SIPP, Hargreaves Lansdown and Funds

dunstonh

Starting at £100pm from a nil value for a SIPP is pointless. They are designed for larger values with more unusual investment choices. Not as high as mentioned above but the thought of using a SIPP for that amount is crazy. A stakeholder or Personal pension would be more sensible at this stage. Build the value up and then look to move it later if you still have an interest in it.

Also, focusing on trackers only at this stage is also a bit of a folly. Are you willing to compromise your investments to save around £2.40 a year?

Santiago1_2

I do take the point of SIPPs offering wide investment choices but, frankly, I find this not really relevant. If I was considering over-paying for SIPP functionality I am not planning to use, then yes, it would make sense to avoid a SIPP for such low amounts. However, we are here talking about a SIPP with no set-up charge, no ongoing charge (unless one chooses one of a certain number of funds which attract the 0.5%+VAT annual charge) and a very small minimum contribution.

For someone who would be willing to invest in, say, an HSBC tracker with a TER of 0.27% within such a HL SIPP, would there be a realistically cheaper option? I would really like to hear some specifics on this.

Finally, regarding trackers, I do not believe in active management, chasing returns or star managers or timing the market. Therefore, trackers will do. When active managers start returning money to investors when they fail to outperform their benchmarks, I could reconsider. For the time being, it has to be trackers.

GeordieSaver

Hi all,

Some really interesting stuff on this thread - I've doubled my knowledge of pensions in 15 minutes!

I have a question if I may. My background: I'm 27 and I have £30k in two company pension schemes to which I don't contribute anymore (as I've just started working for a small company that does not offer a company pension). I aim to invest c£500 per month (£600 with tax relief @ BR and claim the HR in my Tax Return) in a SIPP.

But I'm unsure of who is the best: Hargreaves Lansdown or Sippdeal. At the minute I'm leaning to Sippdeal as they have no annual charge whereas HL charge 0.5%+VAT.

Any advice welcome! Thanks

My

Old_Slaphead

I use both - HL for funds and Sippdeal for shares/ITs/ETFs

dunstonh

But I'm unsure of who is the best: Hargreaves Lansdown or Sippdeal. At the minute I'm leaning to Sippdeal as they have no annual charge whereas HL charge 0.5%+VAT.

HL is geared for funds. Not exactly what SIPPs were designed for but that is what their model is. (funds typically being cheaper in modern personal pensions). Sippdeal is better for direct investments (which is what SIPPs were designed for).

For someone who would be willing to invest in, say, an HSBC tracker with a TER of 0.27% within such a HL SIPP, would there be a realistically cheaper option? I would really like to hear some specifics on this.

Yes. You have Skandia's personal pension with access to trackers at 0.1% and 0.2% as well as the HSBC trackers at 0.25% and L&G trackers etc. That contract is geared for retail via an IFA but it can beat HL on pricing. If the FSA proposals come in, then expect charges on tracker funds to increase when using platforms.

Finally, regarding trackers, I do not believe in active management, chasing returns or star managers or timing the market. Therefore, trackers will do. When active managers start returning money to investors when they fail to outperform their benchmarks, I could reconsider. For the time being, it has to be trackers.

which is fair enough but if you are using the unit trust/oeic universe then you are not going to be able to get trackers in all sectors and that will leave your portfolio unbalanced.

satori

Hi Santiago1,

They may seem cheap, but they make quite a lot of mistakes, especially with transfers, both of CREST -dematerialised- holdings (basically, they tell you you've never had any holding!:mad:) and non-CREST holdings (basically, they lose your share certificates:eek:).
They do not offer good customer service: you really wonder where they get their staff from at times, and there seems to be quite a lot of staff turnover.

I guess that's why they call themselves a 'fund supermarket': they're the equivalent of Asda!

