Warning re Stakeholders/Personal Pension vs SIPPS

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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  • EdInvestorEdInvestor
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    Did you want an expensive SIPP or a cheap one?

    Do you plan to invest the money in it yourself, or with the help of an IFA?

    SIPPs allow you to invest in things that ordinary pensions don't, such as shares, gilts, and commercal properties, plus residential property after next April.Do you want to invest in any of these?

    Existing SIPPS can meet all these requirements.

    The choice boils down to what you're investing in really.

    1.expensive/IFA/funds and/or property
    2.cheap/no IFA/mainly funds
    3.cheap/no IFA/mainly shares or gilts

    I doubt the new ones coming are going to add much: they appear to be SIPPs in name only with virtually no self investment functionality, just leaping on the SIPP publicity bandwagon.
    Trying to keep it simple...;)
  • cheerfulcatcheerfulcat Forumite
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    dunstonh wrote:
    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.

    Hi, dunstonh,

    I would suggest that investing now, rather than waiting, has two big advantages. Firstly, regardless of what has been leaked/surmised, we do not yet *know* any details of the new "simplified" pensions regime. It may turn out that it would have been better for some reason to start a pension now, under existing, known rules; the situation can always be reviewed a few years down the line.

    Secondly, starting the pension now gives you the extra time advantage. After all, how long would you suggest waiting? It would surely have to be a matter of years, rather than months, until the new regime beds in?

    In any case, unless marlina wants more exotic investments than those allowed under the current rules, there doesn't seem to be much point in waiting? But please correct me if I'm wrong...
  • dunstonhdunstonh Forumite
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    I doubt the new ones coming are going to add much: they appear to be SIPPs in name only with virtually no self investment functionality, just leaping on the SIPP publicity bandwagon.

    Which is why you are not an advisor. Personally, from what I know of the new versions coming in, they will offer better terms than the current ones. The cut down versions certainly seem more attractive to the average person.
    I would suggest that investing now, rather than waiting, has two big advantages. Firstly, regardless of what has been leaked/surmised, we do not yet *know* any details of the new "simplified" pensions regime. It may turn out that it would have been better for some reason to start a pension now, under existing, known rules; the situation can always be reviewed a few years down the line.

    Partly answered why above. However, the rules are coming in to effect April 2006. We should know what those rules are late January/Early February. That gives 2 months to do anything that is time limited. There are some things that need to be done pre A day. However, starting a pension is not one of them.
    Secondly, starting the pension now gives you the extra time advantage. After all, how long would you suggest waiting?

    I would suggest waiting until late Jan, Early Feb. Review the situation then and then. Even if the most desirable product is not released at that point, we should know the timing it will be. Most, if not all will be in place for April 2006.
    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.
  • EdInvestor says this...."The choice boils down to what you're investing in really.

    1.expensive/IFA/funds and/or property
    2.cheap/no IFA/mainly funds
    3.cheap/no IFA/mainly shares or gilts."

    I've always loved the sound of the word "crass" [dictionary definition = so crude and unrefined as to be lacking in discrimination and sensibility].

    I've rarely used it but, now, I think I've found its perfect use: most of what EdInvestor says is crass. Look at the example cited above: does she hope and expect that this will deter normal people from asking for advice from an IFA? Is she also advocating that posters embark upon DIY divorces? That conveyancing is best left to Uncle Sid?

    Running a Self-Invested Personal Pension is a complex area of financial planning; it needs careful attention and regular maintenance. If you feel you are up to it, great...just don't let EdInvestor's simplistic analysis deceive you into thinking that it's anything like switching credit card balances every six months.
    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
    15.7K Posts
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    oceanblue wrote:
    Running a Self-Invested Personal Pension is a complex area of financial planning; it needs careful attention and regular maintenance.

    Don't be so pompous ocean blue, a SIPP is only a tax wrapper like any other pension.How easy or hard it is to run depends on how you invest the money you put in it.

    Some people keep their SIPP money in cash.How complex is that?
    Would you need to monitor and maintain a SIPP invested in an index tracker fund/ I-share , another popular choice?

    A typical asset allocation for an older person probably looks quite like one of those investment bonds you love so much ( but without the horrific commission of course).:)

    They're not very complex are they? You'd never suggest an investor had to spend any time maintaining one of those. And nor would you be bothering to do it for him, would you?
    Trying to keep it simple...;)
  • Yeh

    How hard is it ?

    If the market goes up and your portfolio goes down then you need to take a look to see why and make changes.

    If the market goes down and your portfolio goes up then you don't need to bother with anything.

    If the market goes up and your port goes up similar amount or more then do nothing.

    If the market goes down and your port goes down similar or less then do nothing.

    Not rocket science.
  • EdInvestor wrote:
    Don't be so pompous ocean blue, a SIPP is only a tax wrapper like any other pension.How easy or hard it is to run depends on how you invest the money you put in it.

    Some people keep their SIPP money in cash.How complex is that?
    Would you need to monitor and maintain a SIPP invested in an index tracker fund/ I-share , another popular choice?

    If you're investing in straightforward assets, why bother with a SIPP?
    EdInvestor wrote:
    A typical asset allocation for an older person probably looks quite like one of those investment bonds you love so much ( but without the horrific commission of course).:)

    They're not very complex are they? You'd never suggest an investor had to spend any time maintaining one of those. And nor would you be bothering to do it for him, would you?

    Remember what I was saying about crass? All of the investments I've arranged this month have been ISA's, OEIC's, or Unit Trusts. Investment Bonds have their place, but they're not the product of choice for most people. For your information, the most recent investment bonds I've arranged are for trustees; their principal responsibility is to generate income for two youngsters at boarding school: regular maintenance is essential. No initial commission was paid - I charged a fee.
    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.
  • deemy2004 wrote:
    Yeh How hard is it ?

    If the market goes up and your portfolio goes down then you need to take a look to see why and make changes.

    If the market goes down and your portfolio goes up then you don't need to bother with anything.

    If the market goes up and your port goes up similar amount or more then do nothing.

    If the market goes down and your port goes down similar or less then do nothing.

    Not rocket science.

    I agree with what you say, Deemy, but, for most of my clients, retirement means holidays, helping children/grandchildren, gardening, holidays (they like holidays!) They don't want to spend time managing their investments and staying online until 03:00 gleaning snippets from chat rooms. You would be OK managing your assets, but you're not typical, are you?
    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.
  • I would not say I was untypical of sipp holders.

    Afterall it does mean Self Invested Personal Pension.
  • deemy2004 wrote:
    I would not say I was untypical of sipp holders.

    Afterall it does mean Self Invested Personal Pension.

    You may be right; however, most of my clients would not even understand what "Time Tells Trend ! Fx Trader Extraordinaire" means, let alone choose to use it as a postscript!
    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.
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