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Amalgamating small DB & DC pension pots

Including Financial Independence and Retiring Early (FIRE)
TimR
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Amalgamating small DB & DC pension pots

#88972

Postby TimR » October 17th, 2017, 9:55 pm

My wife (Age 56) has several small pensions from her 'nomadic' career over the years in 'admin work' which was not well paid.

She has two small deferred index-linked DB pensions (transfer value about £12K each) and five small DC pension pots (less than £5K in each pot) plus her largest pension pot which is a DC pot (worth £40K) with Standard Life. She is currently doing some part-time work and not contributing to any pension scheme at present but hopes to go full-time again next year where she may join yet another pension scheme for however long she stays there !

She is considering either - Transfering the two DB pensions and five small DC pots into the largest Standard Life DC pot or Transferring them all into a new SIPP which she would need to open.

I believe Standard Life would be happy to transfer the DB & DC pensions in to her existing DC pension but would many SIPP providers be happy to transfer in several small pots (DB & DC) as described above ?

TimR

Moderator Message:
edited title on op's request. Raptor.

Raptor
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Re: Amalgamating small DB & DC pension pots

#89022

Postby Raptor » October 18th, 2017, 8:23 am

HL took over 3 of mine when I created a SIPP, then later included another small DB pension, when the company I worked for closed the DB and started us all in a DC one (which I will transfer into SIPP when I eventually get around to retiring fully).

Raptor.

TimR
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Re: Amalgamating small DB & DC pension pots

#89056

Postby TimR » October 18th, 2017, 11:04 am

Thanks for the reply.

HL look to be a good option for transferring into a SIPP if I can get her to invest the proceeds in Shares / ITs / ETFs which have a capped fee (Are HL's fees reasonable for paying out an drawdown / dividend income in the future for a smallish SIPP ?)

She was thinking of investing the proceeds of the pension transfer in something simple to manage like 'Vanguard Life-strategy 60' with the aim of long term hold.

Unfortunately OEICs appear to have a high % charge on HL platform . I was wondering if anyone has any experience of investing in SIPPs on the Halifax or IWeb platforms or other platforms which don't have such a high % charge for OEICs.

TimR

hiriskpaul
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Re: Amalgamating small DB & DC pension pots

#89161

Postby hiriskpaul » October 18th, 2017, 6:32 pm

You will not be able to transfer the DB pensions to DC without taking financial advice. If the pots are small the cost of the advice will probably prove uneconomic.

If you want to invest in LifeStrategy, the obvious broker choice is Vanguard, but they are not yet offering a SIPP (due in 2018 they say). The charges may of course be higher than the current 0.15% they charge for ISAs. Next best for a very simple and reasonably low cost SIPP is probably Fidelity. They will charge you 0.35%, but no other charges, even for transfer out or for drawdown. They even sell units to cover charges for no fee, so you can happily put the lot into an accumulating fund. Fidelity only allow drawdown for funds larger than £50k, so that should put you in the clear. No fee to transfer out means you could take advantage of the Vanguard SIPP when it comes along if it turns out better value.

TimR
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Re: Amalgamating small DB & DC pension pots

#89178

Postby TimR » October 18th, 2017, 8:41 pm

hiriskpaul wrote:You will not be able to transfer the DB pensions to DC without taking financial advice. If the pots are small the cost of the advice will probably prove uneconomic.


Does this also apply to transferring a DB to a SIPP as well as to a DC - I thought I read somewhere that if the DB pension was worth less than £30K the regulators did not insist you had to get advice to transfer it?

TimR

swill453
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Re: Amalgamating small DB & DC pension pots

#89183

Postby swill453 » October 18th, 2017, 8:57 pm

TimR wrote:Does this also apply to transferring a DB to a SIPP as well as to a DC

A SIPP is a type of DC pension, it has the same rules in that respect.

TimR wrote:I thought I read somewhere that if the DB pension was worth less than £30K the regulators did not insist you had to get advice to transfer it?

Yes that seems to be the case according to https://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/transferring-your-pension

Scott.

TimR
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Re: Amalgamating small DB & DC pension pots

#89412

Postby TimR » October 19th, 2017, 10:30 pm

swill453 wrote:
TimR wrote:I thought I read somewhere that if the DB pension was worth less than £30K the regulators did not insist you had to get advice to transfer it?

Yes that seems to be the case according to https://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/transferring-your-pension


Just contacted a SIPP provider (Best Invest Tilney) - I was told they require advice on any DB pension transfer to their SIPP even those transfers less than £30K. If all SIPP providers insist on advice this makes transferring a small DB pension below £30K uneconomic !

TimR

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Re: Amalgamating small DB & DC pension pots

#89600

Postby Shelford » October 20th, 2017, 4:41 pm

I'm in the same position, but looking to transfer a DB pension into a SIPP.

My provider is Hargreaves Lansdown, who take a conventional position on DB ie. best to keep them, whether or not the advice says otherwise. In general, the adviser there told me they don't recommend transfers out of DBs except in very unusual circumstances. Note: In the event the advice is negative, they won't accept a DB transfer.

AJ Bell however will accept transfers (based on my exchange with them) even in the event the advice is negative. So you might try with them.

Shelford

Kantwebefriends
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Re: Amalgamating small DB & DC pension pots

#95486

Postby Kantwebefriends » November 13th, 2017, 11:22 pm

"She has two small deferred index-linked DB pensions": unless the CETVs are attractive, she might be best to keep these and view their eventual payout as the conservative bond-like part of her pension portfolio. She could also enquire about the size of the actuarial reduction for taking them early.

The others: if she finds the scatter a nuisance she could, I suppose, consolidate them. But she's past 55 - she could look at getting some of the money out now by emptying some of them altogether particularly if she's not a taxpayer this year. Then she could recycle that cash into a pension contribution this tax year. She'd have to stay on the right side of the rules that constrain recycling of tax-free lump sums. That may be no problem for the modest amounts you imply.

It's worth noting that, for her DC pensions, if she drew any money beyond the TFLS she'd then be limited to a maximum £4k p.a. pension contribution in future. It would be worth looking to see if there's a way round this. For instance, do the old "small pots" rules still exist, and would they be a way round it?

The nub of my suggestions is that she try to find ways to exploit her current pensions to fund further pension contributions.


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