Hybrid SIPP

purch

Sorry for no doubt covering old ground ( but the sticky thread on HL and SIPPS is too long )

The term Hybrid SIPP is often used in replies...

Can anyone enlighten me as to,

a) How it differs from the usual SIPPS offered by discount brokers
b) Where or who can arrange one

Thanks

dunstonh

Hybrid Sipps or fund supermarket pensions invest into unit trust/oeic/sicav funds. They do not invest into pension funds (like a conventional personal pension). They are not a SIPP though. However, most people who use SIPPs invest in funds so they meet the requirement for most people.

a) How it differs from the usual SIPPS offered by discount brokers

Differences:
Fund supermarket pensions operate under a master trust (like personal pensions) so less admin and they can accept contracted out funds (protected rights) as well as ordinary rights.

No cash account exists in fund supermarket pensions.

(some) Fund supermarket pensions can do income drawdown on protected rights.

Investments into the fund supermarket pensions go directly into the funds. Not a cash account.

The providing firm can reduce the trail commission to lower the annual management charge if they wish. This can make them cheaper than HL (typically better on funds over 100k). However, the benefit of having protected rights available can also make them more beneficial.

b) Where or who can arrange one

Any IFA (discount or otherwise)

Basically, they strip out some of the full SIPP benefits (and costs) and give you a cross between a personal pension and a SIPP by giving you the ease of a personal pension but with the popular investment options of the SIPP.

EdInvestor

purch wrote: »

Can anyone enlighten me as to,

a) How it differs from the usual SIPPS offered by discount brokers
b) Where or who can arrange one

These plans are not SIPPs, indeed they are almost indistinguishable from personal pensions these days, as so many PPs now provide access to external funds.The key difference with SIPPs at the moment is that the hybrids can accept protected rights money, which SIPPs cannot (yet).

A SIPP provides direct investment into shares/gilts and bonds/commercial property/cash and various other instruments, across various different markets. SIPPs are also the route normally followed by people who wish to do income drawdown rather than buy an annuity at retirement.

Hybrid SIPPs appear to be much more expensive than the cheap online SIPPs, not surprisingly, as they are an advisor prodict whereas the others are execution only.

jamesd

EdInvestor, whether they are sold execution only or not isn't the distinguishing factor, since IFAs other than HL can and do sell on reasonable execution only terms. What it depends on is the particular IFA.

dunstonh

These plans are not SIPPs, indeed they are almost indistinguishable from personal pensions these days, as so many PPs now provide access to external funds.

You miss the big difference. Virtually all personal pensions invest in pension funds. These invest in unit trusts/oeics and sicavs.

Hybrid SIPPs appear to be much more expensive than the cheap online SIPPs, not surprisingly, as they are an advisor prodict whereas the others are execution only.

Apart from the ones which are cheaper.

EdInvestor

jamesd wrote: »

EdInvestor, whether they are sold execution only or not isn't the distinguishing factor

That's what the OP asked about.

You miss the big difference. Virtually all personal pensions invest in pension funds. These invest in unit trusts/oeics and sicavs.

What is the difference between investing in (say) the Invesco Perpetual Higher Income fund as an external offering in an insurance company PP, as a unit trust at a hybrid SIPP offered by a fund supermarket, or as a unit trust via a SIPP at a discount broker?

Other than the cost, of course.

dunstonh

What is the difference between investing in (say) the Invesco Perpetual Higher Income fund as an external offering in an insurance company PP, as a unit trust at a hybrid SIPP offered by a fund supermarket, or as a unit trust via a SIPP at a discount broker?

The pension funds are an insurance company version of that fund. They are not the fund itself. They can be mirror funds or reinvested into the main fund and there can be delays in the interaction as well as the potential for an increased TER.

Other than the cost, of course.

Yes that is fair comment. Some personal pension funds can be lower in cost than the unit trust version that is used on SIPPs or fund supermarket pensions.