Migrating from personal pension account to SIPP (charges, limitation and other caveats)

Thrugelmir

kangoora said:

The other disadvantge with Vanguard is they don't support flexible drawdown, not sure if that is relevant to the OP but was promised to be available in 20-21, not sure if that is still current

Probably waiting for sufficient AUM  to warrant the launch. 

bowlhead99

twister_teddy said:
Okay, that's no good then. I'm invested in a number of funds from all over and would like to have those options. 

How is AJ Bell coverage around funds, stocks for SIPP etc. 

AJ Bell is fine, as good or better selection of funds and markets as HL cover really. I've had a SIPP with them about 8 years now, and have some open ended funds, some investment trusts, ETFs and individual stocks listed in UK, US, Canada, Hong Kong, Germany, France, Amsterdam, Denmark, Sweden, Switzerland.  The portal and app are fine too, it's easy enough to use.

twister_teddy said:

Apart from reducing the annual management fee from 0.5% to something lower is there anything else I'm looking to gain by moving  to SIPP. 

That seems to be a question for you, not us! Is there anything else you are looking to gain from a move? We don't know what you are looking to gain, apart from the platform fee on third party funds.

Albermarle

Couple of additional points 
When you contribute a lump sum to a PP , then normally the money is immediately invested in the funds you have nominated and tax relief is also invested at the same time . With a SIPP it goes into a cash account until  you decide where to invest it .
Also with a PP, tax relief is normally invested immediately ( the providers usually prefund it ) whereas  with a SIPP you have to wait around 6 weeks for it to arrive.
With a PP you can only invest in open ended funds ( OEIC's) and switching is free.
With a whole market SIPP ( like HL or AJBell) you can invest in many different types of investments and often there is a small cost involved in buying them 

twister_teddy

Albermarle said:

Couple of additional points 
When you contribute a lump sum to a PP , then normally the money is immediately invested in the funds you have nominated and tax relief is also invested at the same time . With a SIPP it goes into a cash account until  you decide where to invest it .

Is there a limitation of SIPP that I can't set instructions to automatically invest the payments into a specific stock or fund ?
And what about the growth or dividends, its not possible to set up instructions to automatically have it invested as opposed to being held in cash.
Lets assume above question are in context of a SIPP account held at AJ Bell.

bowlhead99

twister_teddy said:

Albermarle said:

Couple of additional points 
When you contribute a lump sum to a PP , then normally the money is immediately invested in the funds you have nominated and tax relief is also invested at the same time . With a SIPP it goes into a cash account until  you decide where to invest it .

Is there a limitation of SIPP that I can't set instructions to automatically invest the payments into a specific stock or fund ?
And what about the growth or dividends, its not possible to set up instructions to automatically have it invested as opposed to being held in cash.
Lets assume above question are in context of a SIPP account held at AJ Bell.

If you only used 'accumulating' funds or ETFs there wouldn't be any income paid into the cash part of the account, so you wouldn't need to do any reinvesting as all the income generated would be kept in their respective funds and internally reinvested by the fund managers without cash flowing to your SIPP.

With ITs or individual company shares this isn't an option but you can generally set an auto-reinvest for them to use the dividends you receive to buy new shares of the same stock that the dividend was paid from.  That might not be very efficient if you had some individually small holdings, e.g. £2000 of ABC plc paying you a £20 dividend twice a year, as the dividend reinvestment fee is a minimum of £1.50 which is a big percentage of the £20 being reinvested back into the company.

Perhaps a more effective way to deal with spare income is the fact that they have a 'regular investment' service where you can configure automatic monthly investment of £X amounts into whichever funds, ETFs, ITs or FTSE350 stocks you like on the 10th of the month; £1.50 per purchase. This can be used in conjunction with a direct debit instruction, but doesn't have to be, and you can change the setup of what you want to buy whenever you like.

So for example if half of your funds were accumulating ones but you had £100k of shares and ITs giving you about £3000 of dividends over the year in dribs and drabs, you could simply set up a regular investment for £300 a month into the investment of your choice, which would cost £1.50 (a pretty nominal half a percent of the £300 being invested). If one month there wasn't as much as £300 in the account, the investment would simply fail for lack of funds and try again the same day the following month. You could change your mind on what to invest in or how much to invest whenever you like (e.g. set a higher or lower purchase amount) and of course you could simply do an ad-hoc purchase if you felt there was too much idle cash sitting around.