Investment & Investing

I have no personal recommendation for an IFA but I've heard good things about using unbiased.co.uk to find one.

I actually started a very similar process and so far been using unbiased - still working through the process but it's pretty straightforward. Their model is that the IFA's pay them to be connected with consumers but the portal and experience so far has been good. I wasn't in-undated with loads of calls from shisters

Other than "speak to an IFA" which is what I intend to do, what's the general idea about combining old pension pots?

I have a bunch from previous employments, plus one from my current employer.

Do I transfer the old ones* into my current pension and continue on its merry way? Does this make the management fees I pay lower if I'm actively paying into the same pension?

Or do I keep the old ones separate in a SIPP?

I'm wary of combining everything into one basket (even if I apportion it to different levels of risk) as I remember the horror stories of the various pension scandals (my FiL got nobbled by the Equitable Life collapse).

I'm reasonably financially savvy and responsible. I know this is my retirement future so I won't be gambling it away (or not all of it), and I'm quite risk averse to begin with.

Looking after the 4 current pensions is not an onerous task, but I'm almost certainly paying more in fees than I need to.

Retirement is probably still ~10 years away unless my numbers come in. I should be mortgage free in ~5 years too.

I'm wary of combining everything into one basket (even if I apportion it to different levels of risk) as I remember the horror stories of the various pension scandals (my FiL got nobbled by the Equitable Life collapse).

SIPPs are different in that respect, no? In that you are not putting your money into a insurance product, but into a product that is made up of funds / equities / bonds etc... (although I expect you can find funds that include insurance products).

So where Equitable Life's product goes a bit fucky, the products in your SIPP are still there even if the administrator / manager goes tits up.

I moved ~4 pensions into one Aviva one, then realised I could have the same risk profile with a SIPP at 1/10 of the cost.

Within that SIPP, you can still diversify and choose different risk profiles.

The (professional) advice I got was to combine the smaller ones, but to consolidate into two or three separate pots so you mitigate mismanagement.

I think at one point I had six separate pensions on the go. It’s down to three now.

Yeah, Mrs GB has ~10 pensions as she's been doing shorter term contracts (usually maternity cover roles) more recently.

Our usual IFA* has quoted £150 per pension to help with the consolidation process - mostly to make sure that we don't incur any unnecessary fees or miss out on monthly/annual interest/dividend payments by transferring it at the "wrong" time. Seems a bit steep when there are lots of pensions but it can be worth it depending on the timings.

First step is me needing to sit down and stare at the last few years statements for each of my pensions to work out the fees I'm paying...

* We've known him for years, but he's since progressed on to managing people with serious amounts of money, but continues to help us every so often as a favour.

I moved ~4 pensions into one Aviva one, then realised I could have the same risk profile with a SIPP at 1/10 of the cost.

Yeah, I guess it comes down to whether moving it all into my current active pension (which makes me twitchy having all eggs in a single basket) would be cheaper overall than putting the older ones into a SIPP and managing that myself.

[EDIT] Did a bit of digging:

Current work pension: ~0.40% annual fees
Old work one (with bulk of money): ~0.17% annual fees!
Old work one (smallest): can't see any details at the weekend for some reason, despite it being the same provider as current work pension
Old work one (mid-size): ~0.69% annual fees

All 3 I can see have different retirement ages (60, 63, 66) so those will need fixing at some point (I'm only 47 so even the earliest one won't start to consolidate for a few more years, that usually starts ~10 years from specified retirement age). And no idea of the details of the 4th one.

Rang about the smallest pension as I can't see any real details (apart from the value) on the website. No statements, no monthly breakdowns, no fee info.

They claim there's an annual fee of 1% but the amounts they say are being deducted per month only account for 0.15% annually! They're sending me a load of stuff (statements, product fee breakdowns, etc) by email that should help clarify this.

If it's cheap I'll keep it where it is, if it's more expensive (because a bigger fee appears once a year and they didn't see it in what they could see) I'll look to transfer it into my current work pension (same provider) assuming there's no other gotchas.

Next on the list is the pension with 0.69% annual fees...

Update on the fascinating pension consolidation.

I've kicked off the transfer of both the oldest (smallest), and the most costly (0.69% annual fees) pensions, into my current work pension. It'll take anything up to 28 days but will get there eventually. Neither had anything special (different terms, guarantees, bonuses or other benefits) so it was all straight forward.

That should mean I'm not wasting any unnecessary dosh and splits up the money between two well known pension providers. Just have to grow it into something more meaningful now.

I went through pension consolidation about 12 years ago. I had two pensions from previous employers and a person pension that I had taken out a decade or so previously.

I put all of them into my new SIPP, which is where everything is today.

What I remember is that for old pensions you had the fund value and the transfer value, which was far lower. It meant that you would lose much / most of the value of the fund if you were to transfer it, as you could only transfer the transfer value.

One of mine certainly had this - the old personal pension. I can't remember how I got round this, but I don't think I had to take a write-off. I am pretty sure that these lock-ins are now illegal. Maybe I moved my pension at the time that they were abolished.

The platform charges in my new SIPP were significantly lower than in all of the old pensions. I had only ever invested in tracker funds in all of them so the actual fund charges were similar.

Doing the transfers was straightforward as long as I had the right paperwork (in those days it was paper, and I had to make some phone calls). I certainly wouldn't have considered paying anyone to do it.

