Pension consolidation and management

Pension consolidation and management

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TartanPaint

Original Poster:

2,981 posts

138 months

Wednesday 8th March 2017
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Hi all,

I have a couple of tiny workplace/personal pensions from previous employments that are currently being ignored, probably incurring charges. I've ignored them because they're probably <£20k combined and all were setup by employers with me just nodding and signing my name. Having no understanding of them makes me feel detached from them, and pensions in general.

However, I want to bring them back under my control, and combine them. Because of the low-value, I want to self-manage, and not pay fees for somebody else to choose my funds for me. The aim now is not to maximise return or minimise risk, just to bring all the schemes into one place under my control, for that feeling of ownership and responsibility. I'd be happy to chuck the lot at Fundsmith for a while until I learn more. Is a SIPP the best wrapper for funds?

I realise there may be penalties for rolling three small pensions into one, but unless I get visibility of them they're not doing anything useful anyway. I'm hoping that seeing them in action will force me to grow them with further contributions.

So, I need a recommendation for a good online self-managed SIPP provider with low fees for small pots, but all the whistles and bells and admin tools I could hope for on the online portal so I don't have to move providers again for the forseeable future. I know HL are popular here, but they seem quite pricey. Is it worth it?

And a final newbie question if I may, because Google hasn't helped: Do all providers allow access to all funds, or could I find myself locked out of certain funds by the SIPP provider I choose?

Thanks Finance!

WindyCommon

3,356 posts

238 months

Wednesday 8th March 2017
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Sounds like a good plan. You may be pleasantly surprised on the "penalties" front.

Here's a helpful comparison of SIPP providers: http://moneyweek.com/personal-finance/isas/stocks-...

To answer your other question, SIPPs don't all offer every eligible fund. Happily the major ones all offer more funds than you'll ever need, including all of the "household name" funds. If you stick to the established SIPP providers I doubt that fund access will be an issue for you with now or in the longer run.

TartanPaint

Original Poster:

2,981 posts

138 months

Wednesday 8th March 2017
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Many thanks, much appreciated.

98elise

26,381 posts

160 months

Thursday 9th March 2017
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i was in a similar situation to you, and asked advice on here.

I ended up going with hargreaves Lansdown who are a very big and highly recommended company. They charge 0.5% per year which is slightly more than other providers, however I have found their service to be very good. My other pensions transferred without charge, and was all handled by HL through their portal.

Basically create the SIPP onmline, then enter the details of the pensions you want to transfer, and a week or so later the funds appear in your account ready to invest.


TartanPaint

Original Poster:

2,981 posts

138 months

Friday 10th March 2017
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Thanks.

For anyone else stumbling across this thread later, I found another good comparison of brokers.

http://monevator.com/compare-uk-cheapest-online-br...

EDIT: and another http://www.comparefundplatforms.com/

Edited by TartanPaint on Sunday 12th March 15:33

TartanPaint

Original Poster:

2,981 posts

138 months

Sunday 12th March 2017
quotequote all
I have a plan now, and would greatly appreciate any feedback and a good old sanity check, because I’m learning as I go here…

I have opened an account with AJ Bell/Youinvest.
I filled in the forms for HL based on PH's recommendation, and was very tempted by the tools and excellent looking website, but changed my mind at the last minute. Youinvest website looks ok and is easy to navigate and find funds etc. It charges 0.25% vs 0.45% for HL. Youinvest do charge per trade, but I think my number of trades will be minimal, just one per month at £1.50 per trade for funds, and while that’s quite high as a % of my monthly contribution, I think over the year I’ll beat HL costs, especially as my pot grows.

There are definitely a few even cheaper options (e.g Close Bros, 0.25% with no trade fees for funds), but I discounted a few with confusing websites or limited fund choice.
Anyway, I’ll see how I get on with youinvest and move in a year when I have more experience.



SIPP:

I’ve submitted the details of my old workplace pensions (only about £23k total, sadly, but no exit or transfer fees to pay!) to Youinvest and I think those are now in the process of transferring.

I’m about 27 years away from my target retirement of 65, so I’ve got some aggressive contribution to do. I’ll have some property income to help in retirement, and I guess some unquantifiable inheritance at some point, but this SIPP needs to be given some attention.

Because I don’t know what I’m doing, and don’t intend to gamble beyond the basic acceptance of stock market risks, I plan to select a basic “couch potato” mix of a few index funds (still researching the fine details of this), and I plan to pay into only one of these funds each month, to keep trade fees to a minimum. I’ll pay into the lowest % value in the mix to rebalance the split each month.

Any salary bonuses or pay rises will up contributions, rather than improve my lifestyle. In theory.

