Virgin Red 125,000 points move pension offer

[Alex]

What do respectable members of public think about this new Virgin Red offer – Earn up to 125,000 points when you move your pension(s) to Virgin Money?

[BA Flyer IHG Stayer]

Don’t ever make major financial decisions based on the ability to earn points from it.

This isn’t paying a few hundred quid for a credit card sign up bonus.

It can have long lasting impact on your future income long after some points have been spent.

[Alex]

Well I’d like to state their offer details then – FCSC protected, 0.75% total annual fees, index trackers, I am perhaps asking for in depth opinion rather than advice for an inexperienced investor, sorry. I do use SIPP switches on occasions as they can be very attractive and over last year/s SIPP fees with my providers have been paid exclusively with c.s.h.b.c.k. I earned with their offers. Can VM get bust?

[tootsci]

Holding a pension with them would be a pass from me with an AMC of 0.45%. And probably not worth the hassle of a transfer in for the minimum period (end of this year) and then a transfer out again to keep those fees to a minimum

Edited as just seen your follow-up. Charges are even worse then! I think only you can judge if it’s worth the hassle of a quick transfer in and out for the points, but I certainly wouldn’t be keeping my money there any longer than the bare minimum with fees as shocking at that.

[BA Flyer IHG Stayer]

Alex wrote:

Well I’d like to state their offer details then – FCSC protected, 0.75% total annual fees, index trackers, I am perhaps asking for in depth opinion rather than advice for an inexperienced investor, sorry. I do use SIPP switches on occasions as they can be very attractive and over last year/s SIPP fees with my providers have been paid exclusively with c.s.h.b.c.k. I earned with their offers. Can VM get bust?

You have no idea what my level of investment experience is.

I’d question yours when you need to ask random members of the public for advice.

I gave you my advice as a “respectable member of the public”

Take my advice or don’t take it but there is no need to be insulting.

[tootsci]

As you’re an experienced investor I’m sure I don’t need to say that you also need to consider the effect that constantly moving a pension around will have on your returns e.g. what is your money invested in each time? Personally I’d rather just ‘set and forget’ rather than chase the latest ‘bonus’ whatever that may be.

[Alex]

BA Flyer IHG Stayer – I do not know your level, you do not know mine. I do not see any insult in what I wrote and this was a response to how you worded yours. Thank you anyway, hope we all can be positive and help each other rather than raise tensions.

[executiveclubber]

Sorry you’ve faced unnecessary hostility. Some people spend too much time on here. Myself included sometimes!

I personally would transfer in and out for the minimum term.

[Alex]

executiveclubber wrote:

I personally would transfer in and out for the minimum term.

I keep checking and now feel I would transfer too, the offer looks nice and transparent, they use MSCI All Countries World Index their funds are tracking, each year there is some loss to comparator but small and this is where I believe is some catch. The minimum term is unlikely to result in significant loss and 125,000 points for a couple of holidays will be helpful for us, no need to wait for retirement. There’s a good chance of another provider offer at around the New Year and a few hours spent to transfer pay off thousands in points or cash, in my opinion.

[executiveclubber]

Alex wrote:

executiveclubber wrote:

I personally would transfer in and out for the minimum term.

I keep checking and now feel I would transfer too, the offer looks nice and transparent, they use MSCI All Countries World Index their funds are tracking, each year there is some loss to comparator but small and this is where I believe is some catch. The minimum term is unlikely to result in significant loss and 125,000 points for a couple of holidays will be helpful for us, no need to wait for retirement. There’s a good chance of another provider offer at around the New Year and a few hours spent to transfer pay off thousands in points or cash, in my opinion.

Exactly. If it works for you and brings value beyond what you would deem a small financial loss, then your winnings are better than your outlay. I would honestly go for it. But of course your mileage may vary & you may be more risk-averse than me – I value travelling over theoretical cash in the (for me) very distant bank.

[CarpalTravel]

BA Flyer IHG Stayer wrote:

I am perhaps asking for in depth opinion rather than advice for an inexperienced investor, sorry. I do use SIPP switches on occasions as they can be very attractive and over last year/s SIPP fees with my providers have been paid exclusively with c.s.h.b.c.k. I earned with their offers. Can VM get bust?

You have no idea what my level of investment experience is.
…

I think you may have misread (as I initially did) the OP’s statement. They said “rather than advice for an inexperienced investor”, not “from an”. That aside, I absolutely believe in the two things:

Don’t ever make major financial decisions based on the ability to earn points from it.

and also:

Don’t ever make major financial decisions based on randoms on the internet.

Pensions are just like mortgages, what is best will be down to each individuals circumstances so the only sensible thing is to speak to professionals, like a qualified IFA.

[TooPoorToBeHere]

I’ve moved SIPPs and ISAs several time for transfer offers and will continue to do so where the offers are attractive.

Say you can earn £2500 of tax-free cash paid to you outside the SIPP wrapper, in a year, for doing a couple of transfers of £100k – that’s a *major* bump to your investment returns. Most of us have to “earn” about £5k to take-home £2500.

The key of course is to do transfers in-specie. If you transfer by selling a fund at the bid and then buying again at the offer, you’re going to lose a load of money to the spread and/or charges.

I’ve got a £30k ISA in “cash” (short duration gilts) which is the family emergency fund that has earned a 5% return in a year by being transferred in-specie between ISA providers *on top* of the 5% it yields inside the ISA. Madness not to for an hour’s form-filling.

