Pension Question - Transfer balance in Cash - what to do?

[bennno]

I recently transferred a large pension pot (seven figures) from Scottish Widows to an Interactive Investor (ii) SIPP about two weeks ago. The main reasons were significantly lower management fees and a much wider choice of funds.

The transferred amount is currently sitting in cash. I had planned to invest it into some recommended funds, but I've noticed that if I had left the money in Scottish Widows, I would currently be £20,000–£25,000 worse off compared to the unit prices I sold at.

Given the high level of uncertainty in the markets and world events right now, would it make sense to leave the funds in cash for the time being? Interactive Investor currently pays around 2.3% interest on cash.

[For context, I’m planning to retire early in approximately 4 years’ time].

[Mazinbrum]

You will never know when the bottom of the market is until you've missed it. Looks like you got lucky by going into cash before the orange turd played his games. I'd invest a good portion of it now and maybe keep 2 or 3 years worth of expenses in a money market fund and cash.
Who knows what will turn out to be the right answer.

[AB]

Good timing, I did the same, plan was to consolidate my pensions but it's currently sitting in cash and I think I'll leave it there for now.

Not quite 7 figures but I have my fill of risky stuff so I'm happy with this at a lower but safer rate.

[Panamax]

I would start investing now by putting in, say, 10% and have an outline objective to invest another 10% each month through the rest of 2026. Then as each month comes around you can see how you feel and flex the plan accordingly.

Just remember that for the last 100 years the long term graphs have been "always upwards", so be careful about delaying too much.

In the meantime your cash can be parked somewhere that'll make a decent effort at trying to keep up with inflation.

[simon800]

bennno said:

I recently transferred a large pension pot (seven figures) from Scottish Widows to an Interactive Investor (ii) SIPP about two weeks ago. The main reasons were significantly lower management fees and a much wider choice of funds.

The transferred amount is currently sitting in cash. I had planned to invest it into some recommended funds, but I've noticed that if I had left the money in Scottish Widows, I would currently be £20,000 £25,000 worse off compared to the unit prices I sold at.

Given the high level of uncertainty in the markets and world events right now, would it make sense to leave the funds in cash for the time being? Interactive Investor currently pays around 2.3% interest on cash.

[For context, I m planning to retire early in approximately 4 years time].

If you’re only about four years from retirement, your portfolio should already be aligned with your risk tolerance in a way that allows you to remain invested through market movements.

If that were the case, you’d likely be pleased that the assets you held two weeks ago are now effectively available at a £20-£25k discount.

The fact that you’re hesitant to reinvest at lower prices suggests that your current asset allocation may not be well matched to your risk appetite or time horizon....

[butchstewie]

I'd be pleased I could buy at a £20-25K discount but I'd also have an eye on whether I could buy on a £50K discount in a couple of weeks time.

I think that's human nature though isn't it?

[Sheepshanks]

Mazinbrum said:

I'd invest a good portion of it now and maybe keep 2 or 3 years worth of expenses in a money market fund and cash.

You’d keep some cash even though he’s four years away from retirement?

[Panamax]

^ ^ Is a good point. Average life expectancy is now so long after retirement that it's "high risk" to "de-risk", if you see what I mean.

[alscar]

I transferred my “ large “ DB Pot using a CETV in March 2020 when a certain virus was getting stuck in.
50% I put in Funds straight away with the balance going in MM and then dripped out monthly or as I felt made sense.
I also moved a DC Pot at the same time which went 100% in but this was a lot smaller.

[ExBoringVolvoDriver]

Panamax said:

^ ^ Is a good point. Average life expectancy is now so long after retirement that it's "high risk" to "de-risk", if you see what I mean.

That is true. However, given the current uncertainty and the potential for further fluctuations, then keeping a percentage of total funds in cash is probably a reasonable plan.

I am now fortunate in that practically all of our general expenditure is covered by final salary pensions although I have recently taken £12k out of my SIPP which was taxable and switched 10% into cash still within the pension as a small protection should things go horribly wrong.