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The Masked Tulip

Transfer from Equitable Life to SIPP

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Hi folks,

I have a small pension with Equitable Life that I am thinking of transferring to a SIPP with Selftrade - Selftrade because that is what I use to trade shares. (I have another one, slightly larger with Standard Life, and that too is invested in their various index-linked trusts. It is a personal one that was set up for my business.).

The reason why I am thinking of doing this is because of the almost collapse of Equitable Life back in the 2009 period and how they are shriking as a pension company. I get the occasional letter from them saying that the number of people paying in is getting less, etc, etc. Although, in the last year they seem to have been taken over by Canada Life as opposed to Halifax.

Anyhow, the main reason I am thinking of changing is to get more control over the money. Over the years I seem to have suffered from boom and busts with my pension. One year it goes up dramatically with the stoock market and then the next it goes down. (The Standard Life one also seems to suffer from booms and busts but it has done incredibly well in the past year.). I feel that I would like more control as to when I am in stocks and when I am in cash re the stock markets.

Does this sound reasonable or sensible?

 

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My SIPP provider has a max compensation cover of £50K under FCA.  

It should be pretty basic being a SIPP operator/provider - but in event of something untoward (internal fraud perhaps), max limit of £50K, for everything with them.   Eg; SIPP, share-isa, regular share trading account, combined, it seems to me.

Not suggesting I am over £50K invested, but nevertheless I chose to have SIPP with one provider, and ShareISA with different provider.

Just with you suggesting you already have a share-trading account with one provider, placing another lump with them might be something to consider.

I gather compensation is lot different for some pension schemes.

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8 minutes ago, hotairmail said:

I moved my company pension to Hargreaves Lansdown at great redemption cost when I thought my former employer was going to go bust in 2008.

HL are excellent and will handle the entire process for you. What I liked about them was that they don't bet on their own account unlike an insurer or bank etc. To me that was exceedingly important. The other was that any cash you hadn't invested was placed in 4 separate banks each with their own FSA guarantees (EDIT: you'll have to check this is still the case - at the time I also checked they weren't Irish or Icelandic banks).

They are not the cheapest. Not even the best platform. But, basically, they are just straight down the line and have the company set up in the way I want for my FS provider. They have been very successful over the years - from scratch they are now in the FTSE100. Not being absolute cheapest means they can invest and you know they won't be here today and gone tomorrow.

Being in control of our own pensions was the best decision I made rather than being stuck to v. poor returns year after year because you find it difficult to take the up-front hit. The way I ameliorated that was to transfer our various pensions over a couple of years to spread those hits out.

 

Thanks HAM. I think I will go with them for my Equitable Pension. See how the transfer goes and then, if things work out OK, consider transferring the Standard One later on.

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As a matter of interest,  if your SIPP provider goes bust,  do they actually "own" your shares?

I always assumed they simply "managed" your shares for you and that in the case of bankruptcy would simply pass back management to yourself or another provider.

is this the case?  It seems like a vanishingly unlikely event to occur,  but an important consideration.

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1 minute ago, libspero said:

As a matter of interest,  if your SIPP provider goes bust,  do they actually "own" your shares?

I always assumed they simply "managed" your shares for you and that in the case of bankruptcy would simply pass back management to yourself or another provider.

is this the case?  It seems like a vanishingly unlikely event to occur,  but an important consideration.

No, you own the shares. There would simply be a process of them being transferred to a new provider or being sold and your cash going to a new provider under the regulator.

I have a sizeable sum in a shares ISA already with Selftrade so it probably makes sense to go with a different provider for the SIPP.

I am just fed up with this roller-coaster of my two personal pension plans being up dramatically one year, then down the next, etc, etc. I ain't no millionaire, far far from it, but I would like more control

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5 minutes ago, Ash4781 said:

Are these with profits type policies ? They may have guaranteed annuity rates or some other guarantee embedded within the contract.

The Equitble Life one was taken out mid 1990's and has performed poorly. It has no guarantees re annuity and, frankly, the pot is so small that any annuity gurantee will be tiny.

The Standard Life one supposedly, as it was one taken out for me as a self-employed person, can all be taken in cash. I need to find the original documentation as I have never heard of this before.

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1 hour ago, hotairmail said:

I moved my company pension to Hargreaves Lansdown at great redemption cost when I thought my former employer was going to go bust in 2008.

HL are excellent and will handle the entire process for you. What I liked about them was that they don't bet on their own account unlike an insurer or bank etc. To me that was exceedingly important. The other was that any cash you hadn't invested was placed in 4 separate banks each with their own FSA guarantees (EDIT: you'll have to check this is still the case - at the time I also checked they weren't Irish or Icelandic banks).

They are not the cheapest. Not even the best platform. But, basically, they are just straight down the line and have the company set up in the way I want for my FS provider. They have been very successful over the years - from scratch they are now in the FTSE100. Not being absolute cheapest means they can invest and you know they won't be here today and gone tomorrow.

