Hargreaves Lansdown and SIPPS for Prot Rights

wombat42_2

http://www.trustnet.co.uk/general/news/display-story.asp?db=pension&id=88532

"Sipp investors will be able to invest protected-rights money in direct shares, bonds and commercial property from next October under Government proposals.

At present, these assets can only be invested in insurance funds, deposit accounts, UNIT TRUSTS, Oeics and investment trusts."


So what are Hargreaves Lansdown waiting for as you can hold SIPPS for protected rights as unit trusts already ?

A_Nice_Englishman

wombat42 wrote: »

http://www.trustnet.co.uk/general/news/display-story.asp?db=pension&id=88532

"Sipp investors will be able to invest protected-rights money in direct shares, bonds and commercial property from next October under Government proposals.

At present, these assets can only be invested in insurance funds, deposit accounts, UNIT TRUSTS, Oeics and investment trusts."


So what are Hargreaves Lansdown waiting for as you can hold SIPPS for protected rights as unit trusts already ?

I'm not sure what you're asking. Unit Trusts are different to 'direct shares, bonds and commercial property'

wombat42_2

A_Nice_Englishman wrote: »

I'm not sure what you're asking. Unit Trusts are different to 'direct shares, bonds and commercial property'

That is exactly my point. Surely we dont have to wait until October next year - Prot Rights unit trust SPPS should be available now at H&L for example.

A_Nice_Englishman

Ah, with you now I think.:doh:

You are wondering why HL don't offer unit trust based PR SIPPS when they could?

EdInvestor

The report is incorrect.Protected rights money can only be invested at present in "insured funds" and deposit accounts and it cannot be held in a SIPP.

The insurance companies now have quite a selection of external "mirror funds" which are invested in the same shares as the underlying unit trusts on offer in their prsonal pensions.These count as "insured funds" so PR money can be invested in these.

The "insured funds" provide no actual insurance against anything - the risk is the same - arguably worse because the charges are higher.

You may well ask why the money can't be put in the underlying unit trust.
:rolleyes:

Industry expert asks: what's the point of insured funds?

Looks like it's just another way for life companies to profit at our expense.

dunstonh

The report is incorrect.Protected rights money can only be invested at present in "insured funds" and deposit accounts and it cannot be held in a SIPP.

That is not correct.

They can be held in unit trusts, investment trusts, shares or pension funds. As long as the contract is an insured pension scheme. This is how the fund supermarkets have been able to offer unit trusts for protected rights. They just cannot be held in a SIPP. It's the scheme that had to be an insured scheme. Not the investments within it.

However, you are correct in that when you consider that vast majority of HL's SIPPs invest in unit trusts that they would have created an insured pension to run along side the SIPP to take the protected rights.

wombat42_2

dunstonh wrote: »

That is not correct.

They can be held in unit trusts, investment trusts, shares or pension funds. As long as the contract is an insured pension scheme. This is how the fund supermarkets have been able to offer unit trusts for protected rights. They just cannot be held in a SIPP. It's the scheme that had to be an insured scheme. Not the investments within it.

However, you are correct in that when you consider that vast majority of HL's SIPPs invest in unit trusts that they would have created an insured pension to run along side the SIPP to take the protected rights.

So do we still think the rules will be liberated next October to allow prot rights as unit trusts in non-insured schemes.

wombat42_2

EdInvestor wrote: »

The report is incorrect.Protected rights money can only be invested at present in "insured funds" and deposit accounts and it cannot be held in a SIPP.

The insurance companies now have quite a selection of external "mirror funds" which are invested in the same shares as the underlying unit trusts on offer in their prsonal pensions.These count as "insured funds" so PR money can be invested in these.

The "insured funds" provide no actual insurance against anything - the risk is the same - arguably worse because the charges are higher.

You may well ask why the money can't be put in the underlying unit trust.
:rolleyes:

Industry expert asks: what's the point of insured funds?

Looks like it's just another way for life companies to profit at our expense.

On top of paying more money for these mirror funds, their valuations often seem pretty dodgy as well.
See:
http://forums.moneysavingexpert.com/showthread.html?t=539353

dunstonh

On top of paying more money for these mirror funds, their valuations often seem pretty dodgy as well.
See:
http://forums.moneysavingexpert.com/....html?t=539353

With respect wombat, that is you not understanding how things work and mixing up a software feed issue with unit pricing. Did you not see the thread about HL suffering the same problem yesterday?

A low risk or low/medium investor can actually be a lot better off investing in a personal pension using a spread of internal and external funds. Insurance companies tend to be very good at the low risk stuff, whilst being awful at the higher risk (something a few have been addressing. SWIP, Std Life and NU for example have good offerings). So, you can get lower overall charges on an insured scheme than a SIPP using unit trusts.

I havent got a SIPP and I pay less charges than those of you that do. Yet I have access to same unit trusts you have and that is what I use. SIPPS are being used too much when personal pensions or even stakeholder would be better.

EdInvestor

wombat42 wrote: »

So do we still think the rules will be liberated next October to allow prot rights as unit trusts in non-insured schemes.

The DWP is said to be due to announce the beginning of the consultation process imminently, so that will be a good sign when it happens.

There's quite a lot of drawdown PR money now mounting up in the pipeline - it's quite clear the insurance industry isn't interested in these comparatively small funds, so let's hope they get a move on. :rolleyes:

I'd have thought the number of people with PR money in unit trusts in insured schemes at fund supermarkets would be vanishingly small.The SIPP demand is far more likely to be for direct share investments, which they don't offer, or drawdown,which they may offer (though I doubt it) but at prohibitive cost for small funds.

If you want unit trusts you might as well stay in an ordinary lifeco PP with lower charges and use the mirror funds.I imagine that's why none of the SIPP providers have bothered.

dunstonh

I'd have thought the number of people with PR money in unit trusts in insured schemes at fund supermarkets would be vanishingly small.

Why? With over 90% of SIPPs investing in unit trusts post A day, having a fund supermarket pension investing in unit trusts is no different.

The SIPP demand is far more likely to be for direct share investments, which they don't offer, or drawdown,which they may offer (though I doubt it) but at prohibitive cost for small funds.

All fund supermarkets offer drawdown. A couple of wraps allow shares and ITs as well as drawdown.