Stakeholder Pensions?

MarkCarr203

How would I go about setting up a fund supermarket as I have never heard of these before and would be very interested in migrating over. Would these just be products offered by IFA's?

dunstonh

Fund supermarket pensions are a post A day product so not many exist yet. The numbers are increasing though. The two main ones (at least in my opinion) are Scottish Widows and Selestia. Both of which need purchasing through an IFA (advice or execution only). If on execution only, both of these can be cheaper than SIPPs investing in unit trust funds. The most common SIPP referenced on this site is Hargreaves Lansdown. However, the differences between them all is not significant. Although if you have a large fund and can get your annual management charges 0.25% a year lower then the fund supermarket option can look quite attractive compared to the SIPP.

EdInvestor

dunstonh wrote: »

The advantages of a fund insured contract is that there is less admin

Less admin than what?

.. no need for a cash account

You seem to think a cash account is a bad thing.Why? It's very useful to have somewhere to park money earning interest, to have dividends paid into and to have income paid out of if you are in drawdown.It enables you to operate your pension rather like the way you operate a bank account.

This is a BIG ADVANCE over a bog standard insurance company pension , don't knock it.

and it can take protected rights (a SIPP cannot at this time).

I hear the DWP is now aiming at final consultation later this year, amending legislation in the spring and go-ahead in summer next year.

SIPPs (using unit trusts) and fund supermarket pensions are more expensive than stakeholder pensions and some personal pensions.

The cheap online SIPP run by www.h-l.co.uk costs around the same as a PP using external funds and has more choice plus the features mentioned above.

If you dont use the features of these, you can end up paying more

This is true: however once you have experienced the major improvement in service offered by the Sipp providers compared with the lifecos, plus the convenience of online access and dealing, you may feel this is worth paying a bit for.

So, you need to either be an active investor or have a suitable investment adviser if you intend to go down the SIPP/fund supermarket route.

I disagree entirely. There is no need to be an "active" investor at all - such a person is likely to lose money by trading too much.

dunstonh

Less admin than what?

Insured contracts are in a master trust so you just need the nomination of beneficiary. SIPP trusts are more flexible but can involve more work.

As there is no cash account to monitor, it can be left alone as an invest and forget.

You seem to think a cash account is a bad thing.Why? It's very useful to have somewhere to park money earning interest, to have dividends paid into and to have income paid out of if you are in drawdown.It enables you to operate your pension rather like the way you operate a bank account.

This is a BIG ADVANCE over a bog standard insurance company pension , don't knock it.

It certainly has an advantage for some. However, an inexperienced investor (or lazy one) could leave large chunks or even all if it in the cash account without realising costing them a large amount over the years. Indeed, I came across someone recently that had an amount in excess of £10k sitting in cash without realising it.

However, as most SIPPs go into unit trust funds, the advantges of the cash account are not as strong as they would be for say shares.

The cheap online SIPP run by www.h-l.co.uk costs around the same as a PP using external funds and has more choice plus the features mentioned above.

Personal pensions can utilise stakeholder and external funds. A balanced portfolio or low risk investor will have lower risk funds which are typically where the insurance companies do quite well and these funds are usually available in their stakeholder range at 1.00% p.a. In unit trust form they would be closer to 1.50% p.a.

A fund supermarket with a 0.25% amc discount is cheaper than HL by 0.25% p.a.

once you have experienced the major improvement in service offered by the Sipp providers compared with the lifecos, plus the convenience of online access and dealing, you may feel this is worth paying a bit for.

Thats largely rubbish. Whilst some of the smaller providers can be quite good on the service front, it should be noted that poor service/good service can happen with any provider, new or old. Some insurance companies are notorious for poor service whilst others are good. Also, an insured contract doesnt have to come from an old insurance company.

I disagree entirely. There is no need to be an "active" investor at all - such a person is likely to lose money by trading too much.

I didnt say anything about overtrading. I just said active. Active as in keeping under review and monitoring it. How many people can honestly say that they have kept their pensions under review? How many would say that they will keep them under review in future and will stick to it?

MarkCarr203

Seems to be some very valid and strong points coming across for and against which still leaves things very unclear for me.

I currently have little over £14.5K sat in a Stakeholder Pension with Halifax. I am an amatuer investor even though I have made large returns on the stock market and always on the look out for next investment opportunity. I would like to put my money somewhere for the future where I can specify which funds, shares units etc and have a nice return.

Many thanks in advance.

dunstonh

If you want shares then you are basically looking at a full SIPP. You can more or less forget the rest.

EdInvestor

I would define a "full SIPP" as one which allows commercial property investments.These SIPPs are expensive and are used only by people with large pension funds.

For shares you will be perfectly ok with a low cost online SIPP such as those run by

https://www.sippdeal.co.uk or https://www.alliancetrust.co.uk

Neither have an annual charge.

MarkCarr203

Many thanks to you all for the advice and will be looking to go down SIPP route.