Quick sipp q

monaymadlol

Hi - I'll soon be moving my pot of around 70k from Scottish widows to a SIPP. I believe this is fee free. I won't need to buy shares, just a couple of funds, likeky HSBC global strategy and a vanguard lifestrategy, equally split £35k each, feeding £400 between them a month (200 each). Self employed lower rate payer. Just want to clarify a few things after looking at some of the best buys mentioned here please:

1) fees: there's a platform fee, and fund fee. Most platform fees don't charge for funds dealing, but AJ bell charge £1.50; would that be £1.50 for every payment made into the funds? IE £1.50 x2 for each of the £200 funds bought?

2) would the SW pot move into the sipp account as cash and I go ahead and purchase from there?

3) I plan to drawdown when it comes to retirement (20+ years away), is this something to factor in to any of the platforms?

4) do SIPP platforms allow regular monthly payments to be paid into the chosen funds or is this something the user needs to do?

5) are sipps protected in the £85(?)k limit? Would if a platform goes bankrupt, is everything lost over that amount? Should people have multiple sipps?

I'm looking at vanguard, aj bell, fidelity, interactive investor, hangreaves

The vanguard would be cheapest for the vanguard part, but splitting the sipps would obviously incur double the platform fee.

Therefore, would interactive investor at £12.99 and no fee regular monthly investing make the most sense in my situation?

Anything else I need to consider would be helpful 

Thanks 

Albermarle

monaymadlol said:

Hi - I'll soon be moving my pot of around 70k from Scottish widows to a SIPP. I believe this is fee free. I won't need to buy shares, just a couple of funds, likeky HSBC global strategy and a vanguard lifestrategy, equally split £35k each, feeding £400 between them a month (200 each). Self employed lower rate payer. Just want to clarify a few things after looking at some of the best buys mentioned here please:

1) fees: there's a platform fee, and fund fee. Most platform fees don't charge for funds dealing, but AJ bell charge £1.50; would that be £1.50 for every payment made into the funds? IE £1.50 x2 for each of the £200 funds bought?
Yes it would
2) would the SW pot move into the sipp account as cash and I go ahead and purchase from there?Yes

3) I plan to drawdown when it comes to retirement (20+ years away), is this something to factor in to any of the platforms? No all modern pensions will offer this facility.

4) do SIPP platforms allow regular monthly payments to be paid into the chosen funds or is this something the user needs to do? You can set up regular monthly payments to chosen funds.

5) are sipps protected in the £85(?)k limit? Would if a platform goes bankrupt, is everything lost over that amount? Should people have multiple sipps? A question that gets asked a lot. You own the funds, even if the platform goes bust. So not really something to worry about, especially if you stick to mainstream platforms, which are highly unlikely to have problems anyway.

I'm looking at vanguard, aj bell, fidelity, interactive investor, hangreaves

The vanguard would be cheapest for the vanguard part, but splitting the sipps would obviously incur double the platform fee. One platform is fine for most people. Probably would have to be a full scale WW3 for Vanguard to have problems. 

Therefore, would interactive investor at £12.99 and no fee regular monthly investing make the most sense in my situation? Depends on the total size of the pot . Below £50K , the % charge platforms will work out cheaper normally

Anything else I need to consider would be helpful 

Thanks 

Comments in bold above.

monaymadlol

Thanks - re vanguard comment. More about splitting half into vanguard for the vanguard fund and half elsewhere for HSBC fund. But I'll likely stick to a single platform for ease.

Re interactive investor - maybe it's my math, but I thought it (12.99/month) would work cheaper than say fidelity at 0.35% on 70k at £245/yr?

Linton

monaymadlol said:

Hi - I'll soon be moving my pot of around 70k from Scottish widows to a SIPP. I believe this is fee free. I won't need to buy shares, just a couple of funds, likeky HSBC global strategy and a vanguard lifestrategy, equally split £35k each, feeding £400 between them a month (200 each). Self employed lower rate payer. Just want to clarify a few things after looking at some of the best buys mentioned here please:

1) fees: there's a platform fee, and fund fee. Most platform fees don't charge for funds dealing, but AJ bell charge £1.50; would that be £1.50 for every payment made into the funds? IE £1.50 x2 for each of the £200 funds bought?

2) would the SW pot move into the sipp account as cash and I go ahead and purchase from there?

3) I plan to drawdown when it comes to retirement (20+ years away), is this something to factor in to any of the platforms?

4) do SIPP platforms allow regular monthly payments to be paid into the chosen funds or is this something the user needs to do?

