Opinions on my SIPP with HL

Joey_Soap

zagfles said:

Joey_Soap said:

zagfles said:

Albermarle said:

Joey_Soap said:

garmeg said:

Joey_Soap said:

Not a comment on the holdings at all. But let's say you decide to drawdown from your SIPP at a rate of say 3% of the pot's value each year. I want to point out that by using HL, out of the 3% you have to pay 0.45% to HL in fees. Leaving you with precisely 2.55% of your pot each year as drawdown. That's a truly massive hit to your income every year. I'd shop around if I were you to try to drive down that monthly fee. HTH.

The 0.45% comes out of the fund not the drawdown amount so they can still take 3% and get 3%.
The funds also have charges (probably 0.5% on average as the Vanguard fund is cheap) so you need to allow for that too.
Whether a 3% drawdown is sensible or not is a separate issue. 

There is no magic money tree. It's still his money and HL still grasp 0.45% off him. Whether it's 3% or 3.45% drawdown, HL still take their pound of flesh and 3.45% is a lot less sustainable drawdown than 3%. The underlying fund fees you can nothing about as long as you hold funds. And hopefully, the funds add wealth over time. That's what you pay the funds to do. But HL do nothing but syphon off the wealth that the funds hopefully create for you. HTH.

The OP has a pot of approx. £30K so a % charge based provider makes sense:
The funds will cost the same whoever they are with so the annual platform charges are :
HL - £135
Aj Bell - £75 + drawdown costs later 
Vanguard ( limited fund choice ) - £45
So by avoiding HL 'taking their pound of flesh' the OP will not exactly transform their pension income !

You could just as easily argue that for £135 you in fact get very good value for money . 

And with II, the annual charge would be £240, plus possible trading costs. So it seems II will take even more "pounds of flesh"  than HL

I don't think anyone here is advocating Interactive Investor in this case? It would be inappropriate on a small pot of money. Where But HL are charging 0.45%, around 0.25% is easily available for the same thing. Good point about drawdown fees. But not every platform applies them and one platform recently stopped applying it. So, it's important to research for each case, that's very clear. What's also clear, is that with a limited amount of money in the pot, being very careful with platform charges is extremely important.

Which is why I pointed at Snowman's spreadsheet which will work out the charges based on investment amount, type etc. Rather than the generic assertion we get here all the time that HL are expensive. For the OP they are likely to be at the cheaper end of the scale.

I suppose it depends on whether you think a 0.45% fee is less than a 0.25% fee then. A number which is pretty widely available in the market.

zagfles

Joey_Soap said:

zagfles said:

Joey_Soap said:

zagfles said:

Albermarle said:

Joey_Soap said:

garmeg said:

Joey_Soap said:

Not a comment on the holdings at all. But let's say you decide to drawdown from your SIPP at a rate of say 3% of the pot's value each year. I want to point out that by using HL, out of the 3% you have to pay 0.45% to HL in fees. Leaving you with precisely 2.55% of your pot each year as drawdown. That's a truly massive hit to your income every year. I'd shop around if I were you to try to drive down that monthly fee. HTH.

The 0.45% comes out of the fund not the drawdown amount so they can still take 3% and get 3%.
The funds also have charges (probably 0.5% on average as the Vanguard fund is cheap) so you need to allow for that too.
Whether a 3% drawdown is sensible or not is a separate issue. 

There is no magic money tree. It's still his money and HL still grasp 0.45% off him. Whether it's 3% or 3.45% drawdown, HL still take their pound of flesh and 3.45% is a lot less sustainable drawdown than 3%. The underlying fund fees you can nothing about as long as you hold funds. And hopefully, the funds add wealth over time. That's what you pay the funds to do. But HL do nothing but syphon off the wealth that the funds hopefully create for you. HTH.

The OP has a pot of approx. £30K so a % charge based provider makes sense:
The funds will cost the same whoever they are with so the annual platform charges are :
HL - £135
Aj Bell - £75 + drawdown costs later 
Vanguard ( limited fund choice ) - £45
So by avoiding HL 'taking their pound of flesh' the OP will not exactly transform their pension income !

