Reply With QuoteOriginally Posted by T1ckT0ck
I am not an IFA, and this is most definitely not advice, but I would bung it in a Hargreaves Lansdown SIPP and self-invest in one or more of their Wealth150 funds.
There seems to be a few financial savvy guys on here so just thought I would ask for pointers.
I have a small legacy person pension which I'm wondering what to do with. I'm paying into it monthly but a negligible amount. It was originally a Axa Sun life policy then Friends Life took it over and now Aviva have their mits on it.
I used to be able to administer the policy myself, but since Aviva the online access has not been continued and according to them not likely to be.
I’m not risk adverse as it’s not a significant fund. I have considered an IFA but considering the fund value they would probably laugh.
Therefore i'm looking to transfer the policy to another provider that will give me better access and investment options. I have also looked into my current fees and they don't seem good even with my limited knowledge...
Monthly charge £5.79, Annual (capital) 4.5%, Annual (accumulation) 1.0%, Spread 5.0%, Allocation rate 100%. It hasn’t got profits or bonuses. End date is set for 2027 but at 55 i’m unlikely to need it then.
Also, is it easy to transfer or do you get the fund battered in the process?
Any thoughts greatly appreciated, thanks.
I am not an IFA, and this is most definitely not advice, but I would bung it in a Hargreaves Lansdown SIPP and self-invest in one or more of their Wealth150 funds.
I would do the same. Or if you have other pension pots, transfer it into those. Try and get all your legacy pensions in one place (one administrator, not necessarily all in one fund though)
If it's a simple DC pension then you can indeed transfer it to another platform where you can administer it yourself as a SIPP. Hargreaves Lansdown are one option, as are AJ Bell or Interactive Investor. There's a good thread about providers here:
https://www.pistonheads.com/gassing/...=206&t=1627929
If you don't want advice then the key issue is charges: HL have a good website & platform but you can halve their charges elsewhere.
Vanguard Lifestrategy is very popular at the moment but they don't offer a SIPP so you would have to hold it via a platform. If you're feeling really ballsy then look at Lindsell Train or Fundsmith, although you would need to keep an eye on the performance. If it's money you aren't relying on then it might be worth a punt. There are other funds but these two get a lot of column inches at the moment.
Finally I suggest you might have a read of this thread:
https://www.pistonheads.com/gassing/...=206&t=1786977
Up 37% in three years, 0.87% total charge, you can talk to them as much as you like about financial stuff, tax & investing but they don't give investment advice.
Maybe I've been incredibly lucky with my fund selection, but my HL SIPP is currently running at +103% in 5 years across two different funds. Highest AMC is 0.85%
Anyway, regardless of the provider, consolidation into another company pension or a SIPP sounds like the right course of action
I'd be cautious of HL recommendations following the Neil Woodford funds debacle.
Vanguard Lifestrategy 80. Job done
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That's good going: can you say which funds you are invested in? Does the 0.85% include the 0.45% HL platform charge?
it's only Wealth 50 now
3/4 of my investment is in LF Lindsell Train UK Equity (class D) - https://www.hl.co.uk/funds/fund-disc...d-accumulation
I got in on day one at 95.89p a unit, I think. AMC is 0.51% after HL discounts.
I also have a Japan Equity index tracker which is performing excellently - AMC is just 0.11% on that. https://www.ishares.com/uk/individua...und-x-inc-fund
I am paying about £1.85 a month in fees on a ~£5.1k total investment (I transferred a £2500 pension into the SIPP just over 5 years ago).
If you aren’t going to actively switch stuff don’t go to HL as mentioned above the charges are high and their Wealth 50 is just a marketing exercise. Questions are being asked on the back of the Woodford debacle, loads if much better performing funds that aren’t in the Wealth 50- why? Because the fund managers won’t give HL a discount.
I’d look at the Vangard Lifestategy funds too as the stats say they are likely to outperform many “active” fund managers over time.