5) are sipps protected in the £85(?)k limit? Would if a platform goes bankrupt, is everything lost over that amount? Should people have multiple sipps?

I'm looking at vanguard, aj bell, fidelity, interactive investor, hangreaves

The vanguard would be cheapest for the vanguard part, but splitting the sipps would obviously incur double the platform fee.

Therefore, would interactive investor at £12.99 and no fee regular monthly investing make the most sense in my situation?

Anything else I need to consider would be helpful 

Thanks 

1) Yes AJ bell charge £1.50 per individual tansaction

2) In principle SIPPs can be transfeerred as cash or by directly moving the funds ("in specie").  However if the receiving platform does not support the funds you hold in SW, as I guess is the case, then it will have to be done by cash.   Another important factor is the time taken for a transfer to take place.  From previous reports on this forum, depending on the 2 platforms and funds concerned transferring in specie could take weeks or a small number of days, transferring cash should be days rather than weeks.

3) What happens in 20 years time is unknown.  There is a good chance that many of the current plaforms will no longer exist.  Best to choose a platform suitable for the job now, you can always move again later.

4) Generally funds do not buy or sell investments unless you explicitly request it.  However many platforms have regular investment schemes that invest once a month.  Both II and AJBell do, I diont know about any others.  It is up to you to ensure that the cash is in the account when the funds are due to be bought.

5) This has been discussed on this forum many, many times.  Yes there is an £85K limit but no-one has come up with a realistic scenario where the failure of a mainstream regulated platform would result in FSCS protection.  For more discussion on the topic look back through previous threads.

If you deposit money in a bank that money becomes the bank's to do with as it sees fit, including paying its debts.  When you put money in a fund on a platform the money remains your property.  The fund or platform only have the right to manage it.  The money is ring-fenced and cannot be used to pay the fund manager's or platform's debts.  In any case  you as a customer are a valuable asset and so in the event of failure some other company would be very likely to buy the business from the liquidator.

The only problem that has been suggested is that if a platform goes bust there could be a delay due to IT or admin problems before the new owner is able to resume the service.

The larger investors on this forum, including myself, are happy to hold £n00K on a single platform, though it may be sensible if you need to access the money frequently to use 2 platforms in case of IT problems.

6) You can work out the costs yourself for your size of pot and amount of trading.  You will probably find that for pots  > £80K with minimal trading II is cheaper than the others on your list.

monaymadlol

Appreciate the comments.

Yes, looks like ii may be best for my 70k pot at 12.99 a month (first six months free), fee free fund buying and regular deposits in allowed.

I won't need to worry about that 85k protection limit for a few years (which I guess may increase anyway).

When/if becomes the least competitive option as pot grows, is it easy/free generally to transfer SIPP providers if they hold the same funds?

Linton

monaymadlol said:

Appreciate the comments.

Yes, looks like ii may be best for my 70k pot at 12.99 a month (first six months free), fee free fund buying and regular deposits in allowed.

I won't need to worry about that 85k protection limit for a few years (which I guess may increase anyway).

When/if becomes the least competitive option as pot grows, is it easy/free generally to transfer SIPP providers if they hold the same funds?

It is easy to transfer SIPPs.  Just like ISAs, you ask the receiver to transfer-in the old SIPP.  There may be charges to close a SIPP you have only recently created, otherwise the process should be free.

Albermarle

monaymadlol said:

Appreciate the comments.

Yes, looks like ii may be best for my 70k pot at 12.99 a month (first six months free), fee free fund buying and regular deposits in allowed. Yes probably is for an ISA. 

I won't need to worry about that 85k protection limit for a few years (which I guess may increase anyway).

When/if becomes the least competitive option as pot grows, is it easy/free generally to transfer SIPP providers if they hold the same funds? Yes and sometimes they even offer cashback to tempt you to transfer.

Comments in bold

dunstonh

5) are sipps protected in the £85(?)k limit? Would if a platform goes bankrupt, is everything lost over that amount? Should people have multiple sipps?

This is the main difference with your SW pension.  SW will be using insured funds.    If you use their own brand internal funds then you get 100% FSCS protection with no upper limit.    With the SIPP, you have you just £85k protection at provider level and if you use OEIC/UT funds, then its £85k per fund house.   If you were to use shares, ITs or ETFs, you would have no FSCS protection.

monaymadlol

Interesting. I suppose that some devastating event with ii is unlikely, but something to bear in mind when transferring from SW insured pension.