The Pension Loophole article discussion

johnfthetraveller

SIPP Account Closure fee:

Bestinvest = £150
HL = £30

Wish I'd thought to take this into consideration BEFORE I set up with Bestinvest earlier today. Ouch!

jamesd

There can also be an explicit cost for taking a small pot lump sum to pay.

kidmugsy

johnfrith wrote: »

SIPP Account Closure fee:

Bestinvest = £150
HL = £30

Wish I'd thought to take this into consideration BEFORE I set up with Bestinvest earlier today. Ouch!

What if you don't close it and just leave £1 there?

clivep

johnfrith wrote: »

SIPP Account Closure fee:

Bestinvest = £150
HL = £30

Wish I'd thought to take this into consideration BEFORE I set up with Bestinvest earlier today. Ouch!

HL... Account closure fee: £25 + VAT... This fee applies when transferring your account to another provider.

HL... Triviality payment: £75 + VAT
I believe this is what it will cost me later this year when I cash in my HL small pot that I created from a partial transfer from Fidelity a few months ago.

johnfthetraveller

clivep wrote: »

HL... Triviality payment: £75 + VAT.

My understanding is that a "triviality payment" is when the total of all your pensions is less than 30k. So that's a different kettle of fish from the scheme Martin is talking about.

Considering that (for a basic rate payer), the maximum benefit of doing this is £500 minus fees (per cycle), and the fees are hefty enough to cut into this considerably, could MSE go the extra mile and give guidance on how the fees pan out per provider?

Vortigern

kidmugsy wrote: »

What if you don't close it and just leave £1 there?

That's not an option on their sub £10K form. You have to take the lot.

clivep wrote: »

HL... Account closure fee: £25 + VAT... This fee applies when transferring your account to another provider.

HL... Triviality payment: £75 + VAT
I believe this is what it will cost me later this year when I cash in my HL small pot that I created from a partial transfer from Fidelity a few months ago.

HL will deduct both those fees when you take a sub £10K pot. The form is headed "Commutation of small personal pension funds" and says "Please use this form to request the lump sum payment of a SIPP worth less than £10,000" and "There is an administration fee of £75 + VAT. There is also an account closure fee of £25 + VAT (applicable only for accounts closed after 2 June 2014)"

clivep

johnfrith wrote: »

My understanding is that a "triviality payment" is when the total of all your pensions is less than 30k. So that's a different kettle of fish from the scheme

Although cashing in a small pot is not technically the same as a "triviality payment" HL do not show any fee for cashing in a small pot and I was thinking it would be the £75 + VAT shown for the triviality payment.

Vortigern wrote: »

HL will deduct both those fees when you take a sub £10K pot. The form is headed "Commutation of small personal pension funds" and says "Please use this form to request the lump sum payment of a SIPP worth less than £10,000" and "There is an administration fee of £75 + VAT. There is also an account closure fee of £25 + VAT (applicable only for accounts closed after 2 June 2014)"

I'm not bothered whether or not the account is closed. If taking a small pot necessitates closing the account then that should be included in the fee for taking the small pot. On HL's site against account closure it states:

Account closure fee:
(This fee applies when transferring your account to another provider. Not applicable when transferring between a Vantage SIPP, Group SIPP or Drawdown account) £25 + VAT

A triviality payment is not a transfer to another supplier so surely no account closure fee should apply.

Vortigern

clivep wrote: »

If taking a small pot necessitates closing the account then that should be included in the fee for taking the small pot.

I agree. You now need to persuade HL to agree. Good luck!

Medosh

I am a satisfied client of 18y with HL, but because I already have a SIPP, they will not let me open another one in order to take advantage of the Small Sum scheme. Has anyone any advice on a HL client setting up 3 Small Sums?

Spidernick

An interesting article (albeit that using 'earnt' is very poor English!). However, it just makes me think it's even more likely that the 25% tax-free lump sum will be scrapped sooner rather than later.