Being in control of our own pensions was the best decision I made rather than being stuck to v. poor returns year after year because you find it difficult to take the up-front hit. The way I ameliorated that was to transfer our various pensions over a couple of years to spread those hits out.

100% agree with this as well.I use HL for my share ISA's and also moved a few company pensions over to them in a SIPP.My parents moved a very small share portfolio over to them as well and even though it was only a small amount the service was incredible.They were treated as if they were moving a few million instead of a few thousand.That says it all.

They arent the cheapest like you say,but unlike most of the others,banks,insurers etc they dont trade themselves or have any counter parties to anything,including no debt.I was just about to move another company pension to them,but its a money purchase with a small final salary pension,and because i can use the money purchase bit for all the tax free 25% they wont let my transfer without financial advice at £400 (not HL fault,my old pension provider where its at).So thats on hold stuck in some rubbish world equity fund.

The process is very very easy.Set up a Vantage account with them first online.Takes about 10 minutes.Then request forms for a SIPP transfer (or an ISA transfer if you want).They do the rest apart from you having to sign a form they send you and sending in a birth certificate or driving license (they send back recorded delivery).

I also use their currency service for my business.Superb,and saved my 00s compared to banks.

I wouldnt use anyone else.

 

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19 minutes ago, durhamborn said:

The process is very very easy.Set up a Vantage account with them first online.Takes about 10 minutes.Then request forms for a SIPP transfer (or an ISA transfer if you want).They do the rest apart from you having to sign a form they send you and sending in a birth certificate or driving license (they send back recorded delivery).

I also use their currency service for my business.Superb,and saved my 00s compared to banks.

I wouldnt use anyone else.

 

Thanks for the info - not paperless then as I was hoping.

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2 minutes ago, hotairmail said:

Well, I think you can print the forms off....

info here:

http://www.hl.co.uk/pensions/sipp/transfer-to-the-vantage-sipp/transfer-forms

 

 

Thanks HAM. HL works out about £80 in annual fees, not including trading fees, more than the Selftrade SIPP but for the safety of not having all my eggs in one basket it makes sense to go with them.

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5 minutes ago, The Masked Tulip said:

Thanks for the info - not paperless then as I was hoping.

Yes you can print forms off,but for pension transfer you need to send some id and they send back.They send a form asking for it and a pre paid envelope.After that all paper free.

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2 hours ago, The Masked Tulip said:

The Equitble Life one was taken out mid 1990's and has performed poorly. It has no guarantees re annuity and, frankly, the pot is so small that any annuity gurantee will be tiny.

The Standard Life one supposedly, as it was one taken out for me as a self-employed person, can all be taken in cash. I need to find the original documentation as I have never heard of this before.

 

Remember when you transfer you sell at bid value and buy at the full value. Churn will cost 2% at least.

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Is your Equitable Life pension pot in unit-linked funds?

If so, as I understand, you can switch between (eleven) funds as often as you like, bid price to bid price, so no erosion of capital is incurred.

If over 55 you can draw-down £5,000 p.a. (or more) with no exit charges; £1,250 tax-free, £3,750 taxable at your marginal rate.

You can't hold 'cash', but one of the funds is a 'Money' fund, which in these days of ultra-low interest rates, stays pretty much static.

Not a great variety of other funds, but enough to spread your risk and exercise some choice of geographical area.

 

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32 minutes ago, The Spaniard said:

Is your Equitable Life pension pot in unit-linked funds?

If so, as I understand, you can switch between (eleven) funds as often as you like, bid price to bid price, so no erosion of capital is incurred.

If over 55 you can draw-down £5,000 p.a. (or more) with no exit charges; £1,250 tax-free, £3,750 taxable at your marginal rate.

You can't hold 'cash', but one of the funds is a 'Money' fund, which in these days of ultra-low interest rates, stays pretty much static.

Not a great variety of other funds, but enough to spread your risk and exercise some choice of geographical area.

 

I was spread in several geographical areas but last year Equitable Life basically got rid of a lot of their funds and moved everyone into a handful of funds but with increased charges.

According to this FT article there is no fee to leave - just the cost of selling up the shares and getting out.

https://www.ftadviser.com/2016/04/06/ifa-industry/companies-and-people/equitable-life-hikes-fees-as-funds-close-lzzsDHsm79GknNdy0gneaJ/article.html

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Another HL SIPP holder here and other than the royal mail share offer debacle they've been excellent. I'm all in shares and fees are £16.67 a month which is reasonable. I've done far better than any of our previous company pension providers from Scottish Widows and Schroders through to the diabolical people's pension. The greatest insult of them all is when they lose you money and charge a percentage management fee for the privilege. 

I love being in control. 

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2 minutes ago, longtomsilver said:

Another HL SIPP holder here and other than the royal mail share offer debacle they've been excellent. I'm all in shares and fees are £16.67 a month which is reasonable. I've done far better than any of our previous company pension providers from Scottish Widows and Schroders through to the diabolical people's pension. The greatest insult of them all is when they lose you money and charge a percentage management fee for the privilege. 

