Pension switching incentives

Notepad_Phil

Pat38493 said:

Notepad_Phil said:

NormalNorman said:

Notepad_Phil said:

Albermarle said:

artyboy said:

ewaste said:

I gather with Freetrade that the annual Plus Membership fee can't be taken from the SIPP itself?

I'm considering moving a SIPP and ISA across to Freetrade to make best use of the incentives on offer. 

No, it comes out of my bank account (well, at least I've not yet found a way to pay it out of the SIPP...). Mind you, as I'll be getting £2500 in cashback, it's something I can live with!

In theory the providers can not just take money from a SIPP to pay fees, due to the tax treatment of pension withdrawals.
I tried once to move money from a SIPP to the cash management account with Fidelity and it would not let me.
However if the cash management account is empty, they will take cash themselves from the SIPP to pay fees. 
Do not quite follow the logic of that, but that is how it works.

I'm with ii and they are quite happy for the monthly fees and trading fees to come from within the sipp itself, same with a small HL sipp I once had. Mrs Notepad once had a Fidelity SIPP and IIRC you had to go through quite a long process to withdraw cash, so am not surprised that it stopped you from just transferring SIPP cash to the cash management account - and what would it transfer if you asked for £100 to go across, would that be after or before tax? I can see complaints happening no matter which way they operated.

Messaged ii a few days ago to switch to fees being deducted from the cash balance otherwise it all seems a bit messy if you have regular contributions etc. No reply yet but hopefully soon. Cheers

From memory ii will only allow SIPP fees to be collected from the SIPP cash account when that is the only account you have with them. so if you also have an ISA or Trading Account with them then that might stop it being an option for you.

Why?  Surely any rational person would want the fees collected from their SIPP as priority, and I don't see what difference it makes to II?

Totally agree (though I've seen some other posters disagree in the past) - but yes, ii don't even give the option, as per their help page:

How are SIPP charges paid?

We collect your monthly subscription via Direct Debit. If you have a stand alone SIPP and have no Direct Debit set up, we will try to collect fees from the cash you hold in your SIPP.

If you have a Trading Account alongside your SIPP, we will try to collect fees from cash you hold in your Trading Account. If there is no cash in your Trading Account, and you also have an ISA account, we will attempt to collect fees from your ISA. We may regularly sweep across your accounts, if cash becomes available to settle part or all of a fee debt. 

If these methods aren't successful and we have your Debit Card details, we will attempt to charge that card the outstanding amount.  If there is no other means of payment, we reserve the right to sell your holdings to cover any outstanding fees. 

MallyGirl

Pat38493 said:

Notepad_Phil said:

NormalNorman said:

Notepad_Phil said:

Albermarle said:

artyboy said:

ewaste said:

I gather with Freetrade that the annual Plus Membership fee can't be taken from the SIPP itself?

I'm considering moving a SIPP and ISA across to Freetrade to make best use of the incentives on offer. 

No, it comes out of my bank account (well, at least I've not yet found a way to pay it out of the SIPP...). Mind you, as I'll be getting £2500 in cashback, it's something I can live with!

In theory the providers can not just take money from a SIPP to pay fees, due to the tax treatment of pension withdrawals.
I tried once to move money from a SIPP to the cash management account with Fidelity and it would not let me.
However if the cash management account is empty, they will take cash themselves from the SIPP to pay fees. 
Do not quite follow the logic of that, but that is how it works.

I'm with ii and they are quite happy for the monthly fees and trading fees to come from within the sipp itself, same with a small HL sipp I once had. Mrs Notepad once had a Fidelity SIPP and IIRC you had to go through quite a long process to withdraw cash, so am not surprised that it stopped you from just transferring SIPP cash to the cash management account - and what would it transfer if you asked for £100 to go across, would that be after or before tax? I can see complaints happening no matter which way they operated.

Messaged ii a few days ago to switch to fees being deducted from the cash balance otherwise it all seems a bit messy if you have regular contributions etc. No reply yet but hopefully soon. Cheers

From memory ii will only allow SIPP fees to be collected from the SIPP cash account when that is the only account you have with them. so if you also have an ISA or Trading Account with them then that might stop it being an option for you.