Any advice on a blend of funds would be appreciated, but I accept that’s investment advice territory, and beyond what can reasonably be expected for free on a forum with limited information given. I believe the basic idea of “couch potato” is (approx your age %) domestic bonds, a domestic index tracker and a world index tracker, and a few smaller embellishments I’ve noted by inspecting e.g. Vanguards Target Retirement fund make-up. I haven’t read any books/advice that have been specifically updated post-Brexit; does this basic mix still hold true, or would I be better tracking e.g. S&P500 instead of FTSE?

Now, timing. It looks lousy to me. I’ll be buying in at 1yr highs, but I think I should just suck that up and get in ASAP for the long term, and rebalance bonds/index funds as necessary.

I will also be doing this old workplace pension consolidation for my wife. I’ll set her up with her own youinvest account, and put everything into Vanguard Target Retirement 2050 for ease of maintenance, at least for a year or so until I get the hang of this. I might try a different SIPP provide for her so we can compare.


ISA:

I’ve also opened an ISA, and will move the full £15k allowance from my cash emergency savings account into this. For the ISA, I was thinking Vanguard LifeStrategy 80% or 100%. I know I shouldn’t really gamble with an emergency fund, but even if its value falls in the short term, I can live with that. It won’t be touched unless I have bigger problems than how much I’d lose by cashing it in.

After that I probably won’t be using my annual ISA allowances, because I have no short/medium term savings goals at the moment. I will be splitting my monthly income between SIPP and mortgage overpayments. I’m doing this without really knowing which is best. It feels like the pension contributions will work harder than the mortgage overpayments in the long run, but lots of advice says to pay off your debts first. I will do a bit of both until I figure out how to build a spreadsheet that compares outcomes in the long term. I’d like to have some science behind that choice, but in the mean time all advice is most welcome.


Junior ISAs:

I’ll open a couple of these for the kids (age 3 and 1) and do much the same as my ISA, but with modest contributions each year towards university costs etc. Their grandparents are also contributing annually and they suggested premium bonds for their gifts, but I can hopefully do better than that in a stocks ISA. I accept the risk that it’s their money, not mine, when they turn 18. I’ll have to trust them and advise as best I can when the time comes.



Any glaring holes (edit: other than not starting this when I was 18!) or total misunderstandings in my plans? Thanks in advance, Finance!


Edited by TartanPaint on Sunday 12th March 15:37

Craikeybaby

10,369 posts

224 months

Monday 13th March 2017
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An interesting thread - I think I'll be moving my current workplace pension soon, as I'll be leaving and Scottish Widows website is rubbish. I have my S&S ISA through Cavendish/Fidelity and have been happy with the features/cost, but I'm also going to look at fiveraday, as it is run by a PHer and seems like a good halfway house between managed/me running it.

FWIW I have my ISA funds in Lifestrategy 60, as it is partly my emergency fund. I'm also putting some into Lifestrategy 80 for my son, but currently that is through my ISA, rather than a JISA, as I am nowhere near the limit of contributions.

TartanPaint

Original Poster:

2,981 posts

138 months

Monday 13th March 2017
quotequote all
If I pick my own funds I'll probably regret not getting somebody else to manage it for me when the FTSE drops off a cliff.

If I go with fiveraday or managed funds, I'll regret not saving the fees by picking my own cheap funds.

Where's the no-regrets option? smile

WindyCommon

3,356 posts

238 months

Monday 13th March 2017
quotequote all
TartanPaint said:
If I pick my own funds I'll probably regret not getting somebody else to manage it for me when the FTSE drops off a cliff.

If I go with fiveraday or managed funds, I'll regret not saving the fees by picking my own cheap funds.

Where's the no-regrets option? smile
Isolating the possibility of regret from the definition of risk is - I'm afraid - an ongoing challenge for humanity ;>


Ginge R

4,761 posts

218 months

Monday 13th March 2017
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Without risk, there would be no variable or even high returns. We'd have a stagnant economy too; why invest in fledgling companies if there's no added reward for the added risk..?

Instead, we'd all be in a Corbyn-Bond, where everyone gets a whopping 2% like it or not, and our money is spent for us by the apparatchik. Sounds scary, but the closer we creep towards a cashless society, the more likely it becomes.

Truffles

577 posts

183 months

Monday 13th March 2017
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I have my SIPP with AJ Bell/Youinvest, and have had for many years. No complaints here, and the ongoing costs are way lower than places like HL.

TartanPaint

Original Poster:

2,981 posts

138 months

Monday 13th March 2017
quotequote all
Ginge R said:
Without risk, there would be no variable or even high returns. We'd have a stagnant economy too; why invest in fledgling companies if there's no added reward for the added risk..?

Instead, we'd all be in a Corbyn-Bond, where everyone gets a whopping 2% like it or not, and our money is spent for us by the apparatchik. Sounds scary, but the closer we creep towards a cashless society, the more likely it becomes.
How right you are, comrade Ginge.

