SIPP provider with quick recovery of Basic rate tax?

Kendall80

I've been with Bestinvest for a few months now (2 or 3) and not yet received the extra 20%


That aside, I have no problem with any other aspect of their service thus far.

Shedman

Oops seem to have touched a bit of raw nerve on this one..

Still I think my question got answered in there somewhere :T:

Cottage_Economy

Kendall80 wrote: »

I've been with Bestinvest for a few months now (2 or 3) and not yet received the extra 20%


That aside, I have no problem with any other aspect of their service thus far.

Just to give you a better idea of when you'll get it, a transaction I made into a BI SIPP on 3rd November had the tax paid into that account on 31st December. Give or take a few days for Christmas it looks to be about 7/8 weeks?

zagfles

dunstonh wrote: »

weaker may have been a better word to use than weak. Although there have been concerns raised that a number of SIPP providers may not be as financially strong as desirable. Although that has been said for a number of years.

That's a pointless generic statement which is pretty useless, unless you want to name the "weaker" ones, and justify it. Also perhaps explain the implications of being financially "weaker" when client funds are held separately from company funds.

May as well state "there have been concerns raised that a number of financial advisers are corrupt/incompetant/greedy". But anyone saying that might be accused of having an agenda...

dunstonh

That's a pointless generic statement which is pretty useless, unless you want to name the "weaker" ones, and justify it.

Aug 2014 when the FCA said:
At the current level of capital requirement there is a real risk that when a SIPP operator exits the market it cannot afford to continue to administer its pension schemes, find another administrator for the pension book, or fund the closure, even when fee income is still coming in. This is particularly so where the firm administers non-standard assets, which add significant
complexity from the perspective of a firm who considers acquiring the pension book. This can lead to pension schemes being left without a functioning administrator, creating uncertainty and possibly a significant tax charge for the consumer.
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Some firms may need to raise additional capital to comply with the rules. Firms in this position should start planning for this to ensure that they have sufficient resources in place by the implementation date.
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SIPP operators came into the scope of regulation in 2007 as part of the Government’s approach to promoting pension saving. We have experience of a number of SIPP operators who have sought to close to new business and run off or transfer their book of pension schemes. However, it has been apparent that some operators do not hold sufficient capital to do so in
an orderly manner, especially when they administer schemes that allow clients to invest in less easily realisable asset classes that can be difficult to transfer to another provider.
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pre funding costs money. If you look at those that pre-fund, it is usually the ones that are financially stronger. There are some financially strong ones that do not pre fund but that could be because they want to improve their profit margin. It could be that they have placed their charges low and dont have margins to be able to afford it. Or it could be that they do not have the money themselves to do it. Whatever the reason, it comes down to a choice by the company for monetary reasons as most pension providers do pre-fund. Prefunding is usually not constrained to the tax relief. It can also be on withdrawals and payments.

zagfles

dunstonh wrote: »

Aug 2014 when the FCA said:
At the current level of capital requirement there is a real risk that when a SIPP operator exits the market it cannot afford to continue to administer its pension schemes, find another administrator for the pension book, or fund the closure, even when fee income is still coming in. This is particularly so where the firm administers non-standard assets, which add significant
complexity from the perspective of a firm who considers acquiring the pension book. This can lead to pension schemes being left without a functioning administrator, creating uncertainty and possibly a significant tax charge for the consumer.
<>
Some firms may need to raise additional capital to comply with the rules. Firms in this position should start planning for this to ensure that they have sufficient resources in place by the implementation date.
<>
SIPP operators came into the scope of regulation in 2007 as part of the Government’s approach to promoting pension saving. We have experience of a number of SIPP operators who have sought to close to new business and run off or transfer their book of pension schemes. However, it has been apparent that some operators do not hold sufficient capital to do so in
an orderly manner, especially when they administer schemes that allow clients to invest in less easily realisable asset classes that can be difficult to transfer to another provider.
<>

---

pre funding costs money. If you look at those that pre-fund, it is usually the ones that are financially stronger. There are some financially strong ones that do not pre fund but that could be because they want to improve their profit margin. It could be that they have placed their charges low and dont have margins to be able to afford it. Or it could be that they do not have the money themselves to do it. Whatever the reason, it comes down to a choice by the company for monetary reasons as most pension providers do pre-fund. Prefunding is usually not constrained to the tax relief. It can also be on withdrawals and payments.

A URL to the full report: http://www.fca.org.uk/your-fca/documents/policy-statements/ps14-12

So even though most/all don't pre-fund, the FSA say:

We note that in reality the majority of operators already hold capital well in excess of their existing regulatory requirements. Indeed, approximately 50% of firms in our sample currently hold capital in excess of our calculations of their new requirement

So not much correlation there between financial "weakness" and pre-funding tax relief.

dunstonh

So even though most/all don't pre-fund, the FSA say:
Quote:
We note that in reality the majority of operators already hold capital well in excess of their existing regulatory requirements. Indeed, approximately 50% of firms in our sample currently hold capital in excess of our calculations of their new requirement
So not much correlation there between financial "weakness" and pre-funding tax relief.

and approx 50% dont. So, that one can be read two ways.

So even though most/all don't pre-fund

Most pension providers pre-fund.

zagfles

dunstonh wrote: »

and approx 50% dont. So, that one can be read two ways.

Yes, and? The point is, if pre-funding were in any way related to financial strength, you might expect 50% of SIPP providers to pre-fund. Remind us again, what's the percentage of SIPP providers who pre-fund? Is it similar to the % that the FSA consider financially strong?

Besides which, as this will be a new "requirement", presumably all SIPP providers will have to meet it and have the FSA required financial strength. So nothing really for people to worry about assuming the FSA are right. Even if none still pre-fund.

dunstonh

Got some figures on this produced the other day.

For someone paying £800pm for 10 years and using a 7% projection for growth, the reduction in yield would be 0.09% a year lower if the company does not pre-fund (assuming same charges).

That may not sound a lot but the difference in costs between platforms is not a lot either and many people make decisions based on a lot less than 0.09%. So, a 0.35% platform with prefunding could result in a higher fund value than a 0.30% platform investing in the same fund without prefunding.

zagfles

dunstonh wrote: »

Got some figures on this produced the other day.

For someone paying £800pm for 10 years and using a 7% projection for growth, the reduction in yield would be 0.09% a year lower if the company does not pre-fund (assuming same charges).

That may not sound a lot but the difference in costs between platforms is not a lot either and many people make decisions based on a lot less than 0.09%. So, a 0.35% platform with prefunding could result in a higher fund value than a 0.30% platform investing in the same fund without prefunding.

Unless of course the prefunding platform insisted on an IFA being used, who would charge considerably more than 0.09%