Late to the pension game

tobyj wrote: »

Let say I transfer money into a HL SIPP, is choosing a fund to invest in straightforward and do their returns generally match past performance?

Choosing funds on the HL site is very straightforward. It's easy to search for specific funds, there are a lot to choose from and there is lots of information on the site. Allocating your money to them is really easy and takes a few clicks.

However, choosing which funds to invest in is much, much harder. Like MoneySavingUser said, past performance is never a guide to future performance. You either need to pay an IFA to select some funds for you based on what you tell them about your risk profile or you need to do it yourself. As someone deep into retirement planning myself, my advice would be to spend the time reading a lot of the excellent information on this site and educate yourself. You need to decide how much risk you are happy to accept and also what your retirement plans are, as I am assuming you may be planning on retiring in about 10 years. As there could be a significant market correction in the next few years (as many predict), you may want to make your choices with some care. I saw over 25% wiped off my main pension investments in 2008 because I hadn't been paying enough attention to the fund allocation.

I can't emphasize enough what a great resource this site is. I have been lurking here for about 6 months and have learnt so much by reading a lot of resources on here. You may be late to the game but the good news is you aren't too late.

I would start by looking at all the funds on the HL site by BlackRock and Vanguard. Those companies are two of the largest global fund providers, they offer a wide range of funds and their costs are generally pretty low (and HL has negotiated discounts on a lot of them). Read about the fund objectives and recent performance of some of the funds on the HL site (under the "Fund Prices & Research" section) and see which ones appeal to your risk profile. Then look at what people say about them on here and using a wider Google search to help you decide if they may be right for you. That will give you a start.

I don't know what HSBC offers and I didn't choose HL over anything else because my employer set up a group SIPP with HL and I just decided to go with that.

I've been using HL for about 8 years and have been very happy with HL because the choice of funds is broad and the online platform is very easy to use and full of helpful information. Their customer service is also excellent, their phone help is also very good and will answer any questions about the mechanics of pensions, although of course they do not offer financial advice. I did pay for an HL financial adviser and that was OK but after that I decided to control my investments myself. So I suspect I wouldn't like a "wealth manager" (whatever one of them is).

HL is not the cheapest platform (there are threads on here that compare the different platform costs) but I am happy with it. You can put cash in there and just leave it. Once it is paid into the SIPP it counts as part of your pension pot and is therefore locked away until you are 55 but the cash you pay in immediately gets 20% added to it by HL (and you can them claim additional higher rate tax relief on your tax return in the next tax year).

How you allocate funds in your pension pot between cash and investments doesn't impact tax treatment. The total in the SIPP is your pension "pot". I am a highly defensive investor and am retiring next year so I currently have 50% of my pension pot held as cash.

Regarding fees, the .45 is the HL overall platform fee they charge monthly on all invested money (but not cash). This does reduce once your invested funds are over 250K (like you say). There are then additional fund fees on top of that (these are shown on each fund page on the HL site).

Let me add: the best investment choice I have made by far was using carry forward allowance to make large contributions to my pension fund over the last five years. So, if like me, you are fortunate enough to be a higher rate taxpayer with cash available to invest in a pension, my advice would be do not delay.

tobyj wrote: »

Thanks again for the replies, learning so much
Another question regarding a Hargreaves Lansdown Vantage SIPP. Am I right in saying that there are two fees which are applicable?

• 0.45% per annum on the amount invested in a fund if < 250K
• A fee charged by the fund itself

If I do put money in the SIPP now, can I leave it in as cash (which wouldn't incur a charge), do my research and then invest in a fund when I have done my research.

Yes - 2 fees one for the platform and one for the fund.

HL have secured some discounts with some fund providers to reduce the fund fee. However, HL is also more expensive than some other platforms (say Fidelity) so the total cost may be less on another platform even if they don't have a discounted fund.

Yes, you can leave it as cash for now.

tobyj wrote: »

As an aside, I met with my HSBC wealth advisor (LOL - I'm not wealthy).
He said that he could set up a pension for me for a one off cost of roughly £960 (for his advice). Advice includes calculating how much money I was allowed to stick into the pension and determining what level of risk I am happy with. Other than that, the only other fee is the fee charged by the fund.
Costing the HSBC pension vs the HL Pension, it seems like the longer I keep money in the HSBC pension, the cheaper it becomes, unless that is, I want additional advice from HSBC, which comes at a price. I'm guessing that a fund offered by HSBC may also be offered by HL, if so would such a fund charge the same through HSBC/HL? Has anyone else been in the position of choosing between going with HL or through a high street bank / wealth manager? If so, which route did you choose and why?

Thanks.

TBH the HSBC advisor will probably be biased (and may only offer you HSBC products) - consider using an Independent Financial Advisor if you don't want to DIY.

Yes - they may offer the same fund, you'd need to check the prices for each fund as they will vary from provider to provider.