Another FSAVC to SIPP Question

Rheumatoid

AlanP wrote: »

A true SIPP is a specialised, advanced form of DIY pension that, for example, allows small business owners to put their commercial property into it and effectively rent it back to themselves and so on.

Unsurprisingly the providers charge a hefty fee for this more complex service.

The majority of people do not need a SIPP as they just want to invest in vanilla stocks, funds, bonds and the like so a straightforward pension with the likes of HL, Cavendish / Fidelity or one of the other platforms meets their needs at a much lower cost.

Is it the latter option you are meaning when you say "SIPP"?

Yes. Was just going to stick the value of a pension I don't really need into a HL SIPP.

zagfles

AlanP wrote: »

A true SIPP is a specialised, advanced form of DIY pension that, for example, allows small business owners to put their commercial property into it and effectively rent it back to themselves and so on.

Unsurprisingly the providers charge a hefty fee for this more complex service.

The majority of people do not need a SIPP as they just want to invest in vanilla stocks, funds, bonds and the like so a straightforward pension with the likes of HL, Cavendish / Fidelity or one of the other platforms meets their needs at a much lower cost.

Is it the latter option you are meaning when you say "SIPP"?

The "latter option" is a SIPP. You don't need "advanced" or complicated investments in a SIPP.

zagfles

Rheumatoid wrote: »

Yes. Was just going to stick the value of a pension I don't really need into a HL SIPP.

Sounds like a good move if you're confident in making investment decisions. HL are good value for small SIPPs as there's no flat annual fee etc, it's a %, so better value for small amounts.

Personal pensions might be slightly cheaper - although a lot of them won't deal directly with the public, they insist you use an intermediary, eg a financial adviser or an execution only broker, who'll add their fees. Plus there'll be less investment choice, and if you choose "external" funds there'll often be additional charges.

greenglide

But it is 0.45% a year for the first £250,000 for funds or 0.45% a year for shares capped at £200. There are also exit charges

Whether its customer service justifies these charges is up to the beholder.

Lots of cheaper ones, some of which do PPs as well as SIPPs charging .30% or .35%.

zagfles

greenglide wrote: »

But it is 0.45% a year for the first £250,000 for funds or 0.45% a year for shares capped at £200. There are also exit charges

Whether its customer service justifies these charges is up to the beholder.

Lots of cheaper ones, some of which do PPs as well as SIPPs charging .30% or .35%.

The OP's pension value is about £21k. That would make the annual charge about £95. A lot of other SIPPs have flat fees higher than that plus charges for dealing etc.

There are some others like Fidelity which would be a bit cheaper, but on the OP's value the difference would be trivial. Plus HL do have some "superclean" funds with lower charges than funds on other platforms.

dunstonh

£21k could get a relatively simple personal pension at 0.4% p.a. all in. £21k is not SIPP territory. There is no real point with an amount that small.

AlanP_2

zagfles wrote: »

The "latter option" is a SIPP. You don't need "advanced" or complicated investments in a SIPP.

I would caveat that slightly and say the other option "can" be a SIPP, it can also be a straightforward Personal Pension.

True you don't need "advanced or complicated" investments in a SIPP.

Perhaps we should all start using "SIPP" and "Full SIPP" to distinguish what we mean when we use the term as I have read numerous examples on here along the lines of "you don't need a SIPP if all you want to do is invest in Funds / Bonds etc. for your retirement".

zagfles

dunstonh wrote: »

£21k could get a relatively simple personal pension at 0.4% p.a. all in. £21k is not SIPP territory. There is no real point with an amount that small.

Why not? The OP is happy to manage his investments, the difference in charges will be trivial. Plenty of people have S&S ISAs with that sort of amount, why not a SIPP?

dunstonh

zagfles wrote: »

Why not? The OP is happy to manage his investments, the difference in charges will be trivial. Plenty of people have S&S ISAs with that sort of amount, why not a SIPP?

Its like having a monster truck to do the school run. Pointless.

zagfles

AlanP wrote: »

I would caveat that slightly and say the other option "can" be a SIPP, it can also be a straightforward Personal Pension.

True you don't need "advanced or complicated" investments in a SIPP.

Perhaps we should all start using "SIPP" and "Full SIPP" to distinguish what we mean when we use the term as I have read numerous examples on here along the lines of "you don't need a SIPP if all you want to do is invest in Funds / Bonds etc. for your retirement".

I don't think you get it. When people say "you don't need a SIPP" they aren't saying that the likes of HL's SIPP isn't a SIPP. They are suggesting using personal/stakeholder pensions, which in some cases can be marginally cheaper if you use the pension provider's in house funds.

However many/most personal pension providers won't deal direct with the public, they insist on you using an intermediary, either a broker or a financial adviser. This obviously has additional costs.