Hargreaves Landsdown Question

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NorthernGeezer_2
NorthernGeezer_2 Posts: 153 Forumite
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in Pensions, annuities & retirement planning
Quote from HL website
"The HL SIPP is free to set up and low-cost to run. Our yearly charge for holding investments is never more than 0.45%. There’s no charge for inactivity or for holding cash"
Does this mean i can treat HL as a bank, transfer 2 other pensions i have as cash and dont invest, just drawdown my 25% tax free amount and up to my annual tax allowance every year i dont have to pay anything?
Sounds too good to be true.
«1345

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  • westv
    westv Posts: 6,091 Forumite
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    The cash interest rates you'll get are such a pittance I'm not surprised there's no charge.
  • Zanderman
    Zanderman Posts: 4,691 Forumite
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    Not sure why you're so surprised. You'd be handing HL some money to look after that they can utilise without giving you anything back (I think they pay a smidgen of interest) until you withdraw some.

    The effective value of the fund will decrease annually with inflation too.

    So it can be done, but not investing the pensions whilst they're in HL might be unwise.
  • NorthernGeezer_2
    NorthernGeezer_2 Posts: 153 Forumite
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    The general feeling here seems to be dont invest for the short term (5 years),
    My pension pot is only £90k which will reduce immidiatley to 67.5K when i take my 25% tax free.
    I will then be withdrawing around £12.5k a year for 4 years till my state pension kicks in which will leave me around £17k in the pot.
    Not a lot to invest, i'm very risk averse and i cant see the pot increasing much over the 5 year period when i have to pay charges, hence my thought about using the HL facility like a bank.
  • Superscrooge
    Superscrooge Posts: 1,171 Forumite
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    HL pay 0.05% interest on cash according to their website. So by leaving your pension pot as cash you are almost guaranteed to lose money relative to inflation.

    Whilst there are no guarantees and you state you are risk averse, a low risk multi asset fund is likely to give a better return.
  • xylophone
    xylophone Posts: 44,500 Forumite
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    around £12.5k a year

    The standard single person's allowance for the current tax year is £11,500 and for the next is £11,850.

    You might consider taking the full £11,850 at the beginning of the next tax year, claiming the overpaid tax as soon as possible and then holding it in the highest paying account you can find.

    You might then consider investing the balance in a cautious multi asset fund and selling enough to meet your annual allowance at the beginning of tax year 19-20, doing the same in subsequent years.

    But if you prefer to keep it in cash you can indeed use HL on a "bank" basis.
  • NorthernGeezer_2
    NorthernGeezer_2 Posts: 153 Forumite
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    I've also got some of my wife's tax allowance, hence the £12.5k figure, not sure what it is for the next tax year.
    My biggest concern is will the fee's I'm charged for investing be more than I make over the short period of time.
  • Alexland
    Alexland Posts: 9,665 Forumite
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    I work with someone whose wife is doing something similar draining a small DC pension via HL for a few years before her DB scheme kicks in. If the money is only going to be in the account for a few years and not long enough to ride out investment valuation drops then it's a reasonably sensible approach. However it's not free as they are not paying much interest and there will be the account closure fee at the end.
  • missile
    missile Posts: 11,691 Forumite
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    Alexland wrote: »
    ... and there will be the account closure fee at the end.
    AFIK, there is no closure fee if the account has been held open for 12+ months.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home :iloveyou:
  • Alexland
    Alexland Posts: 9,665 Forumite
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    HL SIPP account closure fee is £295+vat if within 12 months then dropping to £25+vat? Detailed under Account Administration:

    http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

    Alex
  • NorthernGeezer_2
    NorthernGeezer_2 Posts: 153 Forumite
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    I could live with a £25 closure fee.
    Fidelity charge 0.25% for holding cash in a SIPP, which works out at a tidy sum when u consider they are doing naff all.
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