Which pension

dunstonh

SIPP investing would normally have an AMC of around 1.25% after discounts from Hargreaves Lansdown so the personal pension bought from them can be significantly more efficient than their SIPP, if the personal pension has the investment options you want.

HL do not discount on funds in their SIPP. So, the AMC is more typically around the 1.5% mark.

EdInvestor

jamesd wrote: »

SIPP investing would normally have an AMC of around 1.25% after discounts from Hargreaves Lansdown...

There seems to be an automatic assumption by advisor types that people will use a SIPP to invest in more or less the same things they would invest in if they had a standard personal pension.

Of course this is not the point of Self Invested Personal Pensions at all - the idea of SIPPs is that you can choose from a much bigger range of investments, most of which are not available in standard pensions. Many people with SIPPs don't use advisors at all, as advisors are not authorised to advise on many investments available in SIPPs, and SIPPS are specificaqlly set up to be a DIY vehicle ( "Self invested", geddit?)

So many of the comments about SIPPs here by advisor types only tell a small part of the story.


Re the changes to pensions after A day, a key change is the switch from annual allowances to a lifetime allowance for tax relief. This new flexibility means there is no need to lock up savings in pensions until much later in life, when a person may be able to take advantage of higher rate tax relief by putting in large lump sums.

In the absence of an employers' contribution, it's now better to use the stocks and shares ISA for long term savings, as it is a "use it or lose it" tax perk every year.

jem16

EdInvestor wrote: »

Re the changes to pensions after A day, a key change is the switch from annual allowances to a lifetime allowance for tax relief. This new flexibility means there is no need to lock up savings in pensions until much later in life, when a person may be able to take advantage of higher rate tax relief by putting in large lump sums.

How large a lump sum do you mean?

dunstonh

There seems to be an automatic assumption by advisor types that people will use a SIPP to invest in more or less the same things they would invest in if they had a standard personal pension.

James is not an "adviser type" so dont know why you suggest that of him.

However, post A day, most SIPPs do use funds so it is a correct assumption to make.

EdInvestor

You can obtain tax relief on a lump sum up to the size of your annual salary.And in the last year your employer can put in an unlimited lump sum .

You musn't exceed the lifetime allowance, which is around 1.4 million this year IIRC.

So it makes sense for a basic rate taxpayer with no company pension to take up the annual s&S ISA allowance (which is use it or lose it on an annual basis) as the pension tax relief can be accessed later and would be more valuable if the investor was paying HRT, or had a company pension, or both.

peterg1965

Quick and simple question. I have seen the letters numerous times on here, what does IIRC stand for? Thanks.

jem16

If I Remember Correctly

peterg1965

jem16 wrote: »

If I Remember Correctly

Doh...... and there is me thinking it is some technical financial term! :embarasse

jamesd

dunstonh wrote: »

HL do not discount on funds in their SIPP. So, the AMC is more typically around the 1.5% mark.

Thanks for the correction. You're right, I understated the SIPP cost from H-L. Corrected.

EdInvestor wrote: »

There seems to be an automatic assumption by advisor types that people will use a SIPP to invest in more or less the same things they would invest in if they had a standard personal pension. ... So many of the comments about SIPPs here by advisor types only tell a small part of the story.

Not me. And I'm not an adviser type, just a regular person looking for efficient investing. You missed a key piece of my post:

jamesd wrote: »

the personal pension bought from them can be significantly more efficient than their SIPP, if the personal pension has the investment options you want

Now, I'm comparing a SIPP with personal pensions like those from Scottish Widows, or some of the plans coming that give you access to something close to the full range you get in a SIPP.

With that sort of personal pension you can buy some of the funds more cheaply than in the SIPP. You can also mix in some investing in a SIPP to get any funds not available in the personal pension. It's not an either/or decision. It's a pick the best for each investment you want to make situation.

It's going to shift more in favor of the pensions judging from the plans of providers like Scottish Widows, who are now starting to introduce plans with hundreds of investments. It's possible that last year and this might be the years when SIPPs looked their best, compared to personal pensions.

Of course, SIPP providers will have to compete with the new personal pensions, so maybe their costs will drop as the personal pensions match their flexibility.

What I want to see is a personal pension with the sort of online investment managing flexibility you get from the providers like Hargreaves Lansdown. Better still one where you could have an adviser making recommendations and you accepting, with both of you seeing all of the research behind the recommendation. And an option to automatically approve certain classes of recommendations so you can choose how hands on or hands off you want to be.

I do agree that lots of ISA use is helpful. The ISA is limited to only 7000 a year and that can be limiting if you're trying to use it for mortgage and pension planning. Using the CGT allowance outside an ISA and using pension money or an investment bond as a tax wrapper might end up being useful as well for anyone looking to reduce pension use to get greater flexibility.