Why?  Surely any rational person would want the fees collected from their SIPP as priority, and I don't see what difference it makes to II?

In another thread someone mooted that it might be because of the generous tax treatment of pensions and that you couldn't benefit from paying fees for non pension products (as part of a single fee for the platform) from pension money

Pat38493

MallyGirl said:

Pat38493 said:

Notepad_Phil said:

NormalNorman said:

Notepad_Phil said:

Albermarle said:

artyboy said:

ewaste said:

I gather with Freetrade that the annual Plus Membership fee can't be taken from the SIPP itself?

I'm considering moving a SIPP and ISA across to Freetrade to make best use of the incentives on offer. 

No, it comes out of my bank account (well, at least I've not yet found a way to pay it out of the SIPP...). Mind you, as I'll be getting £2500 in cashback, it's something I can live with!

In theory the providers can not just take money from a SIPP to pay fees, due to the tax treatment of pension withdrawals.
I tried once to move money from a SIPP to the cash management account with Fidelity and it would not let me.
However if the cash management account is empty, they will take cash themselves from the SIPP to pay fees. 
Do not quite follow the logic of that, but that is how it works.

I'm with ii and they are quite happy for the monthly fees and trading fees to come from within the sipp itself, same with a small HL sipp I once had. Mrs Notepad once had a Fidelity SIPP and IIRC you had to go through quite a long process to withdraw cash, so am not surprised that it stopped you from just transferring SIPP cash to the cash management account - and what would it transfer if you asked for £100 to go across, would that be after or before tax? I can see complaints happening no matter which way they operated.

Messaged ii a few days ago to switch to fees being deducted from the cash balance otherwise it all seems a bit messy if you have regular contributions etc. No reply yet but hopefully soon. Cheers

From memory ii will only allow SIPP fees to be collected from the SIPP cash account when that is the only account you have with them. so if you also have an ISA or Trading Account with them then that might stop it being an option for you.

Why?  Surely any rational person would want the fees collected from their SIPP as priority, and I don't see what difference it makes to II?

In another thread someone mooted that it might be because of the generous tax treatment of pensions and that you couldn't benefit from paying fees for non pension products (as part of a single fee for the platform) from pension money

Could be, but I haven’t also seen it stated on other threads that HMRC is find with financial service fees being taken from gross earnings.  Having said that, maybe they mean financial service fees for SIPP specifically - maybe they are not fine with the service fees for GIA being taken from a SIPP.  

However - as far as I know, IFAs are allowed to charge their fee from your pension even if they are managing all your assets.

Alexland

Pat38493 said:

Why?  Surely any rational person would want the fees collected from their SIPP as priority, and I don't see what difference it makes to II?

I can't see HMRC being at all happy with the idea that non-pension related charges such the proportion of the fee that relates to the GIA or ISA are deducted from a pension cash balance. You can't just charge anything and expect it to come out the cash balance tax-free it's not reasonable. If that was allowed then II would do good business selling cars to customers and charging them to the pension cash balance.

If II fairly itemised or proportioned how much of their bundle price relates to each product then it would be OK to charge the pension element to the SIPP but I guess they can't be bothered.

Apparently that's how it works at Fidelity if you have multiple products and are using the capping on exchange traded assets they automatically transfer the pro-rata amount (based on how much you have in exchange traded assets in each adult account) from each account cash balance into the cash management account that then pays the overall £7.50 fee. I only have the SIPP there so 100% of the £7.50 comes from the SIPP.

Pat38493

Alexland said:

Pat38493 said:

Why?  Surely any rational person would want the fees collected from their SIPP as priority, and I don't see what difference it makes to II?

I can't see HMRC being at all happy with the idea that non-pension related charges such the proportion of the fee that relates to the GIA or ISA are deducted from a pension cash balance. You can't just charge anything and expect it to come out the cash balance tax-free it's not reasonable. If that was allowed then II would do good business selling cars to customers and charging them to the pension cash balance.

