Pension Advice

JamesU

jem16 wrote: »

At age 29 a multi charged personal pension would probably be the best option, particularly starting off from scratch. If I remember correctly the pensions offered by Cavendish are all mono charged. An IFA would be a good bet if you don't have the knowledge to DIY.

Is there any easy explanation for the difference between multicharged and monocharged pensions? Have no idea what these might be.

JamesU

jem16

middlepuss wrote: »

You say "If just using funds a SIPP is more expensive". What are you comparing with what?

A SIPP with a multi-charged personal pension.

I'm just about to move a stakeholder held with a unit trust provider to Hargreaves Lansdown SIPP because the charges with HL are lower.

Most stakeholder charges can be beaten by the modern personal pension nowadays.

middlepuss wrote: »

HL's SIPP does rebate some of the amc on some funds. They call it an annual loyalty bonus. Typically 0.25% where the amc is 1.5%. On low cost funds, eg amc 0.5%, there is typically no rebate. I have their brochure in front of me if you want to ask about a specific fund.

As far as I'm aware HL's loyalty bonus does not apply to SIPP funds.

http://boards.fool.co.uk/hi-wickham43-and-thanks-for-your-comments-i-got-12000486.aspx

purch

As far as I'm aware HL's loyalty bonus does not apply to SIPP funds

Yes there is usually a little asterix next to the annual saving saying "Annual Saving is not available in the SIPP"

I've never seen a Fund on their 'pimp' list that didn't have that little asterix !!!!

jem16

purch wrote: »

Yes there is usually a little asterix next to the annual saving saying "Annual Saving is not available in the SIPP"

I've never seen a Fund on their 'pimp' list that didn't have that little asterix !!!!

Ah the usual - hidden away in the small print.;)

jem16

JamesU wrote: »

Is there any easy explanation for the difference between multicharged and monocharged pensions? Have no idea what these might be.

JamesU

Monocharged pensions only have the amc.

Multi-charge pensions have various charges which can result in lower overall charges. As to exactly how I will hope that dunstonh will come along later and explain how.

middlepuss

jem16:

You're absolutely correct. H-L do not rebate part of the amc for funds held within a SIPP. They do rebate part of the amc for some funds held within their non-SIPP Vantage account.

I have corrected my earlier posts so as not to mislead readers of this thread.

Thanks.

dunstonh

You say "If just using funds a SIPP is more expensive". What are you comparing with what?

I'm just about to move a stakeholder held with a unit trust provider to Hargreaves Lansdown SIPP because the charges with HL are lower.

When comparing like for like. The SIPP can be cheaper if you are prepared to compromise your investments totally. However, remember that pension funds use the TER as the AMC. The unit trust funds on the HL SIPP quote the AMC as the AMC. You need to look at the TER on the unit trust fund to compare it. In many cases, the use of managed funds on a SIPP is more expensive than the equivalent fund on a personal pension.

Lets say you went into the HL MM balanced fund on their SIPP. This has underperformed and has about 3 times more charges than most insurance company balanced managed funds.

If you are going to utilise the features and options of the SIPP then it can be money well spent. If you are just going to stick it into a basic HL fund (as far too many do) then its a waste of money. If you are going to use specialist funds or sector specific funds and build a portfolio and run it from there, then it can be worth it.

middlepuss

Thanks, dunstonh.

I'm going to use a H-L SIPP to hold HSBC FTSE All Share Index Fund unit trusts. As I understand it the only charge I will incur, both now and when I start drawdown, is the unit trust's 0.27% TER (amc 0.25%). So, I think, in these circumstances the HL SIPP is a good deal? Though I take your point that for other funds there are better options than HL.

dunstonh

I'm going to use a H-L SIPP to hold HSBC FTSE All Share Index Fund unit trusts. As I understand it the only charge I will incur, both now and when I start drawdown, is the unit trust's 0.27% TER (amc 0.25%). So, I think, in these circumstances the HL SIPP is a good deal? Though I take your point that for other funds there are better options than HL.

The only thing you can say on that is that the thought of going 100% FTSE all share tracker would concern me. You are effectively compromising your investments to a large degree to obtain a low cost option. The annual cost saving could easily be wiped out in half a day due to poor quality investing (eggs all in one medium/high risk investment).

middlepuss

dunstonh wrote: »

The only thing you can say on that is that the thought of going 100% FTSE all share tracker would concern me. You are effectively compromising your investments to a large degree to obtain a low cost option. The annual cost saving could easily be wiped out in half a day due to poor quality investing (eggs all in one medium/high risk investment).

I have other eggs in other baskets including emerging markets.