stakeholder or sipp

optimisticopportunistic

Hi all,
After deciding to ivest in a stakeholder pension i turned my attention to researching different funds, a headache in itself i might add, when i come across an article by someone from hargreaves lansdown saying he would choose a sipp over a stakeholder pension because there is more choice of funds yet they cost the same if not cheaper.
I thought a sipp cost more and was a lot harder to manage so why is an expert reccommending this to a novice?

jem16

optimisticopportunistic wrote: »

i come across an article by someone from hargreaves lansdown saying he would choose a sipp over a stakeholder pension because there is more choice of funds yet they cost the same if not cheaper.

More choice of funds but not cheaper.

I thought a sipp cost more and was a lot harder to manage so why is an expert reccommending this to a novice?

Because he wants you to take out an H-L SIPP.

dunstonh

stakeholder or sipp

Thats both extremes. What about personal pensions (the middle ground)?

when i come across an article by someone from hargreaves lansdown saying he would choose a sipp over a stakeholder pension because there is more choice of funds yet they cost the same if not cheaper.

HL being one of the largest retailers of DIY SIPPs. Also, the funds they use are more expensive. Assuming like for like distribution (i.e. you would buy a stakeholder or personal pension on execution only basis as well), then the typical charge on the HL SIPP is 1.5%. On a stakeholder or personal pension you are looking at 0.5%

I thought a sipp cost more and was a lot harder to manage so why is an expert reccommending this to a novice?

HL are experts at marketing. Especially to people that dont know what they are doing. Their product is fine but its not cheap and its not for the novice.

DavidLaGuardia

jem16 wrote: »

More choice of funds but not cheaper.

Not true SIPPs (or so called hybrid variants) have varying costs from nothing to an amount which is often fixed, the percentage charge therefore depends on the amount invested.

A SIPP can easily access funds that charge less than stakeholder pensions. This includes some manged funds that are no less attractive than stakeholder funds or if passive investment is required then using certain trackers or ETFs (exchnage traded funds) are cheaper still

jamesd

The pitch from HL is "This could be the lowest cost pension ever" and the example it uses is HSBC FTSE All Share tracker at 0.25% AMC, 0.27% TER in the HL SIPP. No sign of the extra 0.5% charge that HL usually adds to low cost funds in the information for this one, so maybe it's paying them some commission out of that annual charge. With institutional funds available for the FTSE All Share at 0.1% AMC there's some room for that.

dunstonh

James, remember that on their platform they are keeping the cut that the IFA would normally get and they are getting the cut the platform would get as well. So, if the tracker pays 0.1% for example they are probably getting 0.1% on the platform cut as well.

However, the article is a tale of SPIN. For example Tom McPhail says:

Many of them charge the full whack of 1.5% for ten years and then 1.0% thereafter

Hardly any stakeholder pensions charge 1.5% for 10 years. Most are 1% and many have fund based discounts and that assumes you buy them on the advice channel. Go DIY and buy from Cavendish and you can get down to around 0.3% p.a. potentially.

and in return they offer very little in the way of added value investment management.

Virtually all stakeholders include at least one tracker. The very same HL are promoting in the article. The better ones have trackers in most regions.

You can get cheaper Stakeholder pensions, the cheapest on the market come in at an annual charge of around 0.9%, which is better value and which you can buy through Hargreaves Lansdown

That is incorrect as you can get cheaper than 0.9% even on full commission.

I suspect what HL are doing here is trying to make out they are cheap and give the cheapest possible option on their platform knowing full well that people wont pick that option for some or all of their money but will go into other funds which charge 6 or 7 times more than that.

purch

Suzuki Jimny 1.3 or Range Rover Vogue SE ??

yelf

H-L are players are deserve to be trested with distain.

Vincenzo

I have an H-L SIPP, taken out via a Group SIPP through my employer. I am not sure if that makes any difference but many of the comments above do not ring true to me at all.

There are no HL annual management charges on any of the funds I have invested in (including the HSBC All Share Tracker, in fact when I invested in it the HL SIPP was the cheapest place to do so). I am yet to consider a fund where one is payable. There are no charges for fund switches (unit trusts / OEICs), I rarely pay any inital charges on funds and often the fund's - annual charges are discounted too.

I found the range of funds and the low costs to be so attractive I transferred an existing Standard Life Stakeholder and now my protected Rights pension to them also.

dunstonh

There are no HL annual management charges on any of the funds I have invested in (including the HSBC All Share Tracker, in fact when I invested in it the HL SIPP was the cheapest place to do so).

Every unit trust/OEIC on their platform has an annual management charge.

I am yet to consider a fund where one is payable.

I am yet to see one where there isnt.

often the fund's - annual charges are discounted too.

Not on the SIPP. Not unless your group scheme have negotiated special terms which are not available to the retail consumer buying direct from HL.

jamesd

For unit trusts that pay commission HL don't make an extra charge because they are paid by the fund management company which itself charges you via the fund's annual management charge. That charge is deducted from the fund value daily so it's largely invisible to customers.

At my work I have and use a FTSE All-Share tracker with a 0.1% annual management charge. The 0.15% difference between that and the AMC of the HSBC fund gives some indication of the potential amount of commission that HL may be receiving. I also use HL's SIPP for some investments.