    My main concern is that AJBell might turn round and do the same in a year and then I've lost money. Their charges are 0.25% annual plus think higher charge to buy but I do very little buying/selling because I am reinvesting any growth into same fund,

    Is it worth me moving 6000 of a cash ISA or my premium bonds to top up to 20,000 before switching so that the costs are covered by AJBell? Slightly nervous in light of brexit. I have about 36K in cash ISAs and 13K in premium bonds
    Don't want to go over lifetime 1mill pension fund value but that looks very unlikely since I don't work full time as a GP and hope to wind down work at 60

    I know these charges seem small but they do add up and I always want to get the most bang for my buck....
    Thanks for any thoughts at all
    BP
Page 1
    • dunstonh
    • By dunstonh 4th Aug 18, 3:00 PM
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    dunstonh
    • #2
    • 4th Aug 18, 3:00 PM
    • #2
    • 4th Aug 18, 3:00 PM
    Do expect the charges on so-called-low-cost SIPPs to increase. They have increased solvency requirements and the FOS is now holding them responsible for things that they got away with previously. Plus, the levies contributions are going up for SIPP providers.

    They will go up at different times and some are constantly loss making in the hope they will get market share and be bought before they fail.
    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.
    • AnotherJoe
    • By AnotherJoe 5th Aug 18, 3:52 PM
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    AnotherJoe
    • #3
    • 5th Aug 18, 3:52 PM
    • #3
    • 5th Aug 18, 3:52 PM
    I would worry more about the tiny amount in your SIPP than the charges You are focusing on the trivia and missing the key issue. If you are on 40% tax you'd gain tremendously by putting more in your pension including premium bonds which obviously have a very low rate of return and a cash ISA even less so. If not higher rate then there's still a gain to be made.

    You need a plan to get to whatever SIPP number will bridge the gap and once you've started with that plan then look at charges. In the absence of a plan the charges are very secondary.
    • fred246
    • By fred246 5th Aug 18, 4:13 PM
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    fred246
    • #4
    • 5th Aug 18, 4:13 PM
    • #4
    • 5th Aug 18, 4:13 PM
    I am no expert but won't you be hitting the LTA by putting more into pensions? Something to think about.
    • brunoportia
    • By brunoportia 6th Aug 18, 8:29 AM
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    brunoportia
    • #5
    • 6th Aug 18, 8:29 AM
    • #5
    • 6th Aug 18, 8:29 AM
    Well exactly - I will get my financial advisor around soon but last time she said don't put more into pension - stick it into ISA - due to LTA. That said I won't reach it with another 6k
    I am not worried about the small amount in my SIPP - NHS Pension is the bulk of my income. If I retired at 60 and never worked again income estimated at 30k if 67 then 36k plus 50K tax free lump sum. I can of course continue working as a GP after 60 to bump up my income

    I have also become a partner so my income is rising so my pension contributions will too. Although this is largely irrelevant because it is so difficult that I might not remain a partner for long TBH. Despite additional income the responsibility in addition to patient care is overwhelming and not something I was trained to do...anyway that is irrelevant

    But I agree that the SIPP amount is small and so the worry re charges might seem trivial. However proportionately they seem more as a result and I hate paying for things when I don't have to.

    Agree premium bonds have low rate return (yes am 40% taxpayer naturally) but they are a useful quick dumping ground and a gamble if you like...stock market makes me more nervous but of course has done very well in past 3y...Am stashing cash away for potential school fees in 3y time.

    Useful to hear that SIPP charges are likely to change elsewhere also - as I suspected - in which case I might sit tight. I may consider buying some stocks and shares ISA on my platform....

    Thanks all
    Any other thoughts welcome
    BP
    • AnotherJoe
    • By AnotherJoe 6th Aug 18, 8:48 AM
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    AnotherJoe
    • #6
    • 6th Aug 18, 8:48 AM
    • #6
    • 6th Aug 18, 8:48 AM
    Well exactly - I will get my financial advisor around soon but last time she said don't put more into pension - stick it into ISA - due to LTA. That said I won't reach it with another 6k
    I am not worried about the small amount in my SIPP - NHS Pension is the bulk of my income. If I retired at 60 and never worked again income estimated at 30k if 67 then 36k plus 50K tax free lump sum. I can of course continue working as a GP after 60 to bump up my income
    Originally posted by brunoportia
    Seems I've missed something here, because if your pension is 30k then your LTA for that is 20x eg 600k which is a long way from 1M. But if your accountant is saying you will hit the LTA then obviously I have got something wrong.
    Last edited by AnotherJoe; 06-08-2018 at 11:02 AM.
    • stoozie1
    • By stoozie1 6th Aug 18, 11:44 AM
    • 613 Posts
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    stoozie1
    • #7
    • 6th Aug 18, 11:44 AM
    • #7
    • 6th Aug 18, 11:44 AM
    Another Joe it's 36k from age 67 as I read it, so 720000 not counting the lump sum or SIPP.

