SIPP, Hargreaves Lansdown and Funds

moneyandmountains

Reposting the following H&L quote on the sticky:

"One difference between the SIPP account and the other Vantage accounts is that there is no annual loyalty bonus payable on funds held in the SIPP. This is the annual renewal commission that we share with you in the other Vantage accounts. We have been informed by HMRC that such payments are not permissible from a SIPP account."

Any guesses at what this means in financial terms?
The waters muddy again:huh:

EdInvestor

I think that refers to the 0.25% rebate from the AMC which H-L typically gives to direct and ISA investors.

In the SIPP, AFAIK, they can only rebate the intial charge. Other providers follow a similar arrangement, but also charge dealing fees for each purchase, which is why HL is the cheapest for the regular investor in funds.

moneyandmountains

EdInvestor wrote:

I think that refers to the 0.25% rebate from the AMC which H-L typically gives to direct and ISA investors.

In the SIPP, AFAIK, they can only rebate the intial charge. Other providers follow a similar arrangement, but also charge dealing fees for each purchase, which is why HL is the cheapest for the regular investor in funds.

Cheers Ed, good to get a second opinion, that how I read it as well. I wonder if the TER figures are quoted with or without the 0.25% taken off.

dunstonh

Full SIPPs cannot rebate but personal pensions can. This is why Selestia can rebate trail commission back into the plan with their unit trust funds but HL cannot.

Although Selestia say it cant be done with ISAs as the rebate is treated as a contribution towards the allowance but HL do it.

cheerfulcat

dunstonh wrote:

.

Although Selestia say it cant be done with ISAs as the rebate is treated as a contribution towards the allowance but HL do it.

With HL, you have a separate " Loyalty Bonus " account for the rebates ( which makes me wonder why they can't offer them for SIPPs ).

dunstonh

It does seem strange that if they can do it for the ISA that they cant do it for the SIPP.

I just assumed that they didnt do it on the SIPP because of the higher admin costs involved with SIPPS compared with ISAs (which are only going to increase from April).

EdInvestor

Perhaps it's because it invalidates the fund RIY?

And now we're back we're we started....:D

dunstonh

RIY isnt linked to the fund. RIY is at "package" level. i.e. the wrapper and the funds chosen.

My guess would be that as the investments within the SIPP arent technically in the packaged product, that rebates are classed as a contribution. Initial commission not taken doesnt involve a rebate, it just reduces the initial charge. Trail commission rebated does actually involve a rebate. This is probably why Selestia can do it as their product is classed as a packaged product.

simondo

Hi all. This is my first time posting but I have been following with great interest.

I have £25000 in Prudential pension which I am transfering to a HL sipp. I plan to distribute the £25000 over funds only. Does anyone have any recommendations on much I should split the money up?

For example £5000 in 5 funds or £3000 in 8 funds

dunstonh

Does anyone have any recommendations on much I should split the money up?

recommending funds is a breach of board rules and would also be a breach of FSA rules. You are going execution only so you have to pick them yourself. You know your risk profile better than we do.

As a guide though, you should invest in all the major sectors but average out the amounts so the final result matches your risk profile.