Warning re Stakeholders/Personal Pension vs SIPPS

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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  • EdInvestor wrote:
    We're not talking about drawdown.I'm asking how will insurance companies deal with pension funds containing PR money if they plan to offer SIPPs to the masses? Split them in two?

    I'm not sure that insurance companies have much of a say in this matter: they don't make the rules. The current arrangements work well enough for drawdown, although full integration would be preferable. I'm not sure what you're getting at here, Ed: the prevailing rules already insist on this distinction between PR and Non-PR money.

    Furthermore, I don't believe that insurance companies are gearing-up to offer SIPP's to the masses, despite the media's misguided campaign to extol their virtues. SIPP's are great for permitting a wide spread of investment types, but how many people actually want to use this facility? How many people already engaged in buy-to-let, for example, want to subject all or even most of their property portfolio to pension rules?
    oceanblue is a Chartered Financial Planner.
    Anything posted is for discussion only. It should not be taken to represent financial advice. Different people have different needs, and what is right for one person may not be right for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser; he or she will be able to advise you after having found out more about your own circumstances.
  • EdInvestorEdInvestor
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    OB

    The question was really aimed at Dunstonh who has commented on several threads that he expects insurers to produce SIPP prodiucts which will be sold interchangeably with stakeholders and PPs. For example Standard Life announced the other day it is producing a Group SIPP product imminently, aimed at the mass GPP market.

    So I just want to know what they will do with the PR money?Have they perhaps persuaded the DWP to drop the silly ban on PR money in SIPPS?

    Otherwise it's going to cause even worse pension proliferation than we already have surely? And will be hard to sell?
    Trying to keep it simple...;)
  • dunstonhdunstonh Forumite
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    The question was really aimed at Dunstonh who has commented on several threads that he expects insurers to produce SIPP prodiucts which will be sold interchangeably with stakeholders and PPs. For example Standard Life announced the other day it is producing a Group SIPP product imminently, aimed at the mass GPP market.

    Different providers are taking different approaches. One of the methods is that the policyholder can switch between the different pension products as they wish without having to pay any transfer fees etc. Another approach is just to have an insured SIPP. So it has the fund supermarket style access to unit trust funds but as it is "insured", it can hold protected rights.

    Seeing as the majority of policyholders are only going to invest in funds and lots of them wil have PR or OR, the insured SIPP would be a very good option.

    I will also say that the next 5 months may not be a long but a lot can happen with the providers between now and then. Those that are ahead of the others do seem to have deals which are not quite as good as those that will be releasing their versions later. That being said, I was involved in the development of a pension product with a provider this time last year. How the product ended up was not a lot like it was meant to be at the earlier stages. Indeed, the final product was very much a let down and even those "building" the product were not that impressed at the end. The early ideas were great. By the time the actuaries and accountants had done their bit, all the good things had gone.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestorEdInvestor
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    But can the PR money be invested in all types of funds in the "insured SIPP"? Or only in cash, which is what the other SIPP providers offer?

    I don't understand what an "insured SIPP" is.
    Trying to keep it simple...;)
  • dunstonhdunstonh Forumite
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    EdInvestor wrote:
    But can the PR money be invested in all types of funds in the "insured SIPP"? Or only in cash, which is what the other SIPP providers offer?

    I don't understand what an "insured SIPP" is.

    An insured SIPP is a cross between a personal pension and a SIPP. Probably closer to personal pension than a SIPP as far as the technical side is concerned. However, its closer to a SIPP as far as the marketing and fund selection is concerned.

    An insured personal pension is where a life insurance company manages the assets and where the FSA must authorise the fund managers. This arrangement will include private managed funds but will not apply to self invested pension arrangements such as SIPPs where the investment decisions are the responsibility of the member.

    The insured SIPP will fall within the insured rules as the funds offered (fund supermarket style) will only be available through that provider.

    So, with a full SIPP you could purchase your funds anywhere. With an insured SIPP you could only purchase the funds offered within that providers list and only through that provider. These will not be mirror funds (as with current personal pension funds) but the proper unit trust funds. As i have mentioned before, think of it like buying your ISAs from Fidelity funds network, cofunds, selestia or skandia. They offer a range of the more popular funds but not all of them. This would allow investment of PR into them.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • I am a brand new user to this site and to discussion rooms in general - so please excuse my ignorance for any mistakes of protocols I might make.

