SIPP, Hargreaves Lansdown and Funds

EdInvestor

dunstonh wrote: »

Over half those surveyed had less than £25,000 in the SIPP

Why is that a problem? How many of those SIPPs contained old pensions moved from zombie type or other high cost funds and reinvested in quality funds at lower cost?

41% were contributing less than £100pm

Ditto, why is this a problem?You must get out of this old fashioned mindset that SIPPs are only for rich folk.

Only 31% used a wide range of funds

But this is surely to be expected? If 69% were invested in assets other than funds which are not available in personal pensions, then that is what SIPPs are for.

38% didnt realise that large investment choice was a product feature.

But 62% did.

The article basically concluded that publicity of SIPPs has made people want to buy one without realising what it is they are buying and how it compares to alternatives.

Not from what you've posted it hasn't.

And if people are ill informed about SIPPs, then who is to blame?

I would suggest the first port of call should be their advisors.

dunstonh

Why is that a problem? How many of those SIPPs contained old pensions moved from zombie type or other high cost funds and reinvested in quality funds at lower cost?

That in itself is not a problem but remember SIPPs often have fixed charges which can be attractive for large fund values but expensive for smaller ones.

Ditto, why is this a problem?You must get out of this old fashioned mindset that SIPPs are only for rich folk.

I have no such mindset. That was just one of the facts highlighted in the research. That said, such a small contribution indicates typically poor retirement provision which suggests the indivdiuals dont realise what they are going to get from the pension.

But this is surely to be expected? If 69% were invested in assets other than funds which are not available in personal pensions, then that is what SIPPs are for.

You have misunderstood. Of those using funds, only 31% used a wide range. That means the other 69% were using one or two funds. For those, that would make a stakeholder pension or personal pension a far cheaper option (even on full commission, let alone discounted).

But 62% did.

Nice to see you can add up. However, 38% is a very high figure for those that clearly dont understand the product they have bought.

And if people are ill informed about SIPPs, then who is to blame?

In view of posters in this forum, we could easily say you are to blame if readers here have made such mistakes. Your pro SIPP approach for everyone is misleading and damaging. However, in general you have to put it down to good marketing by the SIPP providers along with a willingness of the media to promote the products of their advertisers (although that has often been the case).

I would suggest the first port of call should be their advisors.

It would certainly help. I have seen who asked for a SIPP thinking that it was the cheap option and have had to re-educate them with facts to show that they are not the cheap option. I would like to think other advisers would do the same most of the time.

EdInvestor

dunstonh wrote: »

That in itself is not a problem but remember SIPPs often have fixed charges which can be attractive for large fund values but expensive for smaller ones.

Or not as the case may be.

such a small contribution indicates typically poor retirement provision which suggests the indivdiuals dont realise what they are going to get from the pension.

I would suggest things have changed: people are far more likely these days to be sporeading money around by overpaying mortgages and using S&S ISAs, since the tax rules no longer benefit pensions as much as in the past.

That means the other 69% were using one or two funds. For those, that would make a stakeholder pension or personal pension a far cheaper option (even on full commission, let alone discounted).

Entirely depends on which funds are chosen.Stakeholder charges are capped at 1.5%, same as H-L's SIPP effectively, but the latter offers the best funds in the country whereas a stakeholder will usually offer only bog standard lifeco rubbish.

However, 38% is a very high figure for those that clearly dont understand the product they have bought.

I'm amazed to hear you think that more than 60% of investors understand ordinary pensions.

Your pro SIPP approach for everyone is misleading and damaging.

I don;t take the view that SIPPs are ideal for everyone, but IMHo everyone should take a look at them not least because they will likely learn quite a lot by doing so.

However, in general you have to put it down to good marketing by the SIPP providers along with a willingness of the media to promote the products of their advertisers (although that has often been the case).

Actually there is not very much about SIPPs or their providers in the press. Pensions are very out of fashion these days.

As for cheapness, many people think (wrongly) that stakeholder pensions are cheap - they used to be but not now. Like they think tracker funds are safe.

If you want cheap and safe, choose a SIPP with no annual fee and invest the money in gilts held to maturity and the cash fund.Can't get much cheaper or safer than that.

dunstonh

Entirely depends on which funds are chosen.Stakeholder charges are capped at 1.5%, same as H-L's SIPP effectively, but the latter offers the best funds in the country whereas a stakeholder will usually offer only bog standard lifeco rubbish.

You are not comparing like for like distribution channels again. HL dont offer any discount on the amc on pensions. Buy a stakeholder on execution only basis and you are looking at 0.6%. If you are young and get a personal pension that can be as low as 0.3%. HL's SIPP at 1.5% doesnt look at all attractive then.

I'm amazed to hear you think that more than 60% of investors understand ordinary pensions.