You could just as easily argue that for £135 you in fact get very good value for money . 

And with II, the annual charge would be £240, plus possible trading costs. So it seems II will take even more "pounds of flesh"  than HL

I don't think anyone here is advocating Interactive Investor in this case? It would be inappropriate on a small pot of money. Where But HL are charging 0.45%, around 0.25% is easily available for the same thing. Good point about drawdown fees. But not every platform applies them and one platform recently stopped applying it. So, it's important to research for each case, that's very clear. What's also clear, is that with a limited amount of money in the pot, being very careful with platform charges is extremely important.

Which is why I pointed at Snowman's spreadsheet which will work out the charges based on investment amount, type etc. Rather than the generic assertion we get here all the time that HL are expensive. For the OP they are likely to be at the cheaper end of the scale.

I suppose it depends on whether you think a 0.45% fee is less than a 0.25% fee then. A number which is pretty widely available in the market.

Oh stop digging. It depends whether you think a £0 flat fee is better than a £10 flat fee. It depends whether you think a £0 dividend reinvestment fee, drawdown fee, fund transaction fee, transfer fee, advice fee etc etc is better than getting charged these fees. The OP wasn't even asking about platform fees, but as usual on here, the mere mention of HL brings out the knee jerk "they're expensive" type posts. When in this case they're cheaper than probably most platforms.

End of pointless diversion, OP was after advice on investments not platforms. He/she can consult snowman's spreadsheet for platform fees.

morrow56

HI all - thanks - look like I have a lot of thinking to do

I do have another option to think of

In August I transferred a DC pension of £27648 to CSPA (Civil Service Pension) I will receive £1690 PA for that amount in Nov  2023

If I transferred the £37,000 SIPP  to CSPA I perhaps could get another £2200 giving a total of £3890 in Civil Service Pension + with 6 years of service to be added to that when I retire on Nov 16 2023

Would there be a chain of thought that the surety of CSPA be a better option for me??

Any thoughts kindly appreciated on that route for myself gratefully received

Thanks

AnotherJoe

Thats a 20 year (aprox) payback if your numbers are correct (I assume you prorated it from the earlier xfer?) .

Not bad. I'd take it all other things being equal which they probably arent. Do you have other savings? Might that money be needed for something ( car, house, holidays, kids etc?) What other pensions do you have? What difference will the extra £2200 a year make to you (so, £200 a month or £180 after tax).

Is peace of mind worth much or do the sums not make much difference?  Will you deeply regret it if it halves at some point?

morrow56

Currently have 11k other cash savings and would look to put £300 a month to add to that for next 3 years
I do like the certainty of knowing the ''guaranteed'' pot at retirement is in place within the Civil Service pension
I currently receive 3k a year from pensions taken previously, salary at the moment is circa 18k 

NedS

@AnotherJoe highlighted above a lot of the questions you will probably want to ask yourself. There are no right or wrong answers as everyone will have different circumstances and attitudes to risk. Like you I will have a mixture of secure DB pension income (plus state pension) and DC SIPP pension provision. I have tried to ensure I will have enough secure DB income to meet my routine daily expenditure and then some additional SIPP provision that I can use flexibly to fund those bigger one off items. If you want to blow £10K on a holiday or a new car, it's difficult to do that solely from fixed DB income so it's nice to have a flexible pot you can draw down on too, but ultimately the daily living costs need to be covered first and having those covered from DB pension provision will sure take away a lot of the uncertainty/worry for me. Ultimately it probably comes down to your attitude to risk.

[Deleted User]

Joey_Soap said:

zagfles said:

Joey_Soap said:

zagfles said:

Albermarle said:

Joey_Soap said:

garmeg said:

Joey_Soap said:

Not a comment on the holdings at all. But let's say you decide to drawdown from your SIPP at a rate of say 3% of the pot's value each year. I want to point out that by using HL, out of the 3% you have to pay 0.45% to HL in fees. Leaving you with precisely 2.55% of your pot each year as drawdown. That's a truly massive hit to your income every year. I'd shop around if I were you to try to drive down that monthly fee. HTH.

