Saturday, 2 May 2015

Transferring my Company Pension into a SIPP

About half of my current monthly savings are salary sacrificed into my employers Defined Contribution Pension plan.  I do this over adding directly to my own personal SIPP for a few reasons:
  • My employer matches contributions up to a certain level;
  • My employer adds the majority of the employers National Insurance that they save into the pension; and
  • The 2% employee National Insurance that I would have paid is also able to be added into the pension

Wealth Warning: Before I proceed it’s worth reinforcing that my employer pension plan is a Defined Contribution Pension and not a Defined Benefit Pension.  It also provides absolutely zero additional benefits.  If it was or did either of those things what I describe below may not be the right approach.

These benefits definitely outweigh the high 0.6% to 0.76% expenses I'm then paying for trackers and the lowest cost active funds (where a tracker is not available) within the Pension.  That said if I could find a way to get the money in through salary sacrifice as I do today but then transfer at regular intervals into my SIPP I’d get all the salary sacrifice benefits of the company pension as well as all the low cost benefits of a DIY SIPP.  This effect would be noticeable as I've been with my current employer for a large portion of my Financial Independence Retire Early (FIRE) journey meaning some 15% of my total wealth is now held within the company pension.  I estimate it would reduce my total wealth annual expenses from 0.31% per annum to about 0.25%.  0.06% doesn't sound like much until you run the numbers and realise its £60 per annum if your wealth is £100,000 and £600 per annum on £1 million.

Regular readers will know I've been trying to find a way to do this for some time.  I've tried two different angles:
  • Get my employer to open me a new Pension policy with them salary sacrificing into that new account.  The old account would then be dormant allowing a trivial SIPP transfer by simply filling out the short transfer form that is available from any SIPP provider.  Unfortunately my employer wouldn't budge here as it was just too much “admin”.
  • Ascertain from the insurance company who provides the Defined Contribution pension if and how this can be done.  They obviously have a vested interest in being as slow and obstructive here as possible.

I am however pleased to announce that many emails, phone calls and a lot of time later I have achieved success.  In case any readers are trying to do something similar the form I needed is what is called a Declaration of Claim Discharge which is a simple 2 page form which importantly includes a section called a Partial Transfer Request which enables me to check a box entitled “If you wish to move the ‘maximum amount’, please tick the box opposite”.  All I have to do is complete this form and then attach it to the SIPP transfer form from my chosen SIPP provider and I'm away.

Before setting the wheels in motion I now have a final choice to make.  What SIPP provder will I use?

Choice 1.  This would seem to be the no brainer.  I already have an AJ Bell YouInvest SIPP which on the expenses front is a percentage fee broker/platform but with a capped maximum expense.  I currently have 26% of my total wealth within this SIPP wrapper and it is now at such a wealth level that I have reached the capped level of expenses.  I'm also happy with the reliability of the platform and the customer service levels.  I could therefore add all the pension transfer into this SIPP wrapper for no additional platform charges other than trading costs when I initially buy my chosen ETF’s/funds.  So why don’t I?  I just don’t like having all my eggs in one basket.  As the excellent Monevator says I “assume every investment I make could leave me with nothing”.  Sure all my wealth in the YouInvest SIPP should be ring-fenced, segregated and held in my name but what if it isn't...  Losing 26% of my wealth would be very painful, particularly if I had been retired for many years and therefore had limited re-employment prospects.  It would be even worse if I added another 15% of my wealth to the problem.  So even though this is the lowest cost option it’s the option I'm unlikely to take.

Choice 2.  So it looks like I need a new SIPP provider.  Here I have 3 choices – a percentage fee broker/platform, a percentage fee broker/platform but with a capped maximum annual expense or a flat fee broker/platform.  To screen providers I'm straight over to Monevator’s Compare the UK’s Cheapest Online Brokers.  I quickly eliminate all the percentage fee brokers as my transfer pot value makes these expensive.  On the flat fee side The Share Centre seems to have the lowest Platform Charges for my transfer amount at £172.80 but there is one big problem.  Their dealing costs are 1% (minimum £7.50)!  On a £100,000 transfer (not my real transfer amount but I am transferring a significant amount) that’s an initial additional cost of £1,000!  Then at periodic intervals I’ll also be transferring more employer pension plus reinvesting dividends so will continue to get hit year after year.  No thanks.

Next up we have Interactive Investor and Motley Fool Share Dealing tied with annual costs of £176.  Not surprising they are tied given the Motley Fool uses the Interactive Investor platform.  Their dealing costs are £10 but you do also get £20 worth of free trades per quarter.  That’ll do me.  So my insurance policy against somebody at YouInvest committing fraud or similar is £176 per annum.  Given the downside is that my YouInvest wealth could go to £0 I think I’ll take that.

