Contracting out of S2P via SIPP based question...

dunstonh

My protected rights pension is invested in Zurich's "Managed AP" fund, and to be honest, I don't have a clue "where" my money is actually invested. This is why I like the idea of the HL SIPP, because I can decide exactly where to put my money to work, and I'd enjoy having control.

There is absolutely no difference in the Zurich pension and the HL pension as both are focused on offering funds and both publish or have access to the same data. HLs SIPP is not priced to be competitive for other assets.

Can I ask why you say that the HL SIPP is expensive? From what I can gather it looks quite reasonable, in terms of costs...

SIPPs for purchasing funds are the most expensive option. A typical fund is going to be 1.5% annual management charge on execution only basis.

Your Zurich one probably has access to around 20-30 funds and they have no annual management charges.

A stakeholder on execution only basis would be around 0.5%. Possibly a tad lower.

A personal pension on execution only basis could come out around 0.3% depending on your age and time to go.

So, you can see that the typical 1.5% amc with HL is more expensive than Zurich (assumption), stakeholder and personal pension.

If/when I go ahead with opening the SIPP; I am considering going for a high risk strategy (emerging markets etc) initially, as I have time on my side; and I would view the sipp as a "bonus" pension if you like. There is so much choice within a SIPP, and so little choice with Zurich; and that's what I find so appealing.

The choice is effectively its only positive point. Zurich's range is comparable to a stakeholder. A mid range PPP would come in with around 100-300 funds. Top of the range PPP would come in around 1900 funds.

You have to decide if the extra cost is worth the difference. If you utilise the benefits and options of the SIPP then its money well spent. I dont personally think that cheapest is best but we have seen many people move to SIPPs thinking they are cheap option and picked funds that would have been better and cheaper in a stakeholder or PPP.

EdInvestor

Deleted_User wrote: »

The protected rights pension I have with Zurich is worth about £13K at the last valuation, and is not my only pension provision with Zurich.

What charges (AMC) are you paying on this pension?You need to know to compare H-L's offering. Dunstonh's quoted rates may apply to you (as it's a company related pension) but many pensions charge a lot more.

With regard to HL SIPP annual charges, as below, how can you tell which funds incur the 0.5% + vat charge?

<Annual charge 0% on cash and over 1,900 funds.
For all other funds & investments we charge 0.5% + VAT up to a maximum of £200 + VAT per annum>.

This applies to investment trusts ETFs and some trackers where H-L receives no trail commission.

[Deleted User]

EdInvestor wrote: »

Deleted_User wrote: »

The protected rights pension I have with Zurich is worth about £13K at the last valuation, and is not my only pension provision with Zurich.

What charges (AMC) are you paying on this pension?You need to know to compare H-L's offering. Dunstonh's quoted rates may apply to you (as it's a company related pension) but many pensions charge a lot more.

I rang Zurich today, to ask what the AMC is for my "protected rights" pension; and I was told that it's 0.75%. BUT that in effect it's zero, because the money they take off me is "reinvested" in dribs and drabs over the following 12 months or something? I don't really understand what she meant by this. Why have an AMC if they effectively give you it back anyway..?

I do appreciate that to buy into funds directly through the HL SIPP (which is what I would be doing) will be considerably more expensive, however I can at least decide exactly where my money is invested, and make reasonably well informed decisions, based on the information HL display for funds.

I really wish pensions weren't so complicated (Which is why I like the idea of a SIPP), there's no wonder people get confused by them. I am reading up all the time, and just when you think you've cracked it, you learn something else you didn't know! You've then got to hope you make it to retirement!!

By the way, does anyone know what "AP" stands for in "Managed AP" please?

I've got my HL SIPP application form & pension transfer form filled out; I'm now going to take some time to decide whether or not to take the plunge.. It is very tempting....

Many thanks again for your replies folks, I'm grateful.

dunstonh

I rang Zurich today, to ask what the AMC is for my "protected rights" pension; and I was told that it's 0.75%. BUT that in effect it's zero, because the money they take off me is "reinvested" in dribs and drabs over the following 12 months or something? I don't really understand what she meant by this. Why have an AMC if they effectively give you it back anyway..?

