PSA: Interactive Investor SIPP fee overcharge
jamiex
Posts: 207 Forumite
Previous II customers should be charged £80 + VAT annually for their SIPP instead of the £100 + VAT for new customers.
I received an e-mail informing me that £96 would be taken by direct debit, but £120 was actually taken.
About 6 weeks and several phone calls later and it's still not been resolved. On the latest call they misinformed me that the £24 difference had been refunded and told me to check with my bank. After checking with my bank, I've recalled the entire £120 via direct debit indemnity. They then sent me a secure message confirming they'd misinformed me and telling me the refund would be with me in a couple of weeks.
I now owe them £96 and have asked them how they would like to proceed.
This is just a PSA for anyone else who might be in a similar situation; check that you're being charged the correct amount. If it's happened to me it's likely to be happening to everyone else on the old pricing structure.
I received an e-mail informing me that £96 would be taken by direct debit, but £120 was actually taken.
About 6 weeks and several phone calls later and it's still not been resolved. On the latest call they misinformed me that the £24 difference had been refunded and told me to check with my bank. After checking with my bank, I've recalled the entire £120 via direct debit indemnity. They then sent me a secure message confirming they'd misinformed me and telling me the refund would be with me in a couple of weeks.
I now owe them £96 and have asked them how they would like to proceed.
This is just a PSA for anyone else who might be in a similar situation; check that you're being charged the correct amount. If it's happened to me it's likely to be happening to everyone else on the old pricing structure.
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Comments
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I am confused why anyone would want to pay their SIPP fee via direct debit? Surely it makes more sense to pay it from within the pension wrapper cash balance so to benefit from tax relief? I was aware that II collect the £90 of annual fees outside the pension but always expected the £100+vat to be from within the wrapper. Do II not offer this option?
I pay my Halifax SD fees from within the wrapper for tax efficiency so the £180 of fees only really costs me £144 - with a direct debit of £12 per month into the cash balance.
Alex.0 -
II are dreadful: I am still awaiting answers to some concerns I raised at the end of June!0
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When I last asked (admittedly before they took over TD), the answer was that the (£100) fee couldn't be taken from the SIPP.I am confused why anyone would want to pay their SIPP fee via direct debit? Surely it makes more sense to pay it from within the pension wrapper cash balance so to benefit from tax relief? I was aware that II collect the £90 of annual fees outside the pension but always expected the £100+vat to be from within the wrapper. Do II not offer this option?
I presume that's their set-up.0 -
Grim - glad I chose Halifax then.0
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I’m pretty sure you end up better off if fees are taken by DD. To run some very rough figures:I am confused why anyone would want to pay their SIPP fee via direct debit? Surely it makes more sense to pay it from within the pension wrapper cash balance so to benefit from tax relief?
i) You have £1000 in your SIPP. £120 fee is taken hence £880 balance. It doubles in value so you have £1760.
ii) £1000 is untouched by fees so doubles to £2000. £120 from your current account means you have net £1880.
Of course there are lots of side-calcs re tax lost on the £120 DD; additional SIPP value that is 25% tax free etc etc but I’m pretty sure that if you worked it all out it remains a better idea to pay the fees by DD.0 -
No. You are not bothering to do the side calcs so you think it is better to give £120 from your current account to the provider to pay the fees, rather than put £96 from your current account into your SIPP (which would be grossed up to £120 for basic rate tax relief) and then you could pay £120 from your SIPP to the provider. Clearly that's wrong, because it is better to spend £96 than spend £120.aroominyork wrote: »I'm pretty sure you end up better off if fees are taken by DD. To run some very rough figures:
i) You have £1000 in your SIPP. £120 fee is taken hence £880 balance. It doubles in value so you have £1760.
ii) £1000 is untouched by fees so doubles to £2000. £120 from your current account means you have net £1880.
Of course there are lots of side-calcs re tax lost on the £120 DD; additional SIPP value that is 25% tax free etc etc but I'm pretty sure that if you worked it all out it remains a better idea to pay the fees by DD.
So, pay the £120 as a cost from your SIPP, and then top up the SIPP back to where it was by paying £96 into the SIPP. Instead of paying £120 from your bank to the service provider.
If you're a higher rate taxpayer, £120 in a pension still costs you £96 contribution but you will get £24 cash refund back from HMRC at the end of the year (because a £120 pension contribution should only cost £72 to a higher rate taxpayer who gets 40% tax relief).
So, the admin fee of £120 paid from inside the pension costs you a £96 cash contribution as a basic rate taxpayer or £72 as a higher rate taxpayer or even less as an even higher rate taxpayer. But feel free to just send them the full £120 cash contribution by direct debit from your bank account, if you like.0 -
As the man said... (I guess I was thinking ISA-type limits). Thanks bowlhead... though since II don't have the facility it ends up being moot.bowlhead99 wrote: »No. You are not bothering to do the side calcs so you think it is better to give £120 from your current account to the provider to pay the fees, rather than put £96 from your current account into your SIPP (which would be grossed up to £120 for basic rate tax relief) and then you could pay £120 from your SIPP to the provider. Clearly that's wrong, because it is better to spend £96 than spend £120.
So, pay the £120 as a cost from your SIPP, and then top up the SIPP back to where it was by paying £96 into the SIPP. Instead of paying £120 from your bank to the service provider.
If you're a higher rate taxpayer, £120 in a pension still costs you £96 contribution but you will get £24 cash refund back from HMRC at the end of the year (because a £120 pension contribution should only cost £72 to a higher rate taxpayer who gets 40% tax relief).
So, the admin fee of £120 paid from inside the pension costs you a £96 cash contribution as a basic rate taxpayer or £72 as a higher rate taxpayer or even less as an even higher rate taxpayer. But feel free to just send them the full £120 cash contribution by direct debit from your bank account, if you like.0 -
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Interesting, thanks. I will check again.Fee is taken directly from within my II SIPP0 -
Interesting, thanks. I will check again.
Yes if I was an II customer it would be nice if they could also take the £90 from within the SIPP which would be allowable if it was your only II account.
On first glance the fixed SIPP pricing for II and Halifax SD look similar (actually II looks better as people forget the £90) but when you consider the tax relief then Halifax SD have the edge for someone with a buy and hold single fund strategy.
Alex1
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