Pension transfer

[smokey01]

Hi,

I have a workplace pension through Standard Life (defined contribution) but as I have recently resigned I now want to transfer it to Interactive Investor. The transfer has to be done in cash and not in specie. I am concerned that the stock market might fall sharply while the process is underway so am considering switching my 4 funds into a low risk fund. I cannot put into cash myself prior to starting the process as Standard Life don’t allow it but they do have this fund :-

Standard Life Money Market Pension Fund

That invests like this

Certificates of Deposit 68.0
Fixed Deposits 23.3
Aberdeen Liquidity Fund 5.0
Commercial Papers 3.7

The performance of the fund is not good losing a small % of money over 1, 3 and 5 years but it would only be while the transfer takes place and my thoughts are to lock in what I believe is a high stock market valuation of my 4 current higher risk funds. Standard Life class my current funds risk as 6 as compared to 1 for the money market fund.

What are people’s thoughts, to first put my holdings into this low risk fund or just cross my fingers and hope for the best?

[Urbandreamer]

What are people’s thoughts, to first put my holdings into this low risk fund or just cross my fingers and hope for the best?

Personally I would not be fiddling with holdings prior to the transfer. It entails additional cost which I would be loath to pay.
Of course you don't say what your holdings currently are, only that they are all the same risk level, and if I'm understanding you right, towards the top end of the risk table.

The exception that I would make is that if, like me, you have a property fund, then get that sold while you can. If it "soft closes" then that could complicate the transfer process.

[Alaric]

The transfer has to be done in cash and not in specie. I am concerned that the stock market might fall sharply while the process is underway so am considering switching my 4 funds into a low risk fund.

What time scale are you anticipating between giving them the go ahead and getting the funds in your ii account? If they are going to sit on the request for months then your course of action may make sense. Otherwise you are injecting an additional stage into the process by selling your existing funds, buying the deposit fund, then selling the deposit fund and transferring the cash,

[swill453]

I am concerned that the stock market might fall sharply while the process is underway

Surely that would be a good thing? If your cash is in transit and the market falls - you win! You can buy back in at the lower price.

If you mean you're worried about the market falling while your money is still tied up in the Standard Life funds, then it may have a neutral effect as once the transfer is complete you can again re-enter the market at the lower rate.

The worst case is a sharp rise in the market while you're in cash. By transferring now to the money market fund you'd make this more likely!

Scott.