If II fairly itemised or proportioned how much of their bundle price relates to each product then it would be OK to charge the pension element to the SIPP but I guess they can't be bothered.

Apparently that's how it works at Fidelity if you have multiple products and are using the capping on exchange traded assets they automatically transfer the pro-rata amount (based on how much you have in exchange traded assets in each adult account) from each account cash balance into the cash management account that then pays the overall £7.50 fee. I only have the SIPP there so 100% of the £7.50 comes from the SIPP.

OK but as I mentioned above, financial service fees (for example IFA fees) can be charged from a SIPP even if the IFA is managing all your accounts (at least that’s my understanding).

LHW99

Alexland said:

Pat38493 said:

Why?  Surely any rational person would want the fees collected from their SIPP as priority, and I don't see what difference it makes to II?

I can't see HMRC being at all happy with the idea that non-pension related charges such the proportion of the fee that relates to the GIA or ISA are deducted from a pension cash balance. You can't just charge anything and expect it to come out the cash balance tax-free it's not reasonable. If that was allowed then II would do good business selling cars to customers and charging them to the pension cash balance.

If II fairly itemised or proportioned how much of their bundle price relates to each product then it would be OK to charge the pension element to the SIPP but I guess they can't be bothered.

Apparently that's how it works at Fidelity if you have multiple products and are using the capping on exchange traded assets they automatically transfer the pro-rata amount (based on how much you have in exchange traded assets in each adult account) from each account cash balance into the cash management account that then pays the overall £7.50 fee. I only have the SIPP there so 100% of the £7.50 comes from the SIPP.

I may have misread, but when the new fee structure comes in, it appears to me that if you pay the £14.99 SIPP fee, there is no extra charged for an ISA or trading account - will they then bring in the option for fees to be taken from the SIPP I wonder?

Albermarle

Apparently that's how it works at Fidelity if you have multiple products and are using the capping on exchange traded assets they automatically transfer the pro-rata amount (based on how much you have in exchange traded assets in each adult account) from each account cash balance into the cash management account that then pays the overall £7.50 fee. I only have the SIPP there so 100% of the £7.50 comes from the SIPP.

That is correct. If you have an ISA and a SIPP with Fidelity, the fees are taken separately from each account.

Alexland

Pat38493 said:

OK but as I mentioned above, financial service fees (for example IFA fees) can be charged from a SIPP even if the IFA is managing all your accounts (at least that’s my understanding).

Fidelity have a PDF that advises on when it's allowed for advisors to charge fees to a pension.

"If the fees do not relate to pensions advice on that pension scheme or are otherwise not appropriate or on an arms length basis, then the whole payment will be an unauthorised member payment".

"the fee cannot cover amounts related to wider matters not associated with the pension, albeit they may be relevant in the overall context of planning for retirement or planning at retirement. For example, costs for advice in relation to ISAs or other investments are not allowed."

https://adviserservices.fidelity.co.uk/media/fnw/guides/facilitating-adviser-fees.pdf

Alexland

LHW99 said:

I may have misread, but when the new fee structure comes in, it appears to me that if you pay the £14.99 SIPP fee, there is no extra charged for an ISA or trading account - will they then bring in the option for fees to be taken from the SIPP I wonder?

II seem to describe the new £14.99 as a 'Plus' plan offering an assortment of accounts types including the SIPP but not exclusively so it seems unlikely that it would achieve HMRC agreement to be charged to the SIPP if you are in any way benefiting from the ISA, GIA, JISA, etc accounts. It might be acceptable to charge a proportion of it if II had an itemised charge or fair method of calculating the SIPP element as Fidelity do.

artyboy

Well this has certainly diverted from the original topic...

Anyway, in case anyone is interested, I am bailing on the IG SIPP xfr offer. For me, this is borderline seismic, and I really had to shake myself to turn down what would ordinarily be £1000 of easy cashback, but I was just getting a very bad feeling about this Options Pensions outfit, and I was also getting radio silence from IG about this totally unrealistic deadline to complete transfers by the end of January.

If anyone else has gone for this specific SIPP transfer offer, I'd be interested to know how it pans out, but I'm steering clear.