I did think that one of them might be Lindsell Train! I'm pretty sure the £1.85 equates to the 0.45% HL charge.
He can't invest directly with Vanguard as they don't have a SIPP (yet) so he would need to go via a platform.
If I recall correctly Fidelity fees are cheaper than HL. Might as well use the cheapest platform if you are choosing your own investments without advice.
I have some money in an L&G UK Equity index fund and it's not doing great. Looking at this thread it might me time to move it
I know- I meant investing in the fund. Wouldn’t use HL- maybe AJ Bell?
If you are still working, it may be worth looking to see if your workplace pension scheme is any good too.
While certainly not always the case, it can often be surprising how reduced the management charges can be if you transfer. And plenty of workplace pensions offer access to a decent selection of funds if you’re not an active investor.
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Another suggestion is transfer it to Nutmeg. I used them for a while and the system is easy to use and they have good service and no fees for moving it around. If you want more of a stand-back time of management.... they do it for you within guidelines you set and can change at any time, then nutmeg seem to be quite good.
tbh I recently moved from them but that's purely because I need an even more hands on approach and I now have a FA that SEEMS to know what he's talking about so it's now been moved to a SIPP which he's going to look after. Total fees on the SIPP work out about 1% which is more than nutmeg (0.45%) but hopefully the hands on approach will yield better returns to compensate. If it doesn't then I'll move it back to nutmeg!
If its pot is more than 30k you will need to an IFA to move it.
Otherwise another vote for HL, excellent customer service and very each to use. Also a great starting point for a DIY investor.
Not to move it, as far as I am aware? Maybe to cash it in?
EDIT: This might clarify:
https://www.pensionwise.gov.uk/en/financial-advice
Last edited by David_D; 4th July 2019 at 17:12.
Question for the financially savvy. I was told that basically if you stuck your money in a tracker such as the Vanguard solution your average annual return would be 10% including dividends. Factoring in inflation and fees sees it at around 7%. Yet pension growth illustrations I see elsewhere always seem to have 3% and 5% illustrations but rarely higher. So how accurate is that 7% real term annual growth averaged over say 20 years?
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I think that 3% and 5% are statutory illustration rates.
7% pa real return over the long term would be fabulous so treat predictions of that as future sustainable return with appropriate scepticism. It's the usual "if it seems to good to be true ...".
Did the chap who told you that own a crystal ball? How would anyone know what the future returns of a fund are going to be?
The 3 and 5 percent figures are based on conservative historical averages. Generally, more than 5% a year is deemed a good return.
You won’t- you are confusing Cetus from Final salary schemes
Whilst HL have good customer service their are cheaper platforms and london term charges do eat into your fund somewhat.
I believe it is based on the long term real return of the US Stock market including dividends. Obviously there will be lots of short term fluctuations
AJBell and iWeb here.
HL might have 'excellent customer service' but why pay hundreds/thousands extra for something you probably won't use.
I think that would be hard going to average 7% net in real terms per annum but no one can predict the future so who knows. Also take into account that over the last 20 years the stock market has halved (yes halved) twice. From memory so maybe slightly out, from 1999 to 2003 it went from just under 7,000 to 3,200 approximately and after the credit crunch in 2007, did a similar thing. I’m biased of course but that’s why advice can be prudent - risk rated funds and regular reviews (especially in the years close to retirement). Vanguard historically has been good, we use them and clients have had excellent returns - so did Woodford though (which we never used).
Illustrations have come down over the years - in the 90’s they could be manipulated to show higher returns so Lautro and the FSA brought them down. Then the FCA even further. They don’t really mean a lot apart from they are conservative- designed to not let people get carried away if you ask me.
To keep it simple - invest monthly for pound cost averaging, review funds every couple of years or so and compare against theirs peers (more important as you can’t buck the market, so have to ride out the lows as well as the highs) and when you have 5 years to go - review review review. Understanding your risk and the market risk is the most important thing of all.
