SIPP, Hargreaves Lansdown and Funds

skylight

Can I ask a question about the Hargreaves Lansdown SIPP.

I have a small pension fund of around £9k that I was thinking of transferring into the SIPP (waiting for info from pension co about exit fees etc.) but I am questioning the details in and what they mean.

So, it says:
Initial Charge 5% Is this the fee HL charge me of the total of the fund purchased? I thought that HL didn't charge fees for dealing on most of their funds..... Or I have picked a fund as an example of one of those that they do charge for!?
Initial Saving 5% Whats this??
Annual Charge 1.25 % (is this the amc from the fund company or HL??)



I don't pay a lot into my pension on a monthly basis, only around £40pm as I don't work at the moment (have only recently started paying into it again after having not paid into it for almost 18months), the majority of this fund I have comes from a few years at a previous employer (I paid some, they paid some. And I contracted-out too). Looking at an old email from them, I "have a single priced contract, therefore I do not incur any paid up charges".

EdInvestor

skylight wrote: »

So, it says:
Initial Charge 5% Is this the fee HL charge me of the total of the fund purchased? I thought that HL didn't charge fees for dealing on most of their funds..... Or I have picked a fund as an example of one of those that they do charge for!?
Initial Saving 5% Whats this??

This means that they are rebating the whole of the initial charge of 5% to you.

Annual Charge 1.25 % (is this the amc from the fund company or HL??)

This is from the fund company.HL does not charge an amc.

LongTermLurker

As Ed says ^^ the Initial Charge is the fund manager's charge each time you buy the fund, but the Initial Saving is what you save by buying it through HL, so in this case the fund costs nothing to buy. You will however pay the 1.25% AMC to HL (if this was not a SIPP, so a direct investment or ISA, they would rebate you a %age of the AMC as well, but they aren't permitted to rebate the AMC into a SIPP for some reason)

jem16

LongTermLurker wrote: »

You will however pay the 1.25% AMC to HL (if this was not a SIPP, so a direct investment or ISA, they would rebate you a %age of the AMC as well, but they aren't permitted to rebate the AMC into a SIPP for some reason)

It's against HMRC rules.

EdInvestor

LongTermLurker wrote: »

You will however pay the 1.25% AMC to HL

HL will collect this money on behalf of the fund manager.It is not an HL charge.

dunstonh

jem16 wrote: »

It's against HMRC rules.

Actually, you can. It's HL's opinion that you cant do it with pensions. It's not an issue with any other provider.

Strangely, with ISAs HL do it but some other fund supermarkets don't because they say the ISA rebate gets classed as a contribution.

The HMRC rules are a bit unclear on this. The bit that is clear is that you cannot rebate commission in cash to you on pension contracts.

LongTermLurker

jem16 wrote: »

It's against HMRC rules.

I gathered so, in fact HL say they are not permitted to pay the rebate for SIPPS.

EdInvestor - HL will collect this money on behalf of the fund manager.It is not an HL charge.

True. That's pretty much what I meant, but I guess it reads wrong.

Dunstonh - Actually, you can. It's HL's opinion that you cant do it with pensions. It's not an issue with any other provider.

Strangely, with ISAs HL do it but some other fund supermarkets don't because they say the ISA rebate gets classed as a contribution.

The HMRC rules are a bit unclear on this. The bit that is clear is that you cannot rebate commission in cash to you on pension contracts.

That last bit makes perfect sense and I can understand that. As I understand it, and tell me if I'm wrong, you could make a contribution to my pension but not to my ISA, because ISA contributions have to be my own money; in that respect, it seems HL are doing things the wrong way round.

dunstonh

and tell me if I'm wrong, you could make a contribution to my pension but not to my ISA, because ISA contributions have to be my own money; in that respect, it seems HL are doing things the wrong way round.

That is correct. HL are doing it back to front compared to the others. Personally, I think they dont do it on pensions because they can get away with not doing it and therefore earn more money.

jem16

dunstonh wrote: »

Actually, you can. It's HL's opinion that you cant do it with pensions. It's not an issue with any other provider.

I thought I had read that it was against HMRC rules - must have got it mixed up with commission rebates then.

Gettingeven

I am expecting a share of my soon to be divorced's husband's pension pot, which is around £135,000, and I think I am able to invest this in my self invested personal pension. Does anyone know if I can then use this money to buy commercial property or is the transferred bit earmarked for pension only?