[The Savage Squirrel]

The big problem is that it is not a SIPP. Therefore your entire pension pot will be invested in one of four fund positions, none of which is particularly competitive in terms of performance (although this can change obviously), but, more crucially, none of which will give you the control and choice of a SIPP and none of which is even remotely competitive in terms of cost/fees vs a basic basket of low-cost ETFs held in a SIPP.

For anyone with a non-trivial sized pension pot, giving up the freedom of choice and the ultra-low cost base of a SIPP for this is likely a very poor decision. Maybe just about a good deal for someone very early in their career with a tiny pot or an investor so clueless they can’t even choose a suitable range of low-cost ETFs. I’m guessing that neither of these descriptions would apply to the OP, so I’d pass on this offer.

[dougzz99]

The Savage Squirrel wrote:

The big problem is that it is not a SIPP. Therefore your entire pension pot will be invested in one of four fund positions, none of which is particularly competitive in terms of performance (although this can change obviously), but, more crucially, none of which will give you the control and choice of a SIPP and none of which is even remotely competitive in terms of cost/fees vs a basic basket of low-cost ETFs held in a SIPP.

For anyone with a non-trivial sized pension pot, giving up the freedom of choice and the ultra-low cost base of a SIPP for this is likely a very poor decision. Maybe just about a good deal for someone very early in their career with a tiny pot or an investor so clueless they can’t even choose a suitable range of low-cost ETFs. I’m guessing that neither of these descriptions would apply to the OP, so I’d pass on this offer.

Absolutely nails it. Loss of control, lack of choice, loss via bid-offer pricing. It’s a firm NO for me. Each to their own though.

[Alex]

The Savage Squirrel wrote:

The big problem is that it is not a SIPP.

I cannot find anything about SIPP in T&C and it is not listed in exceptions. Could it be that they accept SIPP transfers?

[dougzz99]

Alex wrote:

Well I’d like to state their offer details then – FCSC protected, 0.75% total annual fees, index trackers, I am perhaps asking for in depth opinion rather than advice for an inexperienced investor, sorry. I do use SIPP switches on occasions as they can be very attractive and over last year/s SIPP fees with my providers have been paid exclusively with c.s.h.b.c.k. I earned with their offers. Can VM get bust?

Have you considered that cashback/points earned on these moves may seem equivalent to the fees you’ve paid, but those fees have come from inside your pension wrapper, and eroded the long term prospects of your pension growth that compounding brings? That comes for the benefit of some short term offer. Costs matter. Pensions are a marathon not a sprint.

[JDB]

125,000 points may sound very alluring, but in the context of a pension it’s derisory. Barclays offered the same sum (in Avios) in 2022 for a tiny financial commitment as did Amex last autumn, both for products that, unlike pensions, don’t matter.

There are also a hidden direct and indirect costs of switching, so the c.£1,250 might be enjoyed today for some points holiday flights at the expense of future holidays. As pointed out above, this is not a cheap provider which is why they can afford to offer this gimmick.

[BBbetter]

Even setting aside concerns about lack of investing options, highly likely poor returns, just looking at the maths of returns – it’s not a good picture.

125k points is worth £1125 at current sale price.

If you invest 100k, you’ll be paying £750 in fees to Virgin Money per year. Compare that to approx £250 at Vanguard. If you are happy to stick to ETFs, you can pay just £150 at Fidelity.

[BBbetter]

Some people talking about ‘in-specie’ transfers. Its not applicable in this case, so better not to confuse OP.

[degsy]

@CarpalTravel – Same, I also initially misread ‘for’ as ‘from’.
Easily done. Innocuous but impactful!

[Harrier25]

Some will sell their soul for a few extra points with total disregard to how it may impact them over the short, medium or long term…and that’s what these businesses are hoping for.

The best of luck to all.

[JDB]

TooPoorToBeHere wrote:

I’ve moved SIPPs and ISAs several time for transfer offers and will continue to do so where the offers are attractive.

Say you can earn £2500 of tax-free cash paid to you outside the SIPP wrapper, in a year, for doing a couple of transfers of £100k – that’s a *major* bump to your investment returns. Most of us have to “earn” about £5k to take-home £2500.

The key of course is to do transfers in-specie. If you transfer by selling a fund at the bid and then buying again at the offer, you’re going to lose a load of money to the spread and/or charges.

I’ve got a £30k ISA in “cash” (short duration gilts) which is the family emergency fund that has earned a 5% return in a year by being transferred in-specie between ISA providers *on top* of the 5% it yields inside the ISA. Madness not to for an hour’s form-filling.

In specie transfers are also highly unsatisfactory as they can take an inordinate time and mean that you can be stuck with bad positions and/or not be able to take advantage of rare opportunities. Opportunity/time cost is a factor as well so again, even if the bonus is £2,500 rather than this £1,125 to £1,500 offer, it may be entirely illusory.

[Alex]

Thanks to everyone, this discussion actually helps a lot and I see different views. As for now I have had good experiences with a couple of SIPP transfers I did, and actually now I see that this one is not the best offer. I still think it is better than some previous ones like Nutmeg. Attractive offers do appear from time to time and you essentially can get some immediate benefits, either points or cash, from your pension money otherwise untouchable till age 57.

[pbcold]

I am 60 years old and have experience of financial dealings with many institutions, of course. By far the most inept and frustration was Virgin Money.

[JDB]

pbcold wrote:

I am 60 years old and have experience of financial dealings with many institutions, of course. By far the most inept and frustration was Virgin Money.

That experience would be consistent with its failure as a ‘challenger’ bank and its eventual sale at half book value. It was touted around for a while, but not a lot of interest.