Should I transfer Stakeholder to SIPP?

freshstart7

Hi I have a stakeholder pension with Friendslife worth c. £30k and it has been suggested I should transfer to a SIPP with a 3% transfer fee and a 1% annual fee. But I am unsure whether this is worth doing or a good deal. (I still have a long way to run on the pension c. 25 years. Does anyone have views on typical fees to transfer a pension and whether the benefits of it being a SIPP outweigh the one off cost now?

Thanks!

Aegis

Are you going to be using the full features of the SIPP? Are you going to continue contributing at a significant level? Does the annual charge include the management fees for the investments, or is it on top (if the latter, then charges are going to be extremely high)?

Most importantly, what's wrong with your current arrangement, in your opinion?

CannySaver_2

Wow, big area to consider, a few comments but first a few questions:

1. Who has suggested you transfer to a SIPP? An IFA? A tied agent or the man down the pub? I'm assuming it is some sort of adviser given the initial charhe

2. Why has it been suggested you transfer to a SIPP? Lower charges? (Unlikely on £30k) Wider investment powers? If so what investments have you been recommended? Just funds or something more exotic?

3. Which SIPP have you been recommended? Many pension providers are now putting the SIPP label on even the most basic pension (I give you the Prudential fund only SIPP....looks like a personal pension to me!) because they think it looks sexy and they will therefore sell more

4. What is it about a SIPP which attracts you?

The reasons people normally use a SIPP are as follows:

1. They want to exercise wide investment powers than a Personal Pension or Stakeholder allow, e.g. they want to buy property or perhaps shares

2. The charges are cheaper, many old style Personal Pensions and certainly Stakeholders have charges which are percentage based with some funds being very expensive to buy, because SIPPs (proper SIPPs I mean run by proper SIPP providers) charge fixed fees, these can be more cost effective for larger funds

3. They have been sold one by an adviser wanting to make a buck :cool:

4. The fees for this type of transaction generally fall into three discrete boxes. First is the cost of advice, from your IFA (www.unbiased.co.uk), this is typically between 1% - 3% initial fee and 0.5% - 1.% ongoing, personally I think for your size of fund 3% plus 0.5% is perfectly adequate. However this is only charged if you move it, therefore the IFA will only make money, using this fee structure, if you effect the transfer. If you don't they wioll earn nothing....spot the floor? Alternatively you could pay a fee, and then the IFA will not be bias in their recommendation (there are of course IFAs who will tell you not to transfer even down the percentage route). I would suggest an hourly rate of around £125 is fine for this with 6 ish hours work.

You then have the charges made by the SIPP provider, you can review these for yourself here where the charging structure for a wide range of SIPPs is given:

http://www.!!!!!!.uk/sipp-zone/help-choosing-your-sipp/

You then have fees for the actual investment you want to buy i.e. fund management charges, share dealign charges, legal costs to buy a property and so on.

In summary, decide whether you are a DIY investor or you need advice from an IFA, then have a think what you want to achieve, then look at whether your existing plan is doing that for you, if not consider other options and if you are taking advice always worth a second opinion and always always in my opinion go for the fees option.

The Canny Saver

freshstart7

Hi thanks for the responses. I had a free review carried out by an ifa and they shows me some analysis to see how poorly my funds had been performing vs. the market average and suggested a product their company offer mysipp - from the attivo group. However I just don't really know whether to believe it or if it's just sales patter. Sounds like I should see another ifa? Anyone heard of this product and know if it's any good?

I will have more money to invest later this year so wanted to make sure it was in the right place first.

CannySaver_2

freshstart7 wrote: »

Hi thanks for the responses. I had a free review carried out by an ifa and they shows me some analysis to see how poorly my funds had been performing vs. the market average and suggested a product their company offer mysipp - from the attivo group. However I just don't really know whether to believe it or if it's just sales patter. Sounds like I should see another ifa? Anyone heard of this product and know if it's any good?

The SIPP wrapper, in this case 'mysipp' is only half the story, and possibly the least important half.

What have they suggested you invest in? This is far more important.

The SIPP is simply the vehicle to carry the investments. The mysipp SIPP might be charged slightly above or below the average, the service might be great or poor the range of investment allowable might be restrictive or flexible, the key though is how the investments perform.

The Canny Saver