Personally I'd be happy with 2% above inflation. As an aside, bloke in the office has been dabbling with a self managed S&S ISA and is quoting staggering returns over the last 12 months partly by investing in S&S in foreign currencies! He has some in USD which have gone up by 8% but because it's in USD he has also won due to the USD/GBP rate change. Not sure of the full details.
https://www.nerdwallet.com/blog/inve...-stock-market-
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Yep that's true. Scottish Widows used to have a chart showing how the stock market since 1945 wiped the floor against every other investment (property, banks, high interest, gilts, gold etc) if you reinvested dividends.
I just don't see that going forward. We're in a different cycle now. I'm more cautious now than I think I've ever been. Credit is far too easy and far too cheap - the worse warning sign of all in my view.
Well, here's an actual example of what can be achieved:
https://www.intelligentmoney.com/pri...ur-portfolios/
Portfolio: IM Optimum Global Growth
Cumulative Performance
1yr: 7.6%
3yr: 37.27%
5yr: 54.03%
10yr: 204.27%
10yr Annualised: 11.77%
On this basis you could have inflation at 3%, take out 4% a year & still see the fund grow in real value. Figures are exclusive of the 0.87% platform charge.
Of course no-one knows what will happen in the future.
Surely could equally have picked fund that's done badly to show target isn't possible?
Agreed. Record low interest rates (for a long time now) have definitely pushed more money into equities than would otherwise have been there.
I think the USD/GBP exchange rate has boosted (GBP) equity returns generally as many companies (including FTSE 100) have significant USD earnings.
Last edited by David_D; 5th July 2019 at 16:37.
That isn't a single fund, it's a portfolio run by a fully managed pension & ISA provider showing the returns one of their portfolios has achived over the last 10 years. I was responding to the question about whether or not it was realistic to plan for 7% annual growth & as can be seen, it can be (or has been for the last 10 years).
Of course if we had a crystal ball then we'd have stuck everything into Lindsell Train & Fundsmith & be rolling in money, for now at least. However as very, very few investors are actually any good at stock picking (& the vast majority are terrible at it) in general the most effective policy is to invest it in a low cost passive-ish platform & leave it alone. Vanguard LS is one such, but there are others of course.
That's working a treat with my Neil Woodford funds!
I'd never heard of them, for some reason.
They get a 5* rating here:
https://www.defaqto.com/star-ratings/pension/sipp/
and the bloke behind them seems to say the right things:
https://en.wikipedia.org/wiki/Julian_Penniston-Hill
Martin Lewis site worth a look re SIPP costs (although the funds available may vary).
https://www.moneysavingexpert.com/savings/cheap-sipps/
I concur.
Personal borrowing higher in real terms than before the last crash is surely the best barometer?
Or at least a good historical warning.
I see a lot of clever young well paid guys where I do some consulting that are absolutely sleepwalking into a future that they’re not planning properly for- the only thing they don’t seem to “know it all” about.
Until recently they were a private client fund for HNW individuals but have now opened up the funds to lesser mortals. Julian PH is on something of a crusade against IFAs that charge ludicrous fees for little or no added benefit which doesn't make him popular in certain quarters. They charge a flat fee of 0.87% which includes access to a personal client manager who will discuss any aspect of your finances that you want to talk about. The one thing they don't do is give regulated advice, so they won't push any particular fund. As I understand it every one in the company is obliged to have their money invested with IM.
If you are interested then this thread is the starting point. You can ask any question you like on there.
https://www.pistonheads.com/gassing/...=206&t=1786977
The initial charge is waived for PH members.
Thank you all for so much information and thought provoking replies.
I am currently working through it all, no rash decisions from me as it not something to do in a hurry.
I have contacted Aviva with a template letter that asks all the key pivotal information about my current policy just to be sure.
I have worked out the over the last four years it has risen on average 6% a year, so not appalling but probably not the best.
I’m sure i will be back with questions but for now i only have one.
