Workplace Savings – Isio Blog 9

12 Feb 2021
Man and woman at work having a discussion in stairwell

Workplace Savings – An Isio Blog 

Blog 9, February 2021

What is the true cost of moving?

Who’s this for? DC scheme Trustees, Governance Committees and Pension Managers

Scrolling through property apps is a guilty pleasure of mine and during lockdown has become even more consuming while I aimlessly walk around the local area for my daily exercise allowance (and trying to get my 1 year old to nap), spotting for sale signs and then playing guess the price with myself! I can’t be the only one who does this can I?

Whilst we dream of a lovely new house and how big a savings account is required to buy it, in reality it isn’t just the price of the property we need to contemplate. There are less obvious costs associated with the transaction that aren’t always considered at the outset; legal costs, broker fees, moving costs and tax, all can burst the dream house bubble and make it prohibitive.

The same applies when implementing an asset transition for your pension scheme – the new arrangement may look attractive, but there are other costs that may be incurred during implementation that should be taken into consideration.

Transaction costs to transfer a typical member pot are around 2%. If a member is invested in property funds, the round-trip transaction costs are around 7%. If a transition is not well managed, the costs could be much higher due to market impact and out of market exposure.

Much like appointing a conveyancer to conduct a survey on your dream house before purchasing it, the Asset Transition Team at Isio can bring transparency to the forefront and help trustees and employers plan the transition to manage the risks and costs involved so there are no unwelcome surprises for members when their pots move home. Get in touch!

Lorna Courtney is an Investment Consultant at Isio. You can email her directly here.

What is the true cost of moving? PDF