Transferring pension to new provider

[boyse7en]

I'm not the greatest at investing, but i have had a personal pension plugging away for about 20 years. Just been checking the statements and I am paying 0.82% in charges (1% less some sort of discount). This means that the charges are now the equivalent of about 20% of my annual contributions, which seems a lot.

Vanguard is only charging 0.15% for its SIPP, so I'm thinking about shifting it over to them. Good idea? Terrible idea?

I've tried to speak to a financial advisor, but none around here will give you the time of day unless you have at least £250k to invest and I'm a long way off of that.

[LeoSayer]

It's probably a good idea, but it's worth making sure you are comparing like with like.

The Vanguard fee of 0.15% only applies to the use of their platform. Their funds also have a fee built in. Having said that, I'm not sure the total fee would ever get anywhere near to 0.82%.

What is your current pension invested in and what Vanguard fund would you move to?

[Mr Pointy]

What is the fund performance like? If 0.82% is the total charge (ie adviser, platform & fund charges) then it isn't way over the top & you need to look at performance & any benefits you would be losing if you transferred.

Vanguard charge fund fees on top of the 0.15% platform fee so you need to check what the total would be - the highest individual fund charge is 0.89% but it's much lower on the portfolios:
https://www.vanguardinvestor.co.uk/what-we-offer/f...

[VR99]

In addition to the input provided already:
- consider if there are cheaper funds that meet your risk/investment requirements on the existing platform, they may have other options and saves you hassle of moving
- If you do move platform, my general rule of thumb is to stick with the established names hence I use AJ BELL/Vanguard/Fidelity...there are others III etc

FWIW I combined 3 old DC pensions into a Fidelity SIPP, I use two Vanguard Equity ETF's and whilst the platform fees have doubled this year (g*ts), my overall cost as a % of total SIPP value ( includes fund+platform+divi reinvestment fees) = 0.21%

[boyse7en]

LeoSayer said:

It's probably a good idea, but it's worth making sure you are comparing like with like.

The Vanguard fee of 0.15% only applies to the use of their platform. Their funds also have a fee built in. Having said that, I'm not sure the total fee would ever get anywhere near to 0.82%.

What is your current pension invested in and what Vanguard fund would you move to?

It's currently in Standard Life and split between a UK Equity fund (57%) and a Property Pension fund (43%).

I pay in £3470 per year, and last year they took £615 in charges

[LeoSayer]

boyse7en said:

It's currently in Standard Life and split between a UK Equity fund (57%) and a Property Pension fund (43%).

I pay in £3470 per year, and last year they took £615 in charges

That's not a very diverse portfolio. No global equities and a very high concentration in property. How did those get chosen?

What are the fee %s on those funds?

Vanguard don't have a property fund so you're out of luck if that's what you want.

[SteveStrange]

I transferred a pension from a previous employer to a SIPP, and it cost me a fat chunk in tax. Not sure why, or how, but it certainty dropped in value like a stone.

[alscar]

[quote=boyse7en

I pay in £3470 per year, and last year they took £615 in charges
[/quote]

Irrespective of how it has performed that seems outrageously expensive - makes SJP and the like seem like a bargain.
Doesn’t feel right at all especially if SL have been taking this for 20 years.

[VR99]

Sounds like an old employer pension using the Standard Life platform. My last employer used SL and they had Vanguard funds for 0.16% so OP's costs seem v high...I wonder if it's due to being an old scheme or using active funds.

Either way the costs are too high and agree with other post about lack of diversification if just invested in UK Equities and Property funds...unless they form part of a larger portfolio split across multiple wrappers and platforms.

[craig1912]

alscar said:

Irrespective of how it has performed that seems outrageously expensive - makes SJP and the like seem like a bargain.
Doesn’t feel right at all especially if SL have been taking this for 20 years.

How do you know if it is expensive if you don’t know the value of his fund? Seems like his fund is circa £75k. 0.82% charge is not outrageous if it is all charges.

[alscar]

craig1912 said:

How do you know if it is expensive if you don’t know the value of his fund? Seems like his fund is circa £75k. 0.82% charge is not outrageous if it is all charges.

No you are quite right Craig - I completely misread the £ charges as just being payable on the annual contributions - apologies.

[boyse7en]

LeoSayer said:

boyse7en said:

It's currently in Standard Life and split between a UK Equity fund (57%) and a Property Pension fund (43%).

I pay in £3470 per year, and last year they took £615 in charges

That's not a very diverse portfolio. No global equities and a very high concentration in property. How did those get chosen?