The 0.45% comes out of the fund not the drawdown amount so they can still take 3% and get 3%.
The funds also have charges (probably 0.5% on average as the Vanguard fund is cheap) so you need to allow for that too.
Whether a 3% drawdown is sensible or not is a separate issue. 

There is no magic money tree. It's still his money and HL still grasp 0.45% off him. Whether it's 3% or 3.45% drawdown, HL still take their pound of flesh and 3.45% is a lot less sustainable drawdown than 3%. The underlying fund fees you can nothing about as long as you hold funds. And hopefully, the funds add wealth over time. That's what you pay the funds to do. But HL do nothing but syphon off the wealth that the funds hopefully create for you. HTH.

The OP has a pot of approx. £30K so a % charge based provider makes sense:
The funds will cost the same whoever they are with so the annual platform charges are :
HL - £135
Aj Bell - £75 + drawdown costs later 
Vanguard ( limited fund choice ) - £45
So by avoiding HL 'taking their pound of flesh' the OP will not exactly transform their pension income !

You could just as easily argue that for £135 you in fact get very good value for money . 

And with II, the annual charge would be £240, plus possible trading costs. So it seems II will take even more "pounds of flesh"  than HL

No, that's not correct. II would now charge £120 per year for a SIPP, whether in drawdown or not. But they are not an appropriate choice platform for this amount of money.

That's not what it says here https://www.ii.co.uk/ii-accounts/sipp/sipp-charges

• Your £9.99 service plan fee gives you access to the widest range of investments on the market.
• The SIPP fee is just £10 a month extra*, bringing the total cost to £19.99 per month.

OK, we weren't talking about the exact same thing then. On it's own, the II SIPP now costs £10 per month, whereas prior to October 1st it cost £10. + £10 more if it was in drawdown, £20 total. The £10 drawdown fee has now gone, leaving a flat £10 for the II SIPP. The £9.99 you quoted buys you the trading account and ISA on the II platform.

That's not how I read my charges statement
This month for my SIPP it is £9.99 + £10 SIPP fee (well officially it's £8.33 + £1.67 VAT)
Next month when I am in drawdown it would have been
£9.99 Service plan + £10 SIPP fee + £10 Drawdown fee
Now with the charges change, next month in drawdown it will be
£9.99 Service plan + £10 SIPP fee

[Deleted User]

morrow56 said:

HI all - thanks - look like I have a lot of thinking to do

I do have another option to think of

In August I transferred a DC pension of £27648 to CSPA (Civil Service Pension) I will receive £1690 PA for that amount in Nov  2023

If I transferred the £37,000 SIPP  to CSPA I perhaps could get another £2200 giving a total of £3890 in Civil Service Pension + with 6 years of service to be added to that when I retire on Nov 16 2023

Would there be a chain of thought that the surety of CSPA be a better option for me??

Any thoughts kindly appreciated on that route for myself gratefully received

Thanks

That's a good deal and my thought would be to take the offer if you can, morrow56.
I thought one could only transfer funds into the Alpha scheme in the first year of CS employment; mistaken?

morrow56

Yes that is true zing, I joined on March 1 2020 - I have a pension credit from them of 2 years 5 months from Student Loans Company to joining CSPA, this is sitting in the Neuvo scheme and will be available to me at 66th birthday - think I will therefore have to Feb 28 make the transfer of the Sipp of 37k

[Deleted User]

morrow56 said:

Yes that is true zing, I joined on March 1 2020 - I have a pension credit from them of 2 years 5 months from Student Loans Company to joining CSPA, this is sitting in the Neuvo scheme and will be available to me at 66th birthday - think I will therefore have to Feb 28 make the transfer of the Sipp of 37k

Cracking. Thanks for the confirmation. Don't pass up the opportunity imo.