    But I take your point that it seems a way off.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • stoozie1
    • By stoozie1 6th Aug 18, 11:46 AM
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    stoozie1
    • #8
    • 6th Aug 18, 11:46 AM
    • #8
    • 6th Aug 18, 11:46 AM
    @brunoportia, isn't your lump sum 90k (3x annual pension in NHS 1995 scheme)?

    It's just you can only commute your 1995 scheme lump sum up in exchange for annual income, not down.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • stoozie1
    • By stoozie1 6th Aug 18, 12:03 PM
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    stoozie1
    • #9
    • 6th Aug 18, 12:03 PM
    • #9
    • 6th Aug 18, 12:03 PM
    Sorry, this again is not about the SIPP, but are you sure about only 6k per annum from the NHS 2015 scheme? This would equate to only around 13000 of annual pensionable NHS income between now and age 60.

    I'll stop derailing now!
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • brunoportia
    • By brunoportia 6th Aug 18, 5:17 PM
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    brunoportia
    I think that's right - Long way from LTA - although my income has risen becoming a partner and that calculation was based on salaried GP income so will go up a bit...but probably not get close you're all right.
    I think I am 11.5K per annum from 1995 scheme if I hit 60 which is not going to keep me for sure....am thinking of a top up using the lump sum plus SIPP plus savings plus still working...higher the SIPP the less I work!

    Anyway, it seems as though I could easily put another 6k into the SIPP then avoid the transfer fees...is the obvious solution. That does help thank you.
    My husband and I need to look at how much we need in savings for school fees and uni costs etc for our son (only one child which helps this a bit). If I wangle him into the great state school then these decisions become a bit clearer.

    So. Either accept my 100 a year fee or bump fund up to 20K and switch. Mostly just a bit nervous about brexit and fund performances...might wait a year (like everyone else?!)

    Thanks all. Very helpful to think around this. Also reminds me need financial advisor back with an NHS pension update based on more recent income - might incentivise me to stay a partner. Goodness knows I need an incentive...feel a bit bad getting her round. I buy income protection from her then use her advice but go my own way with everything else because her products are otherwise too pricey.

    BP
    • AnotherJoe
    • By AnotherJoe 6th Aug 18, 11:32 PM
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    AnotherJoe

    So. Either accept my 100 a year fee or bump fund up to 20K and switch. Mostly just a bit nervous about brexit and fund performances...might wait a year (like everyone else?!)

    BP
    Originally posted by brunoportia

    If you are, you are investing in the wrong funds.


    FWIW most funds went UP after Brexit, not down. For several reasons but most of them boil down to, because the Pound went down.



    A no deal Brexit might do all sorts of things but the one thing it wont do is damage any reasonable portfolio, indeed very much the opposite. Unless you've invested in a set of UK only companies (which would be very hard to do), Brexit is an investment opportunity, indeed ironically its the factor most likely to put you ABOVE your LTA.
    • brunoportia
    • By brunoportia 7th Aug 18, 9:27 PM
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    brunoportia
    Well indeed - this is probably right. Probably does have a UK bias my portfolio but definitely not UK only companies. Discussing with husband tonight will probably add in the 6k having thought this all through - changing SIPP platform then becomes an option if it looks cheaper.

    One last question - if I do switch platform I am assuming AJBell will let me switch funds as they are - seems to make more sense than selling and buying again with associated charges? I can work that one out for myself... I am assuming if funds grow during switch I still benefit that way....

    This has at least made me have another look at retirement funding/planning - never a bad thing since it probably needs tweaking

    BP
    • AnotherJoe
    • By AnotherJoe 8th Aug 18, 7:19 AM
    • 11,845 Posts
    • 13,810 Thanks
    AnotherJoe
    One last question - if I do switch platform I am assuming AJBell will let me switch funds as they are - seems to make more sense than selling and buying again with associated charges? I can work that one out for myself... I am assuming if funds grow during switch I still benefit that way....
    Originally posted by brunoportia
    Not as simple as it seems unfortunately.
    To switch platform and retain the funds is called an "in specie" switch. This can sometimes be problematic for administrative reasons, some people here have reported switches that took months (others only a few weeks but .....)
    Although you may think you hold fund X you'll find you have "class such and such". Class B, D, R, X etc etc. So your fund may be available on both platforms but different classses, so the switch can't be done in specie.
    When switching in specie there can be a charge per component. Might be 25 for each fund. If you have multiple funds that could add up, as compared to one switch of 25 for cash.
    A pure cash switch will be quick. You will be out of the market while it takes place but is say 2-3 weeks significant in the content of a ten year hold?
    There was a thread here the other day on this subject and whilst admittedly onky a handful responded , so it's not scientific, all the folk that had previously transferred in specie said next time they would do cash only.
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