    I would like to investigate thoroughly sipps, sipp charges, commission paid to IFAs for advice around this area. I am reasonably bright and can decipher most financial jargon if pointed in the right direction. Is there something on this site that highlights rates etc. as they do for mortgages?
  • dunstonhdunstonh Forumite
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    I would like to investigate thoroughly sipps, sipp charges, commission paid to IFAs for advice around this area.

    Big variations. Many of the big providers still have their legacy SIPP running which would cost more to operate. Most of the providers are in the process of launching or relaunching SIPPs after the pension simplification rules are finalised in January.

    Many are currently offering their products with a guarantee to move across to the new SIPP without charge. However, as we dont know the new charging structures (at least officially) you cant be sure the existing provider would still be the best one after 6th April 2006. Even then, there are going to be some providers who realise that they totally got their charging structure wrong and change the charges again in.

    Commission on a SIPP with any half decent IFA would be nil. Howver, that would depend on the asset class you intend to stick inside it. If its funds related and you are buying the funds through the IFA, they will make the money on that side. If you are just using the IFA for the SIPP wrapper and not the assets inside, then there would almost certainly be a fee rather than commission. No point giving advice and having all that paperwork and lifetime liability for free. ;)
    Is there something on this site that highlights rates etc. as they do for mortgages?

    That scares me a little bit. It suggests that perhaps you perhaps shouldnt be looking to do this yourself. SIPPs are not like mortgages. SIPPs are just a tax wrapper. There is no investment content. There are an almost limitless number of assets you can then put into that SIPP wrapper. The majority of these will not have rates because they do not work like that.

    The important thing is to get the right pension tax wrapper. This could be personal pension, stakeholder pension, Full SIPP or hybrid/insured/cut down SIPP (some other pension wrappers exist as well). Each has its pros and cons. SIPP may seem fashionable at the moment but for the majority of people, it will not be the product that is best for them. It will be too expensive compared to stakeholder and personal pensions. The admin is greater as well.

    If you are really clued up on investments, it can be ideal. It also makes a very good advice product for those that employ the use of an IFA with a regular review and report. Or if you have an asset class that can only be taken in a SIPP. If not, then it probably isnt the best pension tax wrapper for you.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Hello Marlina

    You could try this website:

    http://www.trustnet.com/help/sipp/

    I agree with what dunstonh has posted: the range of available SIPP wrappers is likely to become much wider early in the new year. If research leads you to conclude that a SIPP really is for you, then perhaps you would be better off waiting a few months before investing.
    oceanblue is a Chartered Financial Planner.
    Anything posted is for discussion only. It should not be taken to represent financial advice. Different people have different needs, and what is right for one person may not be right for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser; he or she will be able to advise you after having found out more about your own circumstances.
  • cheerfulcatcheerfulcat Forumite
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    Hi, Marlina,

    There's a table of charges in the first link, and further information in the other two

    http://image.guardian.co.uk/sys-files/Money/documents/2005/10/07/sipp.pdf

    http://www.fsa.gov.uk/consumer/06_PENSIONS/starting/sipps.html

    http://money.guardian.co.uk/pensions/story/0,6453,1587490,00.html

    If you don't already contribute to a pension, I would ( respectfully :-) ) disagree with dh's and ob's advice to wait - you can use last year's allowance until January 31st so I would be inclined to say bung it in while you can - it can be kept in cash until you have decided on an investment. FWIW, I am happy enough with Hargreaves Lansdown's SIPP; it is one of the cheapest. However, it is one of the "cut down " versions, offering only basic shares and bonds type investments.

    HTH

    Cheerfulcat
  • dunstonhdunstonh Forumite
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    I would ( respectfully :-) ) disagree with dh's and ob's advice to wait - you can use last year's allowance until January 31st so I would be inclined to say bung it in while you can

    From April, you can pay in 100% of income. That would make quite a large contribution for most people. So, to use last years allowance, this years allowance and then next years 100% allowance would involve very large amounts. Of course, if its a large amount, then fair enough.

    However, if it isn't, then surely its better to see what comes on to the market in the coming months. No point going into one product only to pay charges/fees to move into another 6 months later.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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