Any advise - SIPP with standard life.

232607

Quick backgound:-

My company is closing a DB scheme and replacing it with a DC scheme with Standard Life.
I'm involved in the committee to over see the change.

One thing we pushed the company for was to include SIPP as an option for anyone wanting to go this route. They were not keen at 1st but have now relented.

Questions:-
Does anyone have any experience of dealing with a Standard Lift SIPP?
How easy is it to buy/sell shares with in their website?

Does anyone have any thought on the merits/drawbacks of going down the SIPP route?
I sort of understand that this would mean a lot more self management hence is not for someone who isn't prepared to be active.
I guess the plus side is potentially better returns.

Thanks in advance.

mania112

I'm not a fan of a SIPP.

It will be more expensive.

It has the option for wider fund choices and that's BAD for unadvised pensions - because investors can more easily make some bad investment decisions.

There is no evidence it will perform better than a Personal Pension.

I'm surprised this has happened, I can only think the company is quite small? I don't know of any larger firms that have taken this decision.

jamesd

Mania112, my large employer is one that uses the SL GPP with SL SIPP option. Then I promptly decided to ignore the SL SIPP because its pricing was completely uncompetitive compared to personal pensions aimed at individuals. I can undercut the SL GPP and SL SIPP pricing with just me beating the pricing the whole company managed to get, a 0.75% discount with 0.25% adviser fee.

232607, why Standard Life for the main part of the scheme? You can probably get it cheaper if you use a place like HL and that just gives everyone the breadth of investment options - including a broad range of funds - that aren't present in the non-SIPP SL product.

Fortunately my employer arranged to have it be possible to transfer out and periodic transfers out of the GPP to a personal pension is how I'll deal with both the higher costs of the SL GPP and the limited investment options. Terms for that option are first two transfers out free, rest cost £50 a time. It's a considerably better option than using the SL SIPP.

Watch out for the things that the OFT found affected the GPP market, notably a dysfunctional market that delivers poor products to employees because the employer selects what's best for the employer rather than the employee.

While the SL SIPP is more expensive and best avoided as just an uncompetitive product, personal pension SIPPs can be quite inexpensive and cheaper than the SL GPP.

232607

Just to elaborate a bit more:-
It's not a small company, there will be approx 700 in the new DC scheme.
The choice of Standard Life was a "done deal", IE the company picked these before annoucing the consultation process hence the addition of SIPP is just an "add on" from the range Standard Life will provide.

FYI...The charges agreed with Standard life for the fund manged option is 0.3% but we've yet to find out what the SIPP charges will be.

jamesd

Given that SL is a done deal, I suggest going for easy transfers out, not the SL SIPP. Those with an interest in pensions will probably already have a personal pension that offers appropriate investment options. While the SL GPP options aren't great they are good enough to accumulate money in for a year or two with periodic transfers out.

I'm still on one of the older commission-based contracts. I expect that 0.3% is beatable enough on price for those with significant individual pensions of their own. With a much broader range of investments than the GPP offers.

M.R.W.

Hi, some thoughts on your questions...

Does anyone have any experience of dealing with a Standard Life SIPP? Yes, it's a decent product (in the right hands) and I personally like their online platform and functionality.

How easy is it to buy/sell shares with in their website? I don't have any experience of trading directly held equities on their website, but fund switches are very straightforward.

Does anyone have any thought on the merits/drawbacks of going down the SIPP route? For a company scheme I think a SIPP is overkill. The vast majority of employees are unlikely to want or need the flexibility and control that it offers. Many employees would likely just pick a few investment funds and leave the plan untouched for years - in which case they may as well have a GPP or DC account for a lower cost.

I guess the plus side is potentially better returns. Again, only in the right hands, and never guaranteed!

Matt

232607

All.

Thanks for your comments, just wanted to add an update if anyone can comment further:-
We asked the company if periodic transfers could be made from the GSL scheme.
Their initial reaction was YES but then they "back tracked" and said they would need to seek advise & confirm.
We should find out for definate at a meeting next week.

Having listened to the advise here, I was thinking of running with this as a plan for my own circunstances:-

I've got about £12K in a PP that I've never really kept track of (yes, I know I should have).
I was thinking of moving this to a HL SIPP and managing this a lot better.
When my new GSL pension starts up (Feb 2014), I will have just over £700 per month going into it.
I'm thinking every 12 months, I can empty this pot & I'd be adding about £8500 to the HL SIPP (assuming it's confirmed we can do this).
I see the the benifit to this is I have 12 months of running with both SL & HL, hence I get a feel for which is best.

Any thoughts on this idea?

Also, I seem to have my mind fixed on a SIPP because I want the option of investing in individual shares.
Am I mis-guided on this, IE can this be done with a PP.

T.I.A Again.

jamesd

Not sure what they mean by "back tracked" but good to read that there is progress being made.

Moving the PP might be sensible. Not to HL yet because their new pricing isn't yet known, nor are the reactions to it from others. Best to wait three to six months to allow for dust settling before a transfer at the moment. At the moment it's simply not possible to know whether HL will offer a good or bad deal for your circumstances. HL currently offers a poor deal for those using shares at your sort of value level, with a 0.5% of the value a year fee, charged monthly in proportion, capped at £200 a year. Plus uncapped dealing charges.

The SL investment options will be fine for a year or two. I'd be inclined perhaps not to transfer out less than about £5,000 at a time just so it's not an amount that seems to them to be too small to be worth the trouble. At the moment I've around £50,000 accumulated in mine even though I already have a HL account. I'll transfer somewhere when I know how the pricing turns out.

Individual shares are the sort of thing that requires a SIPP. Standard personal pensions tend not to offer that. Also, in the DIY market there's little reason not to use a SIPP when dealing with shares.