Before I pull the trigger do any readers use Interactive Investor as a SIPP platform?  Would you recommend them?

As always DYOR. 


  1. To answer your question - after the experience I had with Interactive Investor in 2012, I could never, ever recommend them. I will not go into detail but there are lengthy threads on Motley Fool 'broker' board and also MSE 'saving/investing' board which you may wish to read before making a final decision.

  2. I use iii but for my ISA, not my SIPP, which is with Fidelity. There's no denying that there have been problems over the last 18 months or so probably because they are so cheap and this seems to have pushed their business past the point at which they could efficiently manage it. I think the MSE thread that diy investor is referring to is probably this one.

    But despite having some problems with messages not being answered in a timely fashion and the fact that both our ISAs took around 6 months to transfer in I haven't actually had enough of a problem with them to make me transfer out. Our ISAs are linked so only cost £80 pa for the both and the £20 per quarter trades go a fair way towards covering monthly investments at £1.50 a pop. Along with the "transfer in" offers we received this means I don't think we've paid a penny for their service as yet.

    A lot of the complaints have been about slow payments of dividends which doesn't affect us currently as we're ploughing them all back in - they have all been received eventually. The web site is fine, although the search facility can be a bit flaky but they are currently trialling a beta version of a new interface so things might be improving there.

    So it's not a complete "thumbs up" from me and, as diy says, you might want to do a little reading before you commit.

  3. sorry no experience of iii but i use IWEB for my NISA and they seem OK so far. I am on a similar strategy to you. Am currently doing 20% salary sacrifice but our employer does not enhance - they just keep it. The fund is not the best but the charges are only 0.3%.

  4. Just so I'm clear - by completing this Declaration of Claim Discharge it's possible to transfer funds from an employer DC pension into a scheme of your choice, and you can do this on a regular basis, e.g. accumulate x months in the company scheme and then transfer it out? Do you know if this is something your employer's pension provider has chosen to do, or whether it's a service all must provide?

  5. Hi John and Cerridwen
    Thanks for the information on Interactive Investors. I'd seen a very old thread on Motley Fool that didn't have a lot nice things to say but nothing recent that was overly concerning. Thanks for the further information including the MSE hint. Looks like I have a little more DYOR to do given that MSE thread runs to 66 pages.

    Hi Anon
    Thanks for the NISA feedback on iWeb. For me there were two things that turned me off SIPP wise. 1. There seems to be a £200 account opening charge for the first account opened after which I'd be still be up for annual SIPP fees of £180. So for a SIPP it seemed quite uncompetitive expense wise. 2. I believe iWeb is run on the AJ Bell platform so if there were any shenanigans on YouInvest I thought they might also occur on iWeb.

    Hi Jon
    The form I have is clearly a manually processed document and it took a lot of persistence before it was revealed. That said it also doesn't contain any information for how regularly the transfer can be made so it doesn't appear frequency restrictive. To make it worthwhile regarding buying costs within my SIPP I'll probably try again in 9-12 months (assuming everything goes smoothly this time around). I won't say who my employers provider is as nothing I've said on this site has been nice and so I don't want to run the risk of any ramifications. That said I will say they are a large well known UK life insurer so if they do it I can't see why it wouldn't be possible with others. Unfortunately I don't know if it's a legal requirement thought. Maybe another more knowledgeable reader will chime in soon on that...

    1. Before you make a transfer
      Contact your current pension provider and the provider you want to transfer to. You’ll need to check if:

      your existing pension scheme allows you to transfer some or all of your pension pot
      the scheme that you wish to transfer into will accept the transfer
      If you transfer your pension, you may:

      have to make payments to the new scheme
      have to pay a fee to make the transfer 

      lose any right you had to take your pension at a certain age 

      lose any fixed or enhanced protection you have when you transfer
      lose any right you had to take a tax free lump sum of more than 25% of your pension pot
      Your pension providers can tell you whether any of these will apply.

  6. Hi RIT,

    This is interesting. As my pension pot grows I get increasingly wary of having my employment, mortgage provider, share save, share options and pension all tied up with the one company. (Admittedly the pension is in trust in a separate legal entity, but still....)

    I don't have any complaints about the scheme as such, its pretty cheap and the online platform is ok.

    Keep us updated on how it goes :) (I'm going to see if I can find something similar from my scheme, if not for right now for later)

    Mr Z

    1. My previous company went bankrupt with my pension pot. Nevertheless, it got transferred to a major pension vendor without any loss and still fully available for me. It was done by the firm handling the bankruptcy.

