SIPP, Hargreaves Lansdown and Funds

Hello,

I'm considering starting a pension as I've gone several years without one and really need to get going.

I'm considering a SIPP with Hargreaves Lansdown. I don't have a lot of experience with buying funds, though I do hold some in an ISA that I bought 5 years ago and I have bought/sold shares before. So I'm not a complete novice, but I'm far from expert. However, I'd like to have control of my pension and try to get the best from it by investing in a good spread of funds and I think a SIPP could be right for me.

My earnings over the last couple of years are very high and I'm looking to invest maybe 20-30k as a lump sum to get things going and then maybe 1-2k per month depending on how business goes.

So, that's some background info and now for the questions:


1) How good is HL for managing a pension? I've heard that they're cheap but I don't know how easy it is to manage/monitor a pension from their site.

2) I intend on putting a lump sum in to get it in there, but what I might want to do is spread the investing of that over a year. The HL site appears to allow you to keep cash in a pension - is that right? And if so, do you pay tax on the interest, as they quote gross and net interest rates? And is it easy to then buy or add to funds?

3) What spread of investments do you recommend, given that I'm 20 years from the earliest I'll be able to retire so can go for more of a growth portfolio? Should I also have gilts, bonds, cash, etc? At the moment I don't know anything really about gilts/bonds so any info on the advantages/disadvantages of them in a SIPP would be gratefully received.


That's it for the moment!
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Comments

  • cheerfulcat
    cheerfulcat Posts: 3,334
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    Hello, Wibble,

    I've had a SIPP with Hargreaves Lansdown for a few years now so I'll have a go at answering your questions

    1) How good is HL for managing a pension? I've heard that they're cheap but I don't know how easy it is to manage/monitor a pension from their site.

    The buying and selling side is very easy - it just uses HL's normal stockbroking platform. However, getting an overview of what's going on in the pension is more difficult. The portfolio tool is practically useless; you can't see your dealing history easily ( to find a deal you need to know the relevant date, which is sort of self-defeating ); you can only see one month's transactions at a time and worst of all, there is no proper record of dividends paid and charges taken. You see the sums moving in and out but there is no explanation.
    2) I intend on putting a lump sum in to get it in there, but what I might want to do is spread the investing of that over a year. The HL site appears to allow you to keep cash in a pension - is that right? And if so, do you pay tax on the interest, as they quote gross and net interest rates? And is it easy to then buy or add to funds?

    Yes, you can keep cash in the linked bank account - it is moved to the dealing account automatically when you make a purchase and moved from the dealing account to the bank account when you make a sale. Interest is paid gross.
    3) What spread of investments do you recommend, given that I'm 20 years from the earliest I'll be able to retire so can go for more of a growth portfolio? Should I also have gilts, bonds, cash, etc? At the moment I don't know anything really about gilts/bonds so any info on the advantages/disadvantages of them in a SIPP would be gratefully received.

    I wouldn't have cash in a SIPP except with a view to investing. Cash has a very poor long-term return, historically. Bond and gilt prices are on the high side right now and I would be inclined to avoid them for the time being. I would say with that kind of a time scale you can afford to be aggressive with your approach but much depends on your appetite for risk! So yes, growth. This is not advice, of course, and you must DYOR as always.

    So, the HL SIPP is certainly cheap and if you only use it for funds, and are prepared to monitor your portfolio elsewhere ( which involves entering all the information manually ) then it's fine. Anyone who is intending to deal frequently, who deals in shares and wants a decent portfolio tool might prefer Squaregain's SIPP.

    Regards

    Cheerfulcat
  • dunstonh
    dunstonh Posts: 116,031
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    If you plan to do only funds, you may be better off waiting until after 6th April when the fund supermarket hybrid SIPPs are launched. With no charges on the SIPP wrapper at all and the fund supermarket fund range available the same as they are with ISAs, these will ultimatly be cheaper than HL.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • dunstonh wrote:
    If you plan to do only funds, you may be better off waiting until after 6th April when the fund supermarket hybrid SIPPs are launched. With no charges on the SIPP wrapper at all and the fund supermarket fund range available the same as they are with ISAs, these will ultimatly be cheaper than HL.

    Hi dunstonh,

    can you give any more details on the "fund supermarket hybrid SIPPs"?

    Many thanks in advance.
  • Wibble
    Wibble Posts: 44 Forumite
    Thanks Cheerfulcat - that's very helpful!

    I did wonder how good managing a portfolio with HL would be, as looking at the site it didn't seem as good as others.

    I'd not plan on buying/selling a lot so it may well be good enough. Though I would plan on adding to existing funds monthly - how's that handled? Would I have a direct debit set up that credits my pension, then either they automatically add to the funds as I'd previously instructed or else I manually do it?

    Yes, keeping money there in cash may not be a great investment. I'd plan on putting a big lump sum in initially as I'm looking at buying a house soon and so if I put the money in now then it stops me from spending it on a more expensive house! And if I put money in then while the interest paid isn't as good as some other accounts I could put it in it is at least earning that on the full untaxed amount, whereas I'd have lost 40% tax on the money outside the pension.
  • dunstonh
    dunstonh Posts: 116,031
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    Hi dunstonh,

    can you give any more details on the "fund supermarket hybrid SIPPs"?

