SIPP vs Stakeholder

Devenish · 9 February 2018 at 6:17PM

Hello,

My wife is 57 and has no form of personal pension. She wants to start one now investing in ethical funds and our research thus far has pointed to either starting a Stakeholder pension with a provider such as the Pru (0.75% fees) with a choice of 1 fund or a SIPP with, say Fidelity (c1.5% fees), and a choice of 31 ethical funds. Neither us of us has experience in fund choice but are reasonably intelligent (although I say it myself) and have time for research. Which way do you think we should lean?
Thanks in advance.

Devenish · 9 February 2018 at 6:26PM

By the way, she plans on working until she drops and currently is a higher tax earner.

TARDIS · 9 February 2018 at 7:02PM

What do you mean by "ethical"?
What specific sectors are you trying to avoid for example?

dunstonh · 9 February 2018 at 7:07PM

Stakeholder is at one end. SIPP is at the other and PPP is in between.

Stakeholder pensions have 100% FSCS protection with no upper limit and use funds with due diligence carried out by the provider. SIPPs (should have) whole of market access. Very little due diligence carried out and FSCS protection only on regulated investments to 50k.

She wants to start one now investing in ethical fund

Stakeholder pensions are unlikely to carry any more than 1 generic ethical fund. So, they are not really suited to ethical investing. SIPPs will have access to the full range of ethical funds allowing you to run through your ethical filtering to get fund(s) that match your exact ethics.

Devenish · 9 February 2018 at 8:48PM

Hi Tardis,
We haven't as yet discussed the meaning of ethical for her but I suspect we will deal with this in an iterative way - looking at funds and asking how much she values their ethical stance.I take dunstonh's point that this is best accomplished on a SIPP platform.

Devenish · 11 February 2018 at 11:35PM

Many thanks for your thoughts so far. Are there any other differences between Stakeholder pensions and SIPPs you think we should consider?

Prism · 12 February 2018 at 2:15PM

dunstonh wrote: »

Stakeholder is at one end. SIPP is at the other and PPP is in between.

It is odd I think that traditional personal pensions get little press nowadays. Most of the comparisons seems to be between the limited choice stakeholders and full access SIPP options. I have the bulk of my pension with Aviva which has a 'limited' selection of 2000 funds, is simple to use and has reasonable fees. I'm not even sure what category of pension that is

dunstonh · 12 February 2018 at 2:30PM

It is odd I think that traditional personal pensions get little press nowadays. Most of the comparisons seems to be between the limited choice stakeholders and full access SIPP options.

PPPs still get plenty of coverage in the advice market. The DIY market is different though as there are virtually no PPPs targetted at the DIY market. And the few SHPs left are only there for legacy reasons.

SIPPs have the lowest costs to operate as a provider. Fewer solvency requirements, due diligence etc. So, it was natural for DIY providers to go with the cheapest option for them to target a market that is notoriously cost conscious. Often putting cost before quality.

The DIY market is growing but it still smaller than the advice market. The largest provider of drawdown in the UK uses a personal pension and not a SIPP.

I have the bulk of my pension with Aviva which has a 'limited' selection of 2000 funds, is simple to use and has reasonable fees. I'm not even sure what category of pension that is

If its the Aviva plaform/wrap then its a SIPP. Their PPP had around 300 funds and wasnt platform based. The Aviva platform has just moved from fund supermarket to wrap platform. So, it is logical that it is a SIPP. However, they do provide the insured funds (noted by a series number) for those that want higher FSCS protection.

Prism · 12 February 2018 at 3:26PM

dunstonh wrote: »

If its the Aviva plaform/wrap then its a SIPP. Their PPP had around 300 funds and wasnt platform based. The Aviva platform has just moved from fund supermarket to wrap platform. So, it is logical that it is a SIPP. However, they do provide the insured funds (noted by a series number) for those that want higher FSCS protection.

That makes sense. I have two pensions, one with a choice of about 2000 funds and the other about 300 funds like you say. I have kept the PPP one mainly because a couple of the funds seem to have lower costs than their equivalent SIPP versions.

So to the OP I guess I would suggest a SIPP, however not all SIPPS are equal. My Aviva one feels high quality and simple to use but is more expensive and has less choice than my YouInvest SIPP. Saying that, 2000 funds is still plenty of choice.

One way of looking at this would be to fund an ethical fund first that you like and then search for which platforms hold it

Devenish · 12 February 2018 at 5:49PM

[One way of looking at this would be to fund an ethical fund first that you like and then search for which platforms hold it]

Thanks Prism - is there an efficient way of doing this?

Devenish · 12 February 2018 at 5:54PM

Hi dunstonh, Some of your comments imply we should also consider PPPs. If so, what are the advantages over Stakeholder/SIPPs? Also, where's the best place to find and explore ethical ones?

SIPP vs Stakeholder

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