📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

SIPP transfer question

Hi All,

Just got a question regarding SIPP transfers and getting cashback.

Say I have £55k in a SIPP invested in S&P 500 UCITS ETF (VUSA) on the Vanguard platform (ignore the ETF, not part of my query).

I'm thinking of transferring to Fidelity (https://www.fidelity.co.uk/pension-transfer/#cashback-offer) to get £500 cashback, they also provide the VUSA fund, so assume it would be an in-specie transfer.

Vanguard charge 0.15% in fees (£82.50 annual), whereas Fidelity charge 0.35% (£192.5 annual). OCF is 0.07% on both platforms.

T&Cs say I have to keep the SIPP with Fidelity for 18months, so for ease of maths if the fund stays the same price. I'd pay £165 more in fees to Fidelity over 18 months than Vanguard but make £335 from the cashback (500-165). Then I could transfer back to Vanguard or iWeb for lower fees if I wanted to?

Am I missing anything obvious or any potential fees I've not accounted for?

Thanks in advance :)
«1

Comments

  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    edited 15 January at 3:04PM
    Fidelity cap their charges on holding an exchange traded asset such as an ETF at £90 pa however be careful to lookout for £7.50 trade fees if you are getting dividends or still making contributions. Automatic divi reinvestment and automatic regular investing into exchange traded assets only costs £1.50.

    So your Fidelity cashback could cover the account fees for around 5 years if you run it efficiently.

    Of course after 18 months you might decide to take another transfer offer eg II run regular generous promos.

    IMHO iWeb are expensive for SIPPs in your case £180pa plus trades - there are usually better options.

    Also as requested I ignored the ETF choice otherwise I would certainly have made comment.

  • Nuggy96
    Nuggy96 Posts: 227 Forumite
    Seventh Anniversary 100 Posts Name Dropper
    Alexland said:
    Fidelity cap their charges on holding an exchange traded asset such as an ETF at £90 pa however be careful to lookout for £7.50 trade fees if you are getting dividends or still making contributions. Automatic divi reinvestment and automatic regular investing into exchange traded assets only costs £1.50.

    So your Fidelity cashback could cover the account fees for around 5 years if you run it efficiently.

    Of course after 18 months you might decide to take another transfer offer eg II run regular generous promos.

    IMHO iWeb are expensive for SIPPs in your case £180pa plus trades - there are usually better options.

    Also as requested I ignored the ETF choice otherwise I would certainly have made comment.

    Oh good spot didn't notice that asterisk re capping of fees for ETFs!

    I don't actually put any more money into this SIPP was a workplace pension I transferred. In terms of dividend reinvestment, if I put all the money towards VUAG rather than VUSA I assume I wouldn't get stung by reinvesting dividends?

    So in theory it'd be a £90 charge (Fidelity) vs £82.50 (Vanguard) so the £500 cashback is a no brainer?
  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    edited 15 January at 3:14PM
    Nuggy96 said:
    Oh good spot didn't notice that asterisk re capping of fees for ETFs!

    I don't actually put any more money into this SIPP was a workplace pension I transferred. In terms of dividend reinvestment, if I put all the money towards VUAG rather than VUSA I assume I wouldn't get stung by reinvesting dividends?

    So in theory it'd be a £90 charge (Fidelity) vs £82.50 (Vanguard) so the £500 cashback is a no brainer?
    It's not just a good spot some of us have been doing it for a long time with static Fidelity SIPPs costing exactly £96 pa. Even better any kids accounts are free under the same login. And once you get to £250k the free Wealth advisors are very helpful.

    You could switch into the accumulation ETF version (both are showing as available on Fidelity) before the transfer but you might suffer some market spread and if you set quarterly dividends to reinvest at £1.50 it's hardly getting stung. I find the leftover cash from reinvesting divis into whole units helpful to replenish the account cash balance to pay ongoing account fees. I like to see the divis come through as it reminds me what a useful asset I am growing. I also like to play a game with myself on how many years I can go without placing an adhoc trade in that account but I had reason outside my control (a court order) to adhoc trade last year so have just started counting again.