I love being in control. 

Is that £16.67 per month inclusive of VAT?

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6 minutes ago, The Masked Tulip said:

I was spread in several geographical areas but last year Equitable Life basically got rid of a lot of their funds and moved everyone into a handful of funds but with increased charges.

According to this FT article there is no fee to leave - just the cost of selling up the shares and getting out.

https://www.ftadviser.com/2016/04/06/ifa-industry/companies-and-people/equitable-life-hikes-fees-as-funds-close-lzzsDHsm79GknNdy0gneaJ/article.html

Thanks TMT, I didn't know that they had quietly upped the annual charges.

My wife has a pension pot with them which used to be fully invested in their Index-linked Gilts Fund and did very well over a number of years.

This was one of the funds they terminated around April 2016 and clients' assets were moved into the Gilts and Fixed Income Fund.

We didn't like the prospects for this and switched to the International Growth Fund, which has since performed OK (and much better than the Gilts&FI.) :)

 

A related matter, on which I would appreciate comment, is that of a non-taxpayer utilising the pension contribution and draw-down rules (from ages 55 to 75) to supplement income. Annually, a contribution of £2,880 results in an increase to the pension pot of £3,600 units at offer price, approximately £3,400 at bid price. Draw-down of £5,000 is by hypothesis all tax-free. hence the client is £(5000-2880) = £2,120 better off in the pocket but only £(5000-3400) = £1,600 worse off inside the pension pot. A nice tax-free extra £520 p.a., or is there a snag?

 

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Just now, The Masked Tulip said:

Is that £16.67 per month inclusive of VAT?

It's taken from the cash held on account so not sure whether or not VAT is applicable here but we do get the uplift 25% from HMRC on contributions. If you choose to pay the fee from a debit card you'll pay from net salary however. 

That £16.67 is because the SIPP value is at or above their £50k threshold. If you held half that amount the fee would be half too.

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5 minutes ago, The Spaniard said:

Thanks TMT, I didn't know that they had quietly upped the annual charges.

My wife has a pension pot with them which used to be fully invested in their Index-linked Gilts Fund and did very well over a number of years.

This was one of the funds they terminated around April 2016 and clients' assets were moved into the Gilts and Fixed Income Fund.

We didn't like the prospects for this and switched to the International Growth Fund, which has since performed OK (and much better than the Gilts&FI.) :)

 

A related matter, on which I would appreciate comment, is that of a non-taxpayer utilising the pension contribution and draw-down rules (from ages 55 to 75) to supplement income. Annually, a contribution of £2,880 results in an increase to the pension pot of £3,600 units at offer price, approximately £3,400 at bid price. Draw-down of £5,000 is by hypothesis all tax-free. hence the client is £(5000-2880) = £2,120 better off in the pocket but only £(5000-3400) = £1,600 worse off inside the pension pot. A nice tax-free extra £520 p.a., or is there a snag?

 

Absolutely none, especially if today's interest rates prevail meaning any other taxable investments will yield diddly squat anyway. You'd need to be seriously rich to trouble the tax threshold assuming no earned income and utilisation of ISAs.

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I was in a smilar situation last year TMT, although I already run a HL SIPP.

When I went into the Equitable Life stuff, again it's not very much, there was a guaranteed inflate from now to retirement that looked really hard to beat even when you took into account the higher costs versus a SIPP.  So I decided to leave it where it was.

Have a look to see if you have the same.

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34 minutes ago, longtomsilver said:

It's taken from the cash held on account so not sure whether or not VAT is applicable here but we do get the uplift 25% from HMRC on contributions. If you choose to pay the fee from a debit card you'll pay from net salary however. 

That £16.67 is because the SIPP value is at or above their £50k threshold. If you held half that amount the fee would be half too.

The charges on a Hargreaves Lansdown Vantage SIPP vary depending on the type of investments you have.

See HL charges for more details.

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56 minutes ago, Frank Hovis said:

I was in a smilar situation last year TMT, although I already run a HL SIPP.

When I went into the Equitable Life stuff, again it's not very much, there was a guaranteed inflate from now to retirement that looked really hard to beat even when you took into account the higher costs versus a SIPP.  So I decided to leave it where it was.

Have a look to see if you have the same.

I made the same mistake TMT is not in with profits. But yep I agree with your analysis a 3.5% guaranteed inflate is too good to churn in a zirp environment. Also made the point that the last men standing may have a juicy slice of remaining free assets of the Mutual.

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6 minutes ago, crashmonitor said:

I made the same mistake TMT is not in with profits. But yep I agree with your analysis a 3.5% guaranteed inflate is too good to churn in a zirp environment. Also made the point that the last men standing may have a juicy slice of remaining free assets of the Mutual.

My apologies for missing this point earlier in thread TMT, please ignore my earlier post.  Cheers crashmonitor.

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