No idea. I guess the guy who signed us up at work asked me a few questions about my situation and then set it up. It has been the same ever since

[boyse7en]

craig1912 said:

alscar said:

Irrespective of how it has performed that seems outrageously expensive - makes SJP and the like seem like a bargain.
Doesn’t feel right at all especially if SL have been taking this for 20 years.

How do you know if it is expensive if you don’t know the value of his fund? Seems like his fund is circa £75k. 0.82% charge is not outrageous if it is all charges.

That's roughly right.
It seems that having ~20% of my annual contributions effectively disappear as charges seems quite a lot.

Charges are listed as 1.017% less a 0.199% discount, making is 0.818%

[gotoPzero]

I moved to Vanguard and so far I am happy.

The only obvious limitation is that you can only invest in their own funds.

We left my wifes pension with our old provider just to keep the risk spread because if something went wrong she still has an IFA etc.

The fees do start to add up though and she is also considering going to Vanguard.

[richardxjr]

Remember Vanguard pay c. 3.1% (probably 3.6% after tomorrow) on cash too, after the 0.15% deduction.

[Mr Pointy]

boyse7en said:

That's roughly right.
It seems that having ~20% of my annual contributions effectively disappear as charges seems quite a lot.

Charges are listed as 1.017% less a 0.199% discount, making is 0.818%

But how is the investment performing? If it's providing excellent returns then charges are fine. If the performance is not good then that's a good reason to consider moving, either to a new provider or different funds with your current provider. You need to review performance regularly not just let it run.

[boyse7en]

Mr Pointy said:

boyse7en said:

That's roughly right.
It seems that having ~20% of my annual contributions effectively disappear as charges seems quite a lot.

Charges are listed as 1.017% less a 0.199% discount, making is 0.818%

But how is the investment performing? If it's providing excellent returns then charges are fine. If the performance is not good then that's a good reason to consider moving, either to a new provider or different funds with your current provider. You need to review performance regularly not just let it run.

I don't know. They show a graph with a line going upwards covering the last 10 years, but obviously that includes the money have paid into it.

TBH I don't know how you work out a return on an investment that is being continually increased by contributions

Edit:
If it helps, it says that my pension started in 2002, since then i have paid in £51k and the pot is currently worth £75k

So is that roughly 51% increase over 21 years equate to a 2.5% per annum return? That seems far to rough and ready way of working it out, so i'm guessing it is miles out

Edited by boyse7en on Wednesday 1st February 17:11

[Mr Pointy]

boyse7en said:

Mr Pointy said:

boyse7en said:

That's roughly right.
It seems that having ~20% of my annual contributions effectively disappear as charges seems quite a lot.

Charges are listed as 1.017% less a 0.199% discount, making is 0.818%

But how is the investment performing? If it's providing excellent returns then charges are fine. If the performance is not good then that's a good reason to consider moving, either to a new provider or different funds with your current provider. You need to review performance regularly not just let it run.

I don't know. They show a graph with a line going upwards covering the last 10 years, but obviously that includes the money have paid into it.

TBH I don't know how you work out a return on an investment that is being continually increased by contributions

Edit:
If it helps, it says that my pension started in 2002, since then i have paid in £51k and the pot is currently worth £75k

So is that roughly 51% increase over 21 years equate to a 2.5% per annum return? That seems far to rough and ready way of working it out, so i'm guessing it is miles out

If you have enough information to enter the data this spreadsheet will give basic performance infomation:
https://www.vertex42.com/ExcelTemplates/investment...

This one is a simpler calculator but it still requires you to enter the data:
https://www.calculator.net/average-return-calculat...

[timberman]

gotoPzero said:

I moved to Vanguard and so far I am happy.

The only obvious limitation is that you can only invest in their own funds.

We left my wifes pension with our old provider just to keep the risk spread because if something went wrong she still has an IFA etc.

The fees do start to add up though and she is also considering going to Vanguard.

We're in exactly the same position.

Both my wife and I have ISA's with Vanguard, and so I moved my pension over to them back in 2021 leaving my wife's Pension where it was as a bit of a safeguard,

she was also invested in slightly less adventurous funds than me which we figured would mean her pension pot would fare a bit better in the event of a downturn,

The thing is though, when everything went south last year we both lost a big percentage, but mine has since recovered most of the losses,
but hers is still about 10% down from where she was at the end of 2021, so we are now seriously thinking of transferring her pension over as well.

[Mazinbrum]

If you have approx 100k plus Interactive investor is a cheaper platform and it has many more funds and shares than just Vanguard funds. It’s cheaper to hold Vanguard funds there than on Vanguard’s platform!