  7. I use Hargreaves Lansdown for my SIPP. They are certainly not the cheapest, though I have no complaints at all about the service and ease of use of the website. On the odd occasion I've needed to contact them by phone or Email, it has always been a quick response. Although they are not the cheapest for on going fund charges, they do not charge for switching between funds so that is a help.

  8. I have no experience with Interactive Investors but am pleased to hear your ongoing phone calls, emails and communications are finally resulting in a change. Let us know your progress.

  9. HL seem steep at 0.45% p.a. but it's capped for a SIPP at £200 p.a. as long as you are invested in shares, gilts, ETFs and such, as distinct from "funds".

    We find their service excellent. Alas, we are investing peanuts and will never get anywhere near their cap.

  10. I too would use HL and cap at £200pa.

    Will you be out of the market during the transfer - how will you avoid this? I am interested in how you are managing this as my company stakeholder scheme charges >£1000pa and I want to switch to HL to save charges too.

  11. I use iii for a couple of NISAs and I've never had a problem with them. Have had accounts with them for almost ten years. Also have had accounts with AJBell and Best Invest, overall the latter is the best of the three, but no complaints about any of them. iii works out cheapest overall

  12. @RIT: iWeb is part of Halifax Sharedealing. See

  13. I have been a recent client of HL, Best Invest and now iii for my SIPP. I would rate HL the best and iii not quite as good. Clearly iii offers much better value if you have a fair sum invested. More detailed comments:

    - iii have definitely raised their game over the last 3 years
    - I have always managed to get through quite quickly on the phone to someone who was helpful
    - the online messaging service is poor - very formulaic delayed answers
    - the SIPP is actually adminsistered through a 3rd party "The pensions company" This makes interaction a bit
    clunky for example to change the monthly sum you have to fill out and post a new form
    - for some reason no client has received the tax credit from HMRC for the last 6 months. This concerns
    me a bit. It is said to be due to an interaction between HMRC and the
    - the internet display of assets is quick and efficient.
    - online dealing is quite good (much better than Alliance Trust)
    - they have the full Vanguard range

    Overall for the amount they charge I think iii offers amazing value. Companies like HL and Best Invest
    absolutely rip off more wealthy clients. They waste a lot of money with endless mail shots pushing their advice to buy whichever active fund their 'experts' recommend
    Overall I am happy I moved to iii and I prefer them to Alliance Trust too.

  14. PS

    Make sure you can transfer your assets in specie. If not you would be taking a big risk or you could end up going through the hassle of hedging with a spread bet

  15. I'm planning to merge two of my pensions from my previous work history (one of which is only about £50k) into a SIPP. That will give me just two (non-state) pension funds each of a worthwhile amount.

  16. Hello RIT.

    The iii SIPP has not paid any tax reclaim from October last year. One of my family has been with them since that time last year, and has never received the tax relief. It's affecting everyone - read the Monevator 'cheapest online brokers' post from comment 887 onwards.

    I suppose it'll be OK soon, but I am finding it extremely worrying, and am considering stopping payment and transferring out when the tax relief finally appears. Also iii customer service is extremely slow to respond to any queries. They often just don't answer.

    My SIPP is with HL, and although they are expensive, the customer service is out of this world compared to iii. And the expense is not too bad if you avoid funds and don't deal too much.

    Are AJ Bell YouInvest reliable?

  17. I have my ISA with ii - transferred about from HL about 18 months ago. No real issues and speed of replies, actions, div payments etc has improved of late. I suspect they got swamped by transfers when the % platforms started charging but this volume should reduce over time.

    One question I have - one can find 'cost' information regarding platforms while still investing but the bigger question is their service when in drawdown in terms of costs and reliability etc.
    Is there a site that rate platforms for service when in drawdown?

  18. I use XO for my SIPP account. I'm limited in choice as I want to avoid the companies that I use for my larger ISAs (to avoid too many eggs in each basket).

    XO are very cheap, open and simple. The trading platform is basic but functional. The administration system (for one-off contributions etc) is clunky and paper based. Tax credits arrive after about 6 to 8 weeks. The terms & conditions have been written by copy/paste and are poorly produced, making it necessary to get written confirmation on a few issues (such as charges and how the account operates) before I signed up. Overall I'm happy to recommend them as basic, cheap and functional, best suited to someone not dependant on platform based research tools.

  19. Hello Ric, Have XO become less clunky since they moved from Lifetime to Gaudi as their underlying SIPP provider?

  20. Hi can you edit my post please - it should say Liberty not Lifetime