    Many thanks in advance.

    The information is not official yet as they are not being launched until after A day. However, we keep getting snippets and the snippets have been enough for me to suspend all SIPP transactions until then.

    Basically, they are a hybrid between a personal pension and a SIPP. The wrapper is an insured personal pension so can take protected rights and has personal pension discretionary trust status. However, you can invest in any of the funds available on the unit trust/ISA platform just as you would as an ISA. The charges are exactly the same as you would have them on the ISA/unit trust. There are no charges on the SIPP wrapper and no need to hold a cash account within the SIPP.

    To me, this is the future for personal pensions which have been heading that way anyway. I believe it will be this hybrid sipp that will be the mainstream product with the full SIPP being more suited for those wanting different trust arrangements and different investment holdings. Stakeholder will become the low budget cheap product that it always should have been.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • cheerfulcat
    cheerfulcat Posts: 3,334
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    Wibble wrote:
    Though I would plan on adding to existing funds monthly - how's that handled? Would I have a direct debit set up that credits my pension, then either they automatically add to the funds as I'd previously instructed or else I manually do it?

    Yes, you can set up a monthly DD. I'm not sure how they set up the purchase though.
    Yes, keeping money there in cash may not be a great investment. I'd plan on putting a big lump sum in initially as I'm looking at buying a house soon and so if I put the money in now then it stops me from spending it on a more expensive house! And if I put money in then while the interest paid isn't as good as some other accounts I could put it in it is at least earning that on the full untaxed amount, whereas I'd have lost 40% tax on the money outside the pension.

    No, that's fine, it's just that you asked about cash in your OP :-)
    Should I also have gilts, bonds, cash, etc?



    Wibble, thanks to your question I had a good think about my relationship with Hargreaves Lansdown - seeing all my annoyances in print made me wonder what's keeping me there! So I've looked at Squaregain's SIPP. They offer a choice of two trustees, EPML and SIPPdeal. The charges for the SIPPdealextra service are comparable to HL's - in fact, if you take away the set-up fee of £120 ( which they are waiving for accounts opened before 6 April ) they work out considerably cheaper. You can get the same initial discounts on funds, much cheaper dealing fees, a higher rate of interest on smaller amounts of cash and of course the Squaregain portfolio tool which is excellent - a comprehensive overview of transactions is available, and transactions can be sorted by type so for instance you can see all the dividends paid or all the purchases of a particular share...I am moving my account today! Thanks!

    Cheerfulcat
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    HI CC

    I use Squaredeal for my brokerage account and they are fine. For my SIPP I use Sippdeal, which has admin by Sippdeal (AJ Bell)- first class, the market leader - and the brokerage by Brearley -who are more expensive and not as good as Squaregain.But the Sippdeal costing is cheaper for a Sipp invested mainly in shares that doesn't trade a lot.Anyone who does a lot of trading would be better with Sippdealextra and Squaregain.

    EPML had a USP before as it enables protected rights to be put in a cheap Sipp - though only invested in cash/gilts. However the rules will soon change on that it seems. I don't think there's anything to beat the Sippdeal admin service.

    As far as the "hybrid Sipps" are concerned they don't seem to offer any of the investment options which distinguish Sipps, ie, shares, commercial property, cash, so I can't really see the point of them.
    Trying to keep it simple...;)
  • dunstonh
    dunstonh Posts: 116,031
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    As far as the "hybrid Sipps" are concerned they don't seem to offer any of the investment options which distinguish Sipps, ie, shares, commercial property, cash, so I can't really see the point of them.

    1 - Cheaper
    2 - less admin
    3 - protected rights from this year
    4 - regular contributions buying units in selected funds directly and not into a cash account
    5 - standard insured trust arrangements

    The vibes are that charges on full SIPPs are likely to increase when using external investment options.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • cheerfulcat
    cheerfulcat Posts: 3,334
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    EdInvestor wrote:
    HI CC

    I use Squaredeal for my brokerage account and they are fine. For my SIPP I use Sippdeal, which has admin by Sippdeal (AJ Bell)- first class, the market leader - and the brokerage by Brearley -who are more expensive and not as good as Squaregain.But the Sippdeal costing is cheaper for a Sipp invested mainly in shares that doesn't trade a lot.Anyone who does a lot of trading would be better with Sippdealextra and Squaregain.

    Thanks for that, Ed. I had more or less decided on that last combo; nice to have it confirmed! I trade a fair bit in my SIPP as I use it for my growth shares ( oilies and such :-) ). I must say the Sippdeal/Brearley offering looks good too. I also like the fact that Andy Bell is available through TMF.
    EPML had a USP before as it enables protected rights to be put in a cheap Sipp - though only invested in cash/gilts. However the rules will soon change on that it seems. I don't think there's anything to beat the Sippdeal admin service.

    Perhaps it's very shallow of me but I didn't like the look of EPML's website! It looks very unprofessional.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    dunstonh wrote:
    The vibes are that charges on full SIPPs are likely to increase when using external investment options.


    Already we have an excellent reason for steering well clear of SIPPs run by insurance companies.
    Trying to keep it simple...;)
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