I feel a bit arrogant for deciding to go it alone and self-manage in interesting times. Fingers crossed... if it doesn't work, I'll be giving Fiveraday a go, I promise!

Ginge R

4,761 posts

218 months

Monday 13th March 2017
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We certainly do live in interesting times! scratchchin

TartanPaint

Original Poster:

2,981 posts

138 months

Wednesday 15th March 2017
quotequote all
Still deciding what to do in terms of funds. I've still got time as the old pension cash will take another week or so to appear in the new SIPP.

No conclusions yet, but some interesting observations about my own behaviour and thinking:

1) I cannot stop seeing patterns where rationally I know none exist. I cannot stop mentally extrapolating the averages off the right-hand side of the graph. I've concluded that the FTSE is definitely too high, and will drop again. I've concluded that GBP is temporarily undervalued and will rise again. I have ZERO experience or knowledge from which to draw these conclusions. It's just obvious from the graphs, init? Lesson: Humans are dumb at pattern recognition. 3 reds, so it must be a black next, right?

2) I cannot easily disconnect short term timing from long term thinking. It should not matter over 25 years what the hell the FTSE is doing this year, but I still cannot bring myself to click "buy" on a FTSE index tracker fund at such a high point. I can't help thinking about the long term impact of any head start I would get by waiting for it to drop before buying. Of course, this is crystal ball stuff, but the thought of being 20% down after 1 year is nightmare stuff. I guess psychologically I need to see a year 1 increase to justify the decisions I've had to make about my family's future. Year 2 can do what the hell it likes because that's just fluctuations. So mentally, I am prepared for fluctuations long-term, but I can't seem to deal with the thought of a negative year in year 1. Crazy, huh?

3) Related to the last point. Bonds are such low return at the moment, I should definitely only have 20% max at this stage. On the other hand, equities are expensive right now, so I should definitely buy 100% bonds and wait for a good time to buy equities. This is stressful. I hate the sense of anxiety that comes from operating outside my comfort zone where permanent damage might be done.

4) As mentioned previously, I'm flip-flopping hourly between thinking fund managers are geniuses and worth every penny to remove this stress, and thinking they cannot possibly know the future and are working only for themselves, and I'd be mad to trust them with my future (no offense to any reading... I'm sharing my crazy thoughts for your amusement, that's all).

Even having read every "idiot's guide to SIPPs" on the entire interwebs, I'm still almost certain to get it hopelessly wrong.


Craikeybaby

10,369 posts

224 months

Wednesday 15th March 2017
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On my ISA I bought into a fund that then tanked, it took about 12 months to recover, but has continued to rise since. As you say, short term isn't that important, espcially in a pension where you won't be able to access the money for years anyway.

chemistry

2,122 posts

108 months

Sunday 19th March 2017
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Why not drip feed the money into the market? Commit to putting it all in over a 12 month period?

http://www.thisismoney.co.uk/money/investing/artic...

Also, remember that you can't eliminate risk but you can diversify. So you could (say) put some in FTSE, some in US/Euro/Asian markets, some in small cap companies, some in property funds, etc.

That's always been my approach.

TartanPaint

Original Poster:

2,981 posts

138 months

Monday 20th March 2017
quotequote all
Thanks for the input. I've been thinking something very similar. Very small FTSE tracking allocation for now, then increase later. Probably based on price targets rather than time slots.


Thanks.


RL17

1,231 posts

92 months

Tuesday 21st March 2017
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Should possibly be selective when markets are high. Trackers are a good option after markets have dipped and are low cost.

Funds internal charges can also vary a lot and are generally higher than the share platform providers. If you have to put advisers fees etc on top of all these then it can seriously eat away at long terms returns. Not keen on trackers and not keen on UK equity income funds (as they mainly hold same stuff). Do like multi-cap funds and some global funds - but do hold a mix and also went back into individual shares more (may move back to funds as hold outside of tax free wrapper and gains potentially more manageable than dividends).

Beware of managers and manager changes when looking at funds performances.

Dividends can be a major source of returns if have enough scope to diversify,

Ginge R

4,761 posts

218 months

Tuesday 21st March 2017
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I'd be careful. Last week was the first week in eight that we saw net (overall) fund redemptions, but at the same time, we saw positive inflows into equity funds. If the spectre of inflation looms increasingly large, investors might start looking longer and deeper at equities and divert from bonds.

Edit: add <(overall) fund>

Edited by Ginge R on Tuesday 21st March 07:32

LeoSayer

7,299 posts

243 months

Tuesday 21st March 2017
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Ginge R said:
I'd be careful. Last week was the first week in eight that we saw net (overall) fund redemptions, but at the same time, we saw positive inflows into equity funds. If the spectre of inflation looms increasingly large, investors might start looking longer and deeper at equities and divert from bonds.
It's already happening according to this article:

http://www.bbc.co.uk/news/business-39325794