SIPP, Hybrid SIPP, Personal or Stakeholder Pension?

Paul_Varjak

No longer wish to disclose personal information.

dunstonh

Are you using the features of the SIPP? By that, I mean the investment range.

Are you cautious risk or further up the scale. Medium risk or higher utilising a good fund range would see the use of a sipp or fund supermarket pension being a good move. However, a cautious investor could be better served with a personal pension (insurance companies tend to do well on lower risk funds and that coupled with lower charges can swing it back in favour of them).

Will the regulation of SIPPS from April 2007 increase the costs of my HL SIPP?

HL are lucky in one respect that they got a very large chunk of the market. Most of the articles on SIPPs are guess work. However, no-one has any doubt that after regulation, the cost of offering a SIPP is going to be higher. Whether that will see higher charges from the start we dont know but its probably unlikely. However, HL now have to answer to shareholders and that could put pressure on the pricing as they try to generate more income. Only time will tell.

Will HL launch a fund supermarket SIPP?

No reason for them to at this stage. Their SIPP has access to a fund supermarket range. The advantages of the fund supermarket personal pension would have lower costs but I dont see them needing to muddy the waters with what they have on offer.

Fund supermarket pensions are already regulated and costs reflect that. Plus the big providers are starting to enter the fund supermarket arena and both Scottish Widows and Selestia can be used to undercut the pricing of HL (mainly with larger values and the right advisers).

There is a whole load of post A day generation pensions going to be launched. Some did launch, like Selestia, Scottish Life and Scottish Widows but some have held back because of the way the Govt keeps changing the rules.

EdInvestor

Paul_Varjak wrote: »

I am aged 56 and do not work due to a disability. I will have the full 44 qualifying years for a State Pension when I reach 65 (March 2016). I am uncertain if I will qualify for S2P as it seems I don't currently satisfy the Labour Market Attachment test.

You will only need 30 years for the BSP under the new rules.Get a forecast for your total entitlement (incl S2P) here:

https://www.thepensionservice.gov.uk

I have an HL low-cost SIPP and have made full contributions (£3,600 gross) for all tax years from 2004-2005. The value of the SIPP is now £14,242 invested in 6 funds.

Which funds? The wrapper is a good one.

My income consists of about £350/month Incapacity Benefit, DLA Mobility Component (all of which is used to lease car on Motability), plus £200 month from Investment Bonds (commercial property).

What is the rationale for the IB investment as opposed to investing directly?

Now was I right to get this SIPP? Would I have been better off with another type of pension? Would I be better changing now to another type of pension? Will the regulation of SIPPS from April 2007 increase the costs of my HL SIPP? Will HL launch a fund supermarket SIPP?

The SIPP itself is fine, assuming you are investing the money optimally: IMHO there won't be increases in charges at big providers like HL, indeed they are coming down, due to more competition.

The question you need to be looking at is your benefits and tax position after retirement. So step one is the pension forecast.

dunstonh

An article on different views about SIPPS

http://www.pensions-management.co.uk/news/fullstory.php/aid/3191/SIPPS_Q_A.html

EdInvestor

The cost of developing IT solutions and the introduction of compliant operating models may result in additional costs being passed on to the end customers. These increased costs, together with the introduction of capital requirements, will bring consolidation amongst smaller providers. It will be a case of survival of the fittest.

IMHO as the regulation deadline approaches, we are likely to see quite a few of the small SIPP operators falling by the wayside.

So what we are seeing at the moment is charges comng down at the big providers (which are virtually unaffected as they are already incurring the costs), as they want to attract the clients of the small providers who will be looking to move.

I'd have thought this is more likely to affect the more expensive providers offering commercial property investment - though noteably Sippdeal's charges have come down in recent months and they are a low cost provider.

EdInvestor

Paul

I'm not an expert on the benefits/tax/pension interlocking position at retirement.I suggest you talk to the CAB about this as you could get caught in that "crossover" where your savings income wipes out part of your benefits.

I meant investment bond not incapacity benefit BTW: is use of the bond related to your benefits? AFAIK, it is not counted when pension credit entitlement is assessed.

You really need to find out what is the best way to structure savings and income (pension vs ISA vs direct vs bond and there may be other methods.) so you don't waste money which will just be clawed back from pensions credit.

A SIPP is just a type of pension: if you are on for a full BSP (taxable) sounds like you will end up paying no tax on any of the pension income as it will fall within the age allowance at 65.

EdInvestor

The value of the Investment Bond would be used in calculating entitlement to Pension Credit as Pension Credit is really Income Support for people who have a State Pension. If I could claim Income support now by putting all my monies into an Investment Bond - I would!

Ah, that's useful to know.I've put some comments about structure of investments on the other thread.