Do all SIPP platforms have access to all funds or are they biased in any way?
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Don't think there's "bias" per se but some will offer a bigger or smaller range.
Is that before or after charges - it's a crucial difference. You need to include all charges, both platform & IFA. You also need to account for any money you've put in of course. You can use something like this to calculate average/annual return:
https://www.calculator.net/average-r...alculator.html
https://financial-calculators.com/roi-calculator
https://financial-calculators.com/online-calculators
Well, if I’d said pick a badly performing portfolio instead of fund my argument would still stand!
Ultimately aren’t they both collections of stocks or whatever?
Maybe you can plan for 7% growth but not by basing it on a random well-performing example.
Last edited by Kingstepper; 5th July 2019 at 19:17.
Thanks - interesting!
Looking at my ex employer's workplace pension over the last 8 years the average annual return was 9% after fees and including reinvested dividends. So real terms after inflation was around 6.5% per year. That was on a 'balanced' portfolio. I am taking a 20 year view as I won't retire for 20 years and have moved funds to a Hargreaves Lansdowne SIPP. Around 75% is invested in a Vanguard Lifestrategy 80 Tracker, the rest across funds such as Lindsell Train, Fundsmith, Marlborough Special Situations, some Asian funds etc. My calculations on retirement pot are based on 6% real return per year which seems realistic based on all these funds performance over the last 10 years and factors in reinvesting dividends.
Yes after charges and with my small additional contributions removed for that period.
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Sounds like a good plan
I have a SIPP with HL, ISA with Fidelity and a pension with Aviva.
I’m perfectly happy with Fidelity so I’ll be switching the SIPP to them over the next year to take advantage of the lower platform charge (if Vanguard offer a SIPP in that time I may change my mind).
Aviva have been a nightmare to deal with - definitely move your money away. It’s really easy - all you need to do is open an account with your new provider, then give them the name and account/reference number of your Aviva policy and they will do everything else - it may take a couple of weeks.
I’m following an aggressive (read high risk) equity strategy for now (many of the fund names mentioned elsewhere) but I would be cautious about references to excellent fund/market performance over the last 5 or 10 years. We’re in (nearing the end of?) a 10 year bull run. Maybe it will go on for another 10 years, but I don’t hear too many people predicting that.
So with 20 years to retirement if theres a crash in share prices, theres lots of predictions but generally between 20-40% if i bought units heavily during the dip (5 years length?) i should have enough time for recovery of prices and steady growth when we come out of that downturn? Does anyone know of a time frame where we just flatlined for 10/15 years? Interesting thread!
UPDATE:
I have started a pension transfer to a Hargreaves Lansdown SIPP, I appreciated they are not the cheapest but I feel the extra 'support' may come in handy as they will liaise with AVIVA during the transfer process. HL fees are still significantly cheaper from those i'm currently paying.
My dealings with Aviva to date have not been easy due to the fact they have inherited (bought) the policy from Friends Life.
I have not yet selected any investment funds, I will do this once the transfer has taken place.... one step at a time... so i will probably be back!
Thank you for all your help and advice, it's certainly a bit of a midfield but I thought using a 'supportive' company may be better initially, after all I always can move away at a later date if needed financially.
Last edited by T1ckT0ck; 8th August 2019 at 13:51.
Google "Snowmans spreadsheet" and you can compare platform costs vs your fund size and investment strategy.
I like the look of the Blackrock and Vanguard "lifestrategy" products too. They closely mimic what the pension advisors have been doing for years and there is an argument that active investment doesn't outperform passive, just the fees erode your pot.
Don't forget to slide the % equities down as you approach the age you need the money and also ignore a lot of really old fashioned advice to move into very safe stuff at retirement. If you plan a 30 year retirement say, then given that markets historically take no more than 10 years to recover from a crash then 2/3rds of your pot on retirement day can still afford to be in riskier investments since you won't be dipping into that for another 10 years at least.
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