Cheapest Sipp: build yourself a low cost DIY pension article

[Deleted User]

I really appreciate all the commentary / warnings about SIPP comparison - because its a very long term decision, but having looked at the options here I'm now even more confused, so need to dive into the small print and think about costs over the life of the plan.

Wondering if anyone might be expert enough and up for the challenge of running an analysis similar to the reward points to establish some transparency for investors?

One thing that struck me was that a SIPP may end up being the largest accumulation of money anyone will have, but its still only guaranteed under the £30K rule if the financial institution collapses - or have I got this wrong?

PS. I have been using interactive investor for ISA dealing, not mentioned here but charges can go as low as £1.50 if you sacrifice real time control and £10 for real time decisions - they are ok to deal with, but not infallible.

They have a SIPP too but still exploring charges - I think they are owned by Halifax / HBOS ...

averageguy11

certainly TDW is not the place to b with if u r looking at inc drawdown on yur current balance..ther charges r awful..sippdeal r one of the ones i wil b looking at for tht purpose

Neobright

mcdali wrote: »

One thing that struck me was that a SIPP may end up being the largest accumulation of money anyone will have, but its still only guaranteed under the £30K rule if the financial institution collapses - or have I got this wrong?

I agree with this and my concern has been similar. You save all your money into one pot, the SIPP, then find out the company collapses and you are only covered for £30k.
Whilst I am not sure whether this limit of £30k still applies - I would like an IFA to post on here to clarify - I would think that for any pension fund the government would step in to cover should a company go belly up. Think the recent experience of Northern Rock. I'm not saying the Government would cover your total pot value, but I think there maybe more inclination to protect/help our savers who have saved into a pension via a SIPP than say covering merely cash funds in a normal account.

EdInvestor

SIPPs are subject to pension rules, not savings rules, so 90% of the pot is guaranteed.

chris1

EdInvestor wrote: »

SIPPs are subject to pension rules, not savings rules, so 90% of the pot is guaranteed.

But only up to a maximum of £48,000, over the whole life of the pension pot, if I read it correctly.

"Investments: £48,000 per person.
100% of the first £30,000 and 90% of the next £20,000" from FSCS website.

EdInvestor

chris1 wrote: »

But only up to a maximum of £48,000, over the whole life of the pension pot, if I read it correctly.

"Investments: £48,000 per person.
100% of the first £30,000 and 90% of the next £20,000" from FSCS website.

The pensions rules are not the same as the investment rules.

It's 90% of an unlimited pot size ( well, limited by the tax relief rules to around 1.5 million quid these days.)

pensionpuzzled

Im currently trnsferring my company money purchase scheme to a SIPP and have just (almost too late !) twigged the compensation aspect.

I picked up an article from Citywire which contains the following :

"With a Trustee-based SIPP .......compensation only covers the first £48000".....

....Trustee-based SIPPS do not offer the same level of compensation as insurance-based SIPPs or standard pension funds (90% of total value)"

As I understand it the low cost SIPP providers like H-L are Trustee based but Im not sure who would provide a insurance based SIPP ?

Presumably they would not be low cost ?

Suggestions welcome !

happyharry_2

My final salary pension wound up 5 years ago and I had to find a home for my fund. HL was the logical choice (low cost) but wouldn't accept the money without me paying them for advise!! What were they going to 'advise' me to do? I had no choice. So, I opted for IPS (http://www.ipspensions.co.uk/). They charge a set-up fee and an annual flat fee of circa £300 rather than a percentage of the fund value. I have a Selftrade (http://www.selftrade.co.uk/) account linked to my SIPP so I can buy/sell UK & Global shares, REITS, ETF's & ETC's for £12.50. My SIPP pension fund cash account is offshore, currently paying 6.9%.

So, although my fund is 'with' IPS they only provide the SIPP wrapper. The fund is actually split between several other financial institutions. If IPS went belly up my fund would still be held by the other institutions wouldn't it??

For my Protected Rights I use a Transact wrap provided by Argyle ( http://www.argylefinancialgroup.co.uk/). Although they charge a percentage of the fund value, the wrap allows investment in all UK shares & investment trusts.

dunstonh

As I understand it the low cost SIPP providers like H-L are Trustee based but Im not sure who would provide a insurance based SIPP ?

Typically you are looking at your fund supermarkets, hybrid SIPPs and personal pensions.

Presumably they would not be low cost ?

Not so, some can be cheaper than HL.

My final salary pension wound up 5 years ago and I had to find a home for my fund. HL was the logical choice (low cost) but wouldn't accept the money without me paying them for advise!! What were they going to 'advise' me to do? I had no choice.

That is normal. Final salary schemes are high risk and execution only doesnt allow you to do a transaction that is probably the wrong advice. A final salary scheme will often utilise a section 32 buy out bond for example but you dont appear to have considered that. In which case, if there was GMP, then that would now be lost forever and could have costed you thousands of pounds a year of lost income potentially.

EdInvestor

happyharry wrote: »

So, although my fund is 'with' IPS they only provide the SIPP wrapper. The fund is actually split between several other financial institutions. If IPS went belly up my fund would still be held by the other institutions wouldn't it??

Yes, the cash will be with whoever provides the cash account, and the other investments will be held by Selftrade's nominees.

Having extracted your money from the F/S scheme, after October, when PR money is due to be allowed into SIPPs you could consider moving onto something cheaper. Selftrade's own SIPP which has Sippdeal doing the admin will be somewhat cheaper than your present arrangment but with no likely reduction in customer service.