I dont. However, your attempt to deflect the comment doesnt change the fact that inexperienced investors with no or low knowledge are going into experienced investor products and a good number are paying more in charges than they need to.

I don;t take the view that SIPPs are ideal for everyone, but IMHo everyone should take a look at them not least because they will likely learn quite a lot by doing so.

You need to tone down your responses then because every time someone posts you push them into a SIPP and nearly always you promote HL.

Actually there is not very much about SIPPs or their providers in the press. Pensions are very out of fashion these days.

The Telegraph ran a SIPP guide earlier in the year. It was sponsered by HL. I had quite a few new clients approach me asking about SIPPs who showed me that SIPPs guide as they wanted one of these new cheap SIPPs.

As for cheapness, many people think (wrongly) that stakeholder pensions are cheap - they used to be but not now. Like they think tracker funds are safe.

Stakeholders are not necessarily the cheapest option but you cannot argue with the fact that on like for like distribution channels when using funds a stakeholder is cheaper than a SIPP. Although when you consider the number of times that has been said in this section, its a shame you still ignore that fact.

EdInvestor

dunstonh wrote: »

The Telegraph ran a SIPP guide earlier in the year. It was sponsered by HL. I had quite a few new clients approach me asking about SIPPs who showed me that SIPPs guide as they wanted one of these new cheap SIPPs.

What on earth are you complaining about then?

HL sends business to IFA, IFA moans.Some people are never satisfied.

As I'm mentoned before, if mainly funds are wanted in SIPPs, HL is the cheapest hence I mention them.If shares, ITs, gilts,cash are wanted, then Sippdeal or Alliance Trust will often be better.

dunstonh

As I'm mentoned before, if mainly funds are wanted in SIPPs, HL is the cheapest hence I mention them.

If funds are wanted then why look only at SIPPs. Personal pensions (on like for like distribution) will usually be cheaper than the SIPP.

jamesd

margaretclare wrote: »

So, could one convert a SIPP, which is in drawdown, into an annuity?

Yes, and the government prefers that you do that when you're 75, though you can continue to stay invested and in drawdown with an alternatively secured pension instead. 75 also happens to be the theoretical optimal age for an average person to switch from drawdown to an annuity.

You can also switch only part of the money into an annuity, or several different types of annuity if you prefer. Potentially useful to reduce the variability in core income.

margaretclare wrote: »

I didn't want to be forced to take another annuity at age 75, but nothing is growing in the present climate - it was very different a year ago, as we all know.

There are still options like BlackRock UK Absolute Alpha and Cru Investment Portfolio. Two thirds of the part of my pension money that is in a SIPP is in funds like those two at the moment, though it is gradually being switched into other things over a twelve month period.

margaretclare

jamesd wrote: »

Yes, and the government prefers that you do that when you're 75, though you can continue to stay invested and in drawdown with an alternatively secured pension instead. 75 also happens to be the theoretical optimal age for an average person to switch from drawdown to an annuity.

You can also switch only part of the money into an annuity, or several different types of annuity if you prefer. Potentially useful to reduce the variability in core income.



There are still options like BlackRock UK Absolute Alpha and Cru Investment Portfolio. Two thirds of the part of my pension money that is in a SIPP is in funds like those two at the moment, though it is gradually being switched into other things over a twelve month period.

Thanks for this. In fact I've just had the annual review statement from H-L, with figures and all the possible options clearly set out. I still don't want another annuity, and my Artemis Strategic Bond is still gaining slowly, although nothing else is. I'll leave well alone!

EdInvestor

margaretclare wrote: »

I'll leave well alone!

Very wise.:) Patience is what's needed at present. It will all get back to normal in due course - always remember there's a good reason why you are supposed to take a five year view on any investment that involves risk.

LongTermLurker

Just trawling round and looking at the boards; sorry to jump in with a layman's view, but:

Originally Posted by dunstonh
Over half those surveyed had less than £25,000 in the SIPP

You're assuming that someone with a SIPP only has that SIPP; I'm sure I can't be the only person who's collected a raft-load of personal pensions from verious employers. I don't buy individual shares but I've researched various funds outside my pension and it seems sensible to use that research within the pension as well, but some of my preferred funds have combined AMCs around 1.9% in the PPPs, so when I decided to add more to my pension, I decided it made sense to use a SIPP - my employer won't put any more in just because I do, so why not go for the cheaper option? As I don't see my SIPP as being my primary pension, it has less than £25k in it, but that may change come October if I can transfer my PRs.

dunstonh wrote: »

If funds are wanted then why look only at SIPPs. Personal pensions (on like for like distribution) will usually be cheaper than the SIPP.

In my various schemes, I will pay more in the PPPs if I choose the same funds that are in my SIPP.

Ed has a point above when he says people aren't relying on pensions alone any more; that certainly is the case for me.