SIPP, Hargreaves Lansdown and Funds

wolfpack_2

dunstonh wrote:

If you plan to do only funds, you may be better off waiting until after 6th April when the fund supermarket hybrid SIPPs are launched. With no charges on the SIPP wrapper at all and the fund supermarket fund range available the same as they are with ISAs, these will ultimatly be cheaper than HL.

Does anyone have any links to or names of companies providing 'fund supermarket hybrid SIPPs' ?
Have any of these fund supermarket hybrid SIPPs been launched yet?


TIA Justin.

dunstonh

Have any of these fund supermarket hybrid SIPPs been launched yet?

Applications by the providers were submitted on 6th April (they had to wait until A day before they could seek approval) and the products are expected to launch in May.

There will not be many of these as it can only come with a fund supermarket and some of the fund supermarkets are going full SIPP, others are going hybrid.

Wibble

Hmm, I'm still trying to decide what pension to go for as it's all very confusing!

Reading through what's been posted it seems like the following is true:

1) The HL SIPP gives access to a huge number of funds and the charges are fairly low.

2) Other personal pensions (such as Legal and General's Stakeholder, mentioned in an earlier post) would, however, work out cheaper still.

So on the face of it a personal pension with somebody like L&G rather than an HL SIPP might be a better choice for me, somebody that wants to invest in a range of (yet to be determined) funds as their charges are a fair bit lower.

However, one of the problems with the L&G pension is that they appear to allow you to choose from only 20 internal funds and 17 external funds.

What I'm wondering is whether the higher charges of an H&L SIPP are worth it for the ability to choose from a wider range of funds. If I'm able to choose from the top performers in the different markets that I want to invest in then maybe that'd offset the higher charges?

So my questions are:

a) Is a wider choice of funds worth the extra expense of an H&L SIPP?

b) Are there any other personal pension providers that work out cheaper than H&L but that give access to more external funds, and still work out cheaper when investing in those funds?


Of course, I realise that a bigger selection of funds will only perform better if I choose the right ones, but I just worry that the limited range of funds in personal pensions wouldn't allow me to choose the best in all markets.

dunstonh

a) Is a wider choice of funds worth the extra expense of an H&L SIPP?

If you use funds that are not available on other sources cheaper, then YES it is worth it.

b) Are there any other personal pension providers that work out cheaper than H&L but that give access to more external funds, and still work out cheaper when investing in those funds?

I would say yes. Most providers offer external funds on their personal pension range and you can combine the cheaper stakeholder funds and the personal pension funds all in one place. Personally, i rarely use L&G. Whilst their product has some advantages in some areas, I am not a fan of their administration (for example, I requested pension commencement figures for an L&G pensionholder on 20th March and still havent got them - this is not unusual for them), or their limited fund range.

Perhaps L&G are an example where I would prefer them to charge another 0.1% and spend that money bringing in more funds and improving service. If you want cheap, you get cheap.

competitionscafe

Wibble wrote:

Hmm, I'm still trying to decide what pension to go for as it's all very confusing!

You are not the only one who is confused.

I was also wondering if the Hargreaves Lansdown Sipp or the Skandia (Multifunds) Personal Pension (the latter via Cavendish online as per link below) would be the cheapest option in terms of charges (or another alternative?) At this stage I anticipate having self selected funds and not individual shares, although it would be nice to have a cost effective way of including investment trusts and eventually perhaps a few individual Aim shares to spice it up (As you cannot hold Aim shares in an isa). I can find the Hargreaves Sipp charges in the stuff they sent me, but there doesn't seem to be specific info on the Skandia charges either on the Cavendish site or on Skandia's site.

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1050245982,43764,

As for stakeholders, none of those listed here seemed to offer a huge choice of external funds: http://www.cavendishonline.co.uk/COL/Pensions.htm

Are there other alternative stakeholder pension providers who offer a greater choice of funds? I take the point about cheapest seldom being best and am prepared to pay a bit more for the extra choice - just a case of finding the best balance...

EdInvestor

a) Is a wider choice of funds worth the extra expense of an H&L SIPP?

It's not "wider" choice that you want, it's "better" choice.

There are probably not more than around 10 or 20 managed funds out there that are worth investing in, out of the 4000 odd available.

Find the top-rated funds in each sector here

The problem is that these are almost all funds run not by insurance companies but by fund managers. Typically, when the insurers have "external" funds available from fund managers, there are only one or two of the worthwhile 10 or 20 available. To get access to all the good ones, you have to get a SIPP.

A low cost online SIPP which rebates the good funds' charges shouldn't cost you any more than a stakeholder pension if you are investing a lump sum and don't do a lot of switching.

For people who want to make regular monthly contributions however, only the H-L Sipp allows you to do this without charges AFAIK. With the others you would be better to accumulate the money (and the tax relief topup) in the Sipp cash account and invest once or twice a year. This would keep the charges down.

dunstonh

The problem is that these are almost all funds run not by insurance companies but by fund managers. Typically, when the insurers have "external" funds available from fund managers, there are only one or two of the worthwhile 10 or 20 available. To get access to all the good ones, you have to get a SIPP.

But they are available on personal pensions which is the whole point of us saying you should check to see if you can get them cheaper on personal pensions rather than SIPP.

A low cost online SIPP which rebates the good funds' charges shouldn't cost you any more than a stakeholder pension if you are investing a lump sum and don't do a lot of switching.

A lot cost stakeholder should cost around 0.8-0.9% p.a. in annual management charges. Most of these "good" funds charge around 1.5% amc.

For people who want to make regular monthly contributions however, only the H-L Sipp allows you to do this without charges AFAIK.

The hybrid SIPPs wont charge on regualrs either.

With the others you would be better to accumulate the money (and the tax relief topup) in the Sipp cash account and invest once or twice a year. This would keep the charges down.

Which runs a risk, as mentioned before, of people starting with good intentions but then just building up a load of money in the cash account because they dont get round to making the investment. You also lose out on pound cost averaging over a very regular period and end up on a phased investment instead which may or may not be beneficial.

EdInvestor

But they are available on personal pensions which is the whole point of us saying you should check to see if you can get them cheaper on personal pensions rather than SIPP.

Most PPs will only offer a couple of the top 20 funds.They may have other external funds, but these will not be of any interest.

dunstonh

Most PPs will only offer a couple of the top 20 funds.They may have other external funds, but these will not be of any interest.

It depends on provider. Many of them now have in excess of 100 funds and you can pick up most of the Fidelity, Inv Perp, Gartmore, Mellon, Jupiter, Schroder etc funds easy enough.

There is no denying that SIPPs (hybrid or full) will offer the widest range. However, if the funds you want are available on the PPP, then it should be investigated as it could be cheaper and easier.

leaphaze

Wibble wrote:

However, one of the problems with the L&G pension is that they appear to allow you to choose from only 20 internal funds and 17 external funds.

Maybe but the maximum number of funds you can hold at once is 10. A fact I discovered when I tried to increase my funds to 11 via their website... or rather I found I couldn't access my pension a week later due it to being 'under maintenance'. Took 2-3 months to sort out why that had happened. You'd think it would be easy to put some simple validation on their website!

Another thing to be aware of is this 'under maintenance' message appears whenever you make any changes to your pension; as an L&G support person told me: "Oh, that always happens"! The message usually disappears after a week or so (by which time the wheels have obviously turned), and have access to your pension funds again.

I'm very happy with the funds' performance and range of funds, but why the limit? And why not invest some money on improving your website L&G!!!