Happy consolidating!

Yeah, for both of my old pensions fund value = transfer value. Either things have changed or they were non-fucky pensions to begin with.

All I had to do was fill in a web form (once for each pension) with my current provider (as I want to move those two into my current work pension). But I still needed a few phone calls to each provider to check that there was nothing special about the pension (bonuses, guarantees, etc) as that stuff is rarely listed on the website.

Easily done on my own without paying anyone. Mrs GB's consolidation will be different as there's loads, and some are bound to be tricky. We'll probably leave that one to an IFA.

Did think of a SIPP but my main old pension (with the bulk of my savings) is only 0.17% which is a bargain really.

It's another admin thing ticked off my list.

Also bumped up my pension contribution from 4% to 10% (company also puts in 5%) as I'd forgotten to do this.

I'd been doing 5% (with company putting in 10% - I know!) at previous employer so thought I'd keep up that level of contributions.

So I'm tasked with sorting out my wife's 'Stock Incentive Plan' because she's just reached her 10 year milestone at her company and been nudged that the share options will begin to expire if they haven't been cashed in. We never understood how they worked so kind've stuck our heads in the sand, first world problems etc

Her employment contract is scant on detail and the Merrill Lynch app doesn't go into the nuts and bolts of whether these are RSU's or stock options... but does the following sound right...?

You get given some RSU's, after a vesting period (3 years?) they mature and you can sell some (all?) and the 'cash value' is calculated as the increase in share price over the period since they were bestowed....?

Internet advice that I've read seems to be cash them out ASAP unless you're seriously invested in the company and want to play the market game. Although it seems she's played a blinder as the share price has tripled in the last decade.

There’s no set vesting period as far as I know, it’s down to the individual schemes.

Is there any detail on tax arrangements for the scheme? I can’t remember the technical terms, but some schemes will only release the share options minus the calculated tax due, others out the onus on the individual to pay the tax.

Cheers.

So some of the snippets I've pieced together are that it's a three year vesting period but didn't know if this was standard. There appear to be two types of shares (A and B) and a certain percentage can go through as PAYE but that's capped at something like £10K PA. Anything over that has to be declared through a separate tax return.

I've got a meeting booked with an IFA who has some accounting background so hopefully he can advise if any can be diverted to her pension scheme but because the amount in question is quite large I'm leaning towards swallow the tax and lock into long term savings plans whilst maxing out yearly ISA's. I'm aware that it just takes slipping back into a covid lockdown to wipe 50% off the current cash out value.

One thing would be that if you haven’t cashed out the vested shares and they have made accretive gains on the price they were issued at then you would need to pay cap gains tax.

As a rule of thumb you would sell you shares on the day they vest and if you feel strongly about the potential future growth re—buy in a S&S isa rather than hold onto them. It sounds like your wife has continued to be given more rsu’s over the years which have then continued to vest. A standard would be 3-4yr vesting window with say 25% after year one and then quarterly or annually after that.

If it’s going through payroll then you might also look at putting as much through directly into pension contributions as possible as this might work out more tax efficient.

Ahhh that's interesting, thanks. Sometimes I can't tell if I'm reading US or UK tax advice on the web but it looks like she may only pay income tax on the share value at point of vesting and then capital gains tax on any profit.

You're correct that she gets these annually with seemingly no performance conditions attached other than a greater allocation with promotion. I wish I could go back twenty years and work for TJX!

That is correct, that she pays income tax on the value of the shares when they vested and capital gains on any profit subsequently.

Ok given the amount of gains and presumably amount of shares I would work with an IFA. Selling them all in one bunch at this point wouldn’t seem to be prudent. Potentially disposing it some each year to make use of annual CGT allowance and also depending on where your wife is in the income tax threshold.
You might also want to look at any other shares or assets which could be used for offsetting loses against CGT gains

@inchpincher

If there are two classes it may be that it is a mix of RSUs and PSUs. The only difference in my experience is the vesting schedule (split over three years, or all vesting in the third year).

With Net Benefits from Fidelity, the default tax election is net shares, which means any income tax is deducted at source and there is no requirement for declaration on tax return. I don't know the Merrill Lynch app.

As Tenderloin says, there may be a capital gain to be paid on the shares since the vesting date (not the issue date). However, there is no way to time this so you might as well take them when they are at now (unless you want to hold them in the anticipation of growth in share price). I would think there should be a tool in the app / portal that enables you to calculate the gain.

There would be some advantage to phasing cashing them out as you have an annual CGT tax free allowance but of course you would risk share price going down over that time. Mind you you could sell in March and April and be across 2 years

And vesting schedule should be in a contract somewhere.

Ah, i didn't know there was a CGT allowance, having never made any capital gains!

The problem with phasing the withdrawal is that the CGT allowance is diminishing yearly by a factor of 2 anyway, £12k this year, £6k next etc. so while it will definitely make a saving, it’s not substantial enough compared to 20% share drop. Not that I’m anticipating that (!) but the risk adverse side of us would prefer the cash to plough into the mortgage etc
@user75580 Thanks, she’s chasing HR to get some detail, it’s bonkers they’ve never given her an info pack.

Fair enough - would still be worth you looking at if you have any losses that you could bank against the gains. Easiest one would be from stocks and shares but think there are some other things like watches you can do similar with