It is as I thought. The contract allowed 0.75% but its rebated back bringing it to zero. Zurich (And dunbar in particular) were expensive on contributions but cheap on the AMC.

I do appreciate that to buy into funds directly through the HL SIPP (which is what I would be doing) will be considerably more expensive, however I can at least decide exactly where my money is invested, and make reasonably well informed decisions, based on the information HL display for funds.

You may not have the range of funds with Zurich but he data available is the same.

I really wish pensions weren't so complicated (Which is why I like the idea of a SIPP), there's no wonder people get confused by them.

The Zurich offers a limited range of funds and is effectively doing these free of charge now. HL's SIPP is far more complicated and more expensive. That should be the one confusing you.

By the way, does anyone know what "AP" stands for in "Managed AP" please?

I think it was to indicate an Allied Dunbar fund but not sure.

[Deleted User]

Thanks dunston.

While I was on the phone to Zurich today, I also asked what the charges were on my "main" pension plan, that my employer contributes to. I was told 0.75% AMC again (although I don't know if the same rebate system applies here??) PLUS an annual "capital units charge"(?) of 3.5%. Does this sound reasonable to you please? Both of my Zurich plans (protected rights + "main") were set up via Allied Dunbar a number of years ago, and off the top of my head, I'm pretty sure they are both in the same "Managed AP" fund - which I discovered today is managed by threadneedle asset management.

I suppose the main reasons I am being drawn to HL's SIPP for my protected rights pot, are choice of funds, simplicity, better control; and last but not least, I like a challenge! I know that the AMC's on funds through HL are more expensive than Zurich, but if I were fortunate enough to pick funds, that over many years, significantly outperformed the one I'm in with Zurich, it would surely be money well spent.

SIPP's, including HL's, seem extremely popular from what I can gather, but I get the impression that you're maybe not too keen on them.... Am I right? If so, for what reasons please? I would be genuinely interested to read your views on SIPPS; a few pros & cons perhaps.... as food for thought...

Many thanks again for all your input.

EdInvestor

Deleted_User wrote: »

PLUS an annual "capital units charge"(?) of 3.5%. Does this sound reasonable to you please?

No.To see the effect of this, ask for a transfer value for the pension and compare it with the current value.You will note they have deducted a large amount. This is because the contract allows them to extract all the charges they would have made if the pension had stayed with them to maturity if you leave early Capital units are quite pernicious.)

I suppose the main reasons I am being drawn to HL's SIPP for my protected rights pot, are choice of funds, simplicity, better control; and last but not least, I like a challenge! I know that the AMC's on funds through HL are more expensive than Zurich, but if I were fortunate enough to pick funds, that over many years, significantly outperformed the one I'm in with Zurich, it would surely be money well spent.

Indeed so, quite agree.

SIPP's, including HL's, seem extremely popular from what I can gather, but I get the impression that you're maybe not too keen on them.... Am I right? If so, for what reasons please?

IFAs like dunstonh don't like SIPPs like H-L's because they are DIY products, not requiring any advice .So the more punters move to them, the less business, commissions and fees for the IFAs.They would prefer it if you stayed with the old fashioned insurance companies who look after the IFAs very nicely, thank you.At your expense, of course.

dunstonh

SIPP's, including HL's, seem extremely popular from what I can gather

They are certainly fashionable. As were endowments and tech stocks in their day.

I know that the AMC's on funds through HL are more expensive than Zurich, but if I were fortunate enough to pick funds, that over many years, significantly outperformed the one I'm in with Zurich, it would surely be money well spent.

I know what you are saying and there is a lot of valid reasons in there and I would go along with it myself. However, you at least know now what the position is whereas at the start you didnt.

but I get the impression that you're maybe not too keen on them.... Am I right? If so, for what reasons please? I would be genuinely interested to read your views on SIPPS; a few pros & cons perhaps.... as food for thought...

They are over sold, over bought and for most people dont offer any value for money over personal pensions and stakeholders. Your typical consumer isnt skilled enough or interested to utilise direct investments and that is what SIPPs were all about. Since A day, 90% of SIPPs have gone into funds. Thats just crazy.