    I am not aware of any higher net-gain (cashback vs fees) offers for your scenario.
  • incus432
    incus432 Posts: 432 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    edited 15 January at 3:37PM
    Alexland said:
    It's not just a good spot some of us have been doing it for a long time with static Fidelity SIPPs costing exactly £96 pa. Even better any kids accounts are free under the same login. And once you get to £250k the free Wealth advisors are very helpful.
    Am interested to know what the free Wealth Advisors can do?  I would be over 250k if I transferred both ISA and SIPP.

    Damn- just remembered Fidelity won't host single gilts or bonds.


  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    edited 15 January at 4:04PM
    incus432 said:
    Am interested to know what the free Wealth Advisors can do?  I would be over 250k if I transferred both ISA and SIPP.

    Damn- just remembered Fidelity won't host single gilts or bonds.
    Although they are not allowed to advise you in the 1 hour sessions they can ask you helpful questions to get you thinking about your investment objectives and consider how your various accounts are scaled, invested and being contributed into to meet those outcomes. They are happy to talk about accounts elsewhere with no pressure to transfer.

    Unlike a traditional account manager they don't seem to have any sales targets etc. They seem to be purely there for customer satisfaction and retention. Sometimes it can be good to discuss and you are kinda getting feedback from the follow on questions they ask.

    Also they each have an email address and tend to respond quickly and articulately. If they are out of office they seem to monitor each other's mailboxes. I found they had prompt access to their legal department when I needed to get their lawyer's feedback on my draft pension sharing order and later get it implemented.

    For £96 pa I am not complaining although I was a bit miffed when the cap doubled from £45 a year or two ago.
  • jimjames
    jimjames Posts: 18,579 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Nuggy96 said:
    . Then I could transfer back to Vanguard or iWeb for lower fees if I wanted to?

    Am I missing anything obvious or any potential fees I've not accounted for?

    iWeb aren't allowing any SIPPs to be opened at the moment, that might change in 18 months but could stop one route to transfer out if you don't have one already.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    jimjames said:
    iWeb aren't allowing any SIPPs to be opened at the moment, that might change in 18 months but could stop one route to transfer out if you don't have one already.
    Maybe their relationship with AJ Bell for pension admin is coming to an end.

    There are plenty of other places to go after the 18 months is up if the OP really wanted to leave but without wanting to be a total Fidelity fanboy I don't see why they would unless II, HL, etc offer a transfer cashback incentive or they have a bad Tfr/CS experience or decide they want to start holding funds.

    Once they are a Fidelity customer they might get offered the chance to join the Fidelity Review Panel which can be worthwhile if you enjoy earning gift vouchers for doing their online surveys and focus groups.
  • Albermarle
    Albermarle Posts: 27,568 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    incus432 said:
    Alexland said:
    It's not just a good spot some of us have been doing it for a long time with static Fidelity SIPPs costing exactly £96 pa. Even better any kids accounts are free under the same login. And once you get to £250k the free Wealth advisors are very helpful.
    Am interested to know what the free Wealth Advisors can do?  I would be over 250k if I transferred both ISA and SIPP.

    Damn- just remembered Fidelity won't host single gilts or bonds.


    The other point is that if you hold £250K + on the platform, the platform fee for OEIC funds drops from 0.35% to 0.2% for the whole of the money you have on the platform.
    So as explained already the most cost effective way with Fidelity is to only hold ETF's ( or shares or Investment Trusts), if you did want a couple of OEIC funds as well, the % fee is reduced.
    For example if you had £200K in ETF's and £100K in OEIC funds, your overall platform fee would be marginally less than 0.1%. Plus there are no hidden/unexpected charges or charges for drawdown with this provider.
  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    The other point is that if you hold £250K + on the platform, the platform fee for OEIC funds drops from 0.35% to 0.2% for the whole of the money you have on the platform.
    It would have to be a pretty amazing fund to make me want to pay 0.20% even on just a proportion of a large account. If they ever dropped the fee cap then paying % charges even at the lower rate would make me cry.
  • incus432
    incus432 Posts: 432 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    If you wanna be my platform
    You gotta let me hold gilts
    Alexland said:
    without wanting to be a total Fidelity fanboy
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.6K Banking & Borrowing
  • 253K Reduce Debt & Boost Income
  • 453.4K Spending & Discounts
  • 243.6K Work, Benefits & Business
  • 598.3K Mortgages, Homes & Bills
  • 176.7K Life & Family
  • 256.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.