Personal Pension versus SIPP

spiderplant0

I'm trying to figure out if I would be better with a SIPP or personal pension. My circumstances: I am self employed (so no employer scheme available). I don't need any fancy investments (regular stock market funds are fine) and I dont think I need any of the extra information that pension companies provide over SIPP companies. So as far as I can see I may as well pick a provider with the lowest charges.

I looked at the Standard Life Personal Pension.
For a pot of £100k, you get a 0.3% reduction in fund annual management charges.

And I compared it to the Best Invest SIPP.
For a pot of £100k, you have a 0.3% extra charge over and above the fund charges..

I attempted to compare equivalent funds between the above two, and the Best Invest SIPP fund charges are much lower than for Standard Life equivalents and so overall, the SIPP is quite a bit cheaper.

E.g.
Standard life: SL FP Argonaut European Alpha Pension Fund
AMC=2.015%
Overall = 2.015 - 0.3 = 1.7%

Best Invest: Fp Argonaut European Alpha R Acc
OCF=0.89%
Overall = 0.89 + 0.3 = 1.2%

Perhaps some one could let me know if I've miss-understood how this works.

bigadaj

That's broadly correct but you can get funds much cheaper than that.

To go to the big insurers then accessing them through cavendish, or a similar execution only broker/ platform will bring base charges down to 0.5% or less which would include the fund charge for the default funds offered by that insurer.

I've got a bestinvest sipp currently all in vanguard lifestrategy 80 which has total charges of 0.55%, if you wanted to go for a range of index trackers and allocate and rebalance yourself you could probably get down to 0.4%.

There's little difference between sipps and personal pension for many people these days, and with any investments if you are prepared to make your own decisions then it's basically down to cost and investment choice. Well that's most of it, read the iii thread on these boards and I personally would not want to go that cheap if it gives you that much hassle.

Itsallagame

I use some Vanguard ETFs that track various indices.

Charges on these are very small. As an example the FTSE 100 ETF tracker has a charge of 0.09%.

spiderplant0

Thanks for that.
The example fund is expensive right enough, but it is just one that I could find an equivalent offered by Standard Life. (It was quite difficult to find direct equivalents.).

I had a look at Cavendish Online. It looks like good value - very similar to Best Invest..

I must admit, I was assuming that the annual fund charges would be the same for all SIPP providers. I wonder if that is the case? (Apart from Hargreaves Lansdown with its super clean funds.)

dunstonh

I looked at the Standard Life Personal Pension.

Why? What drew you to their product?

Now, the IFA version may be different to the DIY version they offer but I personally find little on offer with Std Life that cannot be got elsewhere for lower cost and/or better functionality

I must admit, I was assuming that the annual fund charges would be the same for all SIPP providers. I wonder if that is the case? (Apart from Hargreaves Lansdown with its super clean funds.)

most platforms have some superclean funds. They are not unique to HL. Some fund houses will offer their superclean share class to certain platforms and not others.

spiderplant0

Hi dunstonh,
No particular reason (I just happen to have an old SL pension). I wanted to compare pension providers. It seems to be easy to find lists for SIPP providers but not personal pensions. (Maybe because SIPP provider are more transparent). Are you aware of any good comparison lists for personal pensions?

dunstonh

(Maybe because SIPP provider are more transparent).

Actually, SIPPs are generally harder to compare as most modern personal pensions are either mono charged or have very few charges. Whereas most SIPPs have a menu of charges that can often go on for several pages.

Multi-charge plans are more difficult to compare and often require software and predictions on future activity to get a reasonable comparison of charges. Mono charged plans are a doddle by comparison.