We have seen people on here taking their money out of cheaper personal pensions and stakeholders to go into HLs SIPP and use the awful HL MM funds. One person had been so brainwashed by Ed they were leaving a Scot Eq fund with a 1% AMC (before fund based discounts) to go into a single HL fund with a higher AMC and a worse past performance because they fell for the hype of SIPP.

IFAs like dunstonh don't like SIPPs like H-L's because they are DIY products, not requiring any advice .

Thats cr*p and you know it. I can arrange SIPPs and I can arrange them cheaper than HL. I prefer to use personal pensions as I can do those even cheaper than a SIPP. Somebody using HLs service isnt going to be using an IFA. Although a lot of people try DIY investing but then go back to an IFA later when they realise it wasnt what they thought.

So the more punters move to them, the less business, commissions and fees for the IFAs.

We sometimes think that Ed works for HL. HL dont discount any of hte AMCs on their SIPP. They take 0.5-0.75% of the annual managent charge and give no advice for it. So, why is it bad for an IFA to be paid for advice that will cost less than that whilst its ok for HL to be paid more for giving no advice?

They would prefer it if you stayed with the old fashioned insurance companies who look after the IFAs very nicely, thank you.At your expense

Reduction in yield due to charges on an HL SIPP using unit trusts will be around 1.7%. Reduction on yield on a personal pension or stakeholder on MAXIMUM commission will be 0.6%-1.3%. Ed knows all this as its been posted so many times but her she is so biased towards SIPPs it is unbelievable the lies she churns out.

EdInvestor

dunstonh wrote: »

Your typical consumer isnt skilled enough or interested to utilise direct investments and that is what SIPPs were all about. Since A day, 90% of SIPPs have gone into funds.

If true (AFAIK there are no stats for the DIY SIPPs, only insurance based ones) it's because IFAs have persuaded investors to transfer into SIPPs (making a commission) and then reinvesting in much the saame way as before.Of course that's ridiculous, but it's not what we are discussing.

We have seen people on here taking their money out of cheaper personal pensions and stakeholders to go into HLs SIPP and use the awful HL MM funds.

One poster on MSE about three years ago did this, because he had been so browbeaten by people like dunstonh telling him off that he could cope with arguing no longer, he was just desperate to get away from the ripoff insurance company. No-one else has done this to my knowledge

Somebody using HLs service isnt going to be using an IFA.

Exactly.

We sometimes think that Ed works for HL.

ROTFLMAO. I'm not even a customer as I mainly invest directly into shares, where H-L is not a competitive provider. It is the best however for regular investment into unit trusts which is what most people want at least initially.

HL dont discount any of hte AMCs on their SIPP

That's because there is no AMC on their SIPP.Just shows how much dunstonh knows about the product, but then why would he know, as it's not an IFA product (like many other low-cost profitable ways of investing).

dunstonh

One poster on MSE about three years ago did this, because he had been so browbeaten by people like dunstonh telling him off that he could cope with arguing no longer, he was just desperate to get away from the ripoff insurance company. No-one else has done this to my knowledge

He left a cheaper pension to go into a more expensive one as he fell for the SIPP hype. He ignored the comments of the advisers on the thread telling him he was wrong to do it. He followed Eds advice to do it.

That's because there is no AMC on their SIPP.Just shows how much dunstonh knows about the product, but then why would he know, as it's not an IFA product (like many other low-cost profitable ways of investing).

Most of the regulars here know that you are just spinning comments to play to the anti-IFA posters and won't fall for your BS. I feel sorry for the non-regulars who dont see past your bias.

An HL SIPP utilising funds will pay far more commission to HL to an advice IFA recommending a stakeholder or personal pension. A 40 year old with a £40k fund going into an HL SIPP will pay around £40,000 more in charges than using a personal pension or stakeholder pension.

EdInvestor

It's not a question of being anti-IFA.The fact is that IFAs aren't authorised to advise on many of the best and low cost ways of investing.So by their nature they will tend to lead investors along a more expensive path and to pooh pooh those who seek more effective ways to get a return which are outside their competence.

The Self Invested Personal Pension which started out - and still is - a vehicle for non-IFA style investing (but has been adipted by some IFAs for their own purposes) thus tends to be a flashpoint.