MEGATHREAD: Freetrade SIPP

You don’t need to do anything right now. It’s fine to keep your workplace pensions separate when you switch jobs.

Consolidating can simplify things though and give you more control and visibility on performance and fees. Find a platform you like (e.g. Pensionbee, Fidelity, HL, AJ Bell, Freetrade soon etc.) based on fees and what funds/shares/ETFs you want in your pension and the element of control you want. Then you just give that new platform the details of your old pensions - name, account number if you know it, name of the employer - and they handle the rest. Then a few weeks later you’ll have a pot of money to invest in your chosen option.

Your current employer may be willing to pay their contributions directly into your SIPP. More likely though they’ll only pay into their normal workplace pension that all staff are enrolled in. It’s easier that way.

So most of the time you’ll have two pensions - a SIPP and a workplace pension with your current employer. Each time you leave a job you can consolidate the workplace one into the SIPP. My workplace pension is with People’s Pension who allow one transfer a year to a SIPP so I can invest that money more flexibly. But that still means I have two pension pots as my boss only pays into that one.

An important thing to keep in mind when doing this are the fees attached. Your old workplace pensions may have big exit fees. These are under review by the FCA, but for now you need to be aware. Some platforms will offer to pay them for you if you switch to them.

Finally, if you’ve ever had a Defined Benefit pension (not many of these are left but if you’ve ever had a public sector job or worked in a formerly nationalised business you might have one) you should be careful about transferring money from that - you may end up worse off.

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@101 the simplest way would be to transfer all of your existing ones to one new pension, probably a SIPP in your name. Employer matches usually only work with workplace pensions - ie the one managed by you/your gf’s employer. (Obviously maximise the employer match because it’s free money for futureyou, but todayyou knew that already.)

But.

Your old pensions (whether they’re defined benefit or not) may have “special features”, which might be bad like chunky exit costs or good like guarantee future annuity rates. So you need to find out about those before you decide whether to transfer or not - as @kenny and @john said it might be worth staying put to avoid losing certain benefits. Annoyingly, special features are not always detailed in your pension statement, so you have to ask your provider.

You could have a pension review with an IFA (if you have a defined benefit pension of over X - I forget how much, sorry - you’ll have to do this before transferring). The last IFA quote I got to do this was £900.

But I didn’t want to pay the £900 so instead I asked my existing pension provider these questions:

  1. Can I transfer my pension out of YourPensionCo? (There can be restrictions on which pensions you can transfer.)
  2. What is the ‘transfer value’ of my pension? (If it’s the same as your pot value, it’s unlikely you’ll be charged a fee when you transfer.)
  3. Are there any disadvantages for me if I transfer?
  4. What fees would I have to pay if I transfer?
  5. Will I lose any “special features”?, eg guaranteed annuity rate, protected tax-free cash, protected low pension age guarantees, waiver of contribution, life assurance benefits, accidental death benefit in addition to death payment, any self-investment option, etc.
  6. Will I lose any rights related to protected tax-free lump sums?

The answers will help you work out whether transferring is a good idea or not. If it is, a co like PensionBee can help make it happen, but the forms are very doable for an ex-pensions advisor :slight_smile:

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This is on the roadmap.

In the medium term timescale at the moment.

I wonder what the pricing for SIPP going to be! I wonder if that has been considered yet, kind of like ISA pricing which has been pre announced before charging it.

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Yes, excited to see it coming soon.

No idea what pricing is but I know I’m moving mine to freetrade when it comes out!

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Was there an answer to whether Freetrade SIPPs will include transfers in out of the gate?

I don’t want to wait 3 to 6 months only to find out it’s another 6 to 12 months for SIPP transfers!

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I didn’t see an answer to the transfer question. Applies to me too. Last roadmap was August with 3 - 6 month timeframe. Wonder if that’s still the plan?

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:eyes:

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I’ve got a SIPP waiting to transfer to either Vanguard or Freetrade…who’s going to win the race!?

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Vanguard most likely as they’ve been working on it. I’m not aware of Freetrade having done anything on it yet, they have other priorities.

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I just received an email from Vanguard about their SIPP.
Launch in early 2020. It looks pretty compelling.

  • A standard annual account fee of just 0.15%, capped at £375 a year.
  • The account fee and cap apply across all an individual’s holdings on Vanguard Investor (SIPP, ISA, general account).
  • Clear pricing – only the account fee plus fund fees and transaction costs – nothing else.

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/retirement/get-ready-for-the-vanguard-personal-pension?cmpgn=ET119UKCESIP0015

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HL for a comparison are 0.45%. So if you take £375 and divide it by 0.45 you’d need a pension of £83,333 to just break even. Given the legal protection is what 85k - they are being very clever as people open various pots with different organizations…

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Only if you have just a SIPP in vanguard. The fee is cheaper if you have more than one product as your now spreading it across them.

(HL have various fees up to £2 million)

As for the FSCS protection, are people really splitting up their pensions into individual 85k pots everywhere? I don’t think they are… so I don’t think this is a consideration at all.

Me - that’s why I currently have two providers, although my £85k pots are made up of SIPP and ISAs.

If one provider falls over, I’ll still have the other. Another form of diversification.

chrome

£83,333 in vanguard would cost you £125, there is no break even

That seems like it would get expensive, and complicated to manage to ensure your not over 85k per institution. I wonder if you’d run out of platforms eventually?

Not to mention you would also be limited in what funds you can invest in to keep them covered under FSCS protection. (Most ETFs are out of the question for example)

So while it may be something you do, I still don’t think it was a consideration at all for vanguard.

Oops yep. The cap is 375 not the annual cost…

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The £85k is for deposit takers. Insurance (which includes pensions) and investments have separate limits.

Also the custodian should keep the assets separate from their own. Even if provider goes bust assets should usually be safe (unless fraud involved).

Haha, I wish, but I’m unlikely to be able to accumulate that much! Likely to be max 4 providers for me.

Protection limits depend on when a firm fails. It went from 50k to 85k earlier this year for investments, but obv doesn’t cover investment performance.

See https://www.fscs.org.uk/what-we-cover/ and https://www.fscs.org.uk/what-we-cover/investments/

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So if I put in 10K 30 years say and retired and it went pop just before retirement I’d only get back 10k?!