I also agree that £100pm is too little for a SIPP, even with the tax incentives. HL try to get as wide a base of clients as possible (they make a living from the commissions they charge), and try to encourage clients to set-up regular monthly purchases (it's a stable source of income for them). However, when you retire, a pension pot of less than £100K (in today's money) isn't going to buy you much of an annuity. I would say, better invest the money in a cheaper stakeholder pension, and in rental property.

Santiago1 wrote: »

Hi Jody,

As far as I can tell, the HL SIPP is very cheap and does allow for small monthly contributions to be made. So I am not sure what your first paragraph exactly means.

Please tell me what other options are available for a pension with tracker/index funds

LongTermLurker

satori wrote: »

Hi Santiago1,

They may seem cheap, but they make quite a lot of mistakes, especially with transfers, both of CREST -dematerialised- holdings (basically, they tell you you've never had any holding!:mad:) and non-CREST holdings (basically, they lose your share certificates:eek:).
They do not offer good customer service: you really wonder where they get their staff from at times, and there seems to be quite a lot of staff turnover.

I guess that's why they call themselves a 'fund supermarket': they're the equivalent of Asda!

I also agree that £100pm is too little for a SIPP, even with the tax incentives. HL try to get as wide a base of clients as possible (they make a living from the commissions they charge), and try to encourage clients to set-up regular monthly purchases (it's a stable source of income for them). However, when you retire, a pension pot of less than £100K (in today's money) isn't going to buy you much of an annuity. I would say, better invest the money in a cheaper stakeholder pension, and in rental property.

Enormously different to my experience. I've always found their paper handling extremely efficient, with confirmation arriving within 1 day most of the time. Their staff are always attentive and professional (of course they don't offer specific advice unless you pay them) and Customer Service is second to none.

(they make a living from the commissions they charge), and try to encourage clients to set-up regular monthly purchases (it's a stable source of income for them)

and is there something inherantly wrong with that then? They are a listed business, and have to make a profit from somewhere, otherwise their shareholders wouldn't be right happy, would pull out and then you'd have cause to complain about bad customer service if they weren't making enough nmoney to buy staff.

However, when you retire, a pension pot of less than £100K (in today's money) isn't going to buy you much of an annuity.

at 5 or 6% that would be about £5000 - £6000pa, so I don't think you're setting the bar very high for the minimum pot size. I would have thought your suggested pot would be worth doubling as a minimum.

I would say, better invest the money in a cheaper stakeholder pension, and in rental property

Rental property also seems a bit specialised and risky - if you are going to have less than £100k, then how many rental properties are you going to buy with that? Even if you bought 1, that's all eggs in the basket territory - if you want a diversified property protfolio, I would have thought you'd want more than that.

It sounds to me that you've had one bad experience and just want to slag them off. Maybe you've had lots of bad experiences, but I'd suggest you must have been born unlucky, because the vast majority of comments on this thread are positive, which goes against the forum norm of only ever reading bad comments.

gallygirl

I agree with LTL, I've always found them extremely helpful & efficient and when I switched a pension fund to their SIPP they were very proactive in sorting it out for me. (Yes, I know it was in their interest but I haven't had my new ISA provider chasing up a transfer.....)

The only thing I don't like about them is that you can't easily chart your holdings with them - I'd like to be able to set up & save for the future.

sabretoothtigger

They answered my online question pretty promptly, apparently offshore funds take longer to buy which makes timing and pricing even more confusing

LongTermLurker

gallygirl wrote: »

The only thing I don't like about them is that you can't easily chart your holdings with them - I'd like to be able to set up & save for the future.

They have a portfolio analysis tool https://online.h-l.co.uk/my-accounts/portfolio_analysis (after you've logged in)

You can analyse all your portfolio or select parts, such as just your SIPP - it gives your top funds, geographical breakdown, share & bond breakdown and a performance analysis of each fund. Morningstar do a good one as well, which is great if you have external pensions as it lets you add life & pension funds from a whole host of providers.

Not sure why the analysis tool would help you set up and save for the future though, specifically?