Cheapest Sipp: build yourself a low cost DIY pension article

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• Since a SIPP is essentially an ISA with more restrictions and higher costs, a comparison with it would come in handy.
  E.g.,
  £3900 to invest in an ISA - by 65, it would be worth at 7% PA growth + 0.5% annual commission rebate for a 25 year old: 3900 * 1.075 ^ 40 = £70,372
  £5,000 to invest in a SIPP - by 65, you would have 5000 * 1.07 ^ 40 = £74,872
  So the SIPP has only slightly more money by 65, despite the much larger initial investment (thanks to tax relief). But then when it comes to income, the ISA is yours to do what you like with, and all income is not taxable - you can spend it all and enjoy yourself.
  But with a pension, you'd pay 22% tax on the income coming out and you're forced into either an annuity or income drawdown. Annuities are very expensive because gilt yields are so low (the government's cost of borrowing is very cheap at the expense of pensioners).
  And income drawdown is capped at 120% of the annuity rates (i.e. very low), so you'll probably never spend most of your pension anyway.
  So you won't ever see much benefit from it really.
• Is part of this article missing?
  It refers to
  Quote:
• oh and another thing, HL's sipp doesn't appear to be cheapest at all, unless you want to buy commission-paying funds. The annual fee is 0.5875% on *all* shares for instance.
  So if you want to buy shares then HL is going to charge you 0.5875% PA on top of its dealing costs.
  Sippdeal or Alliance Trust Select Sipp don't have annual charges like this.
• The most cost effective way to run a SIPP is to hold shares directly and make sure that the SIPP provider doesn't charge an annual fee. i.e. choose sippdeal or alliance trust.
  I can't any sense in investing in funds within SIPP's - there's still a fund providers annual fee to pay.
  I've been blindly putting money into a pension for years and only just realised that I would have been better off using ISA's which would have given me more control over capital as well.
  I'm now using ISA's for retirement saving and a SIPP (invested in shares) as a home for my old pension fund. I'd only consider contributing more cash to my SIPP if I'd used all my ISA allowance.
• For anyone who wants to do regular monthly contributions into a fund investment in a SIPP, I think there's no doubt H-L is the cheapest.
  But for transfers in of a lump sum ( eg consolidating old pensions),particularly if wanting mainly shares or a mixed portfolio of shares and funds with little buying or selling, I'd have thought Sippdeal would be the winner: it also has a better cash interest rate and first class admin/service (the industry leader on the technical side of Sipps).
  www.sippdeal.co.uk
  I hesitate to recommend www.alliancetrust.co.uk yet, as its internet platform is very new, though it certainly has its fans, especially among investment trust fanciers.
  It is probably second cheapest for regular contributions into funds after HL and 2nd best after Sippdeal for shares and portfolios where there are few transactions. Investment in its own ITs is very cheap.
  Quote:
• https://www.fsa.gov.uk/consumer/updat...cts/sipps.html
  Shame it needed the FSA had to step in to make SIPPdeal amend their unfair terms.
  A lesson to all DIYers that its important to fully understand "terms and conditions" - might not always have the FSA to help you out.
• There was another article the other day about a few more low cost SIPP providers withdrawing from providing SIPPs due to the regulation coming in. A couple of scheme underwriters are pulling out as well.
• Anyone recommend a SIPP that accepts commercial property?
  TIA
• Try A.J.Bell (owners of Sippdeal).
• I'm mightly disappointed with this article, since it misses the opportunity to explain the charge structure of pension schemes clearly to a mass audience.
  All fund and wrapper systems have the following charges:
  (i) Charge to accept money into the pension wrapper ('initial wrapper charge')
  (ii) Ongoing wrapper charge ('annual wrapper management fee')
  (iii) Charge to accept money into an investment ('initial investment charge')
  (iv) The difference between the buying and selling prices of the investment ('the spread')
  (v) Ongoing investment charge ('annual investment management fee')
  And what's annoying is that investment yields are always quoted before (v) is deducted - unlike deposit accounts!
  So you've got to be really careful when assessing investment systems - particularly long term ones like pensions that you take into account all five layers of the charging system, and that you take them into account over the lifetime of the investment.
  You can't assess the wrapper in isolation because the reduction in the wrapper management fee will probably pop up again in the investment management fee, the initial investment charge or the spread.
  Don't fall for the water balloon game that pension providers like to play, where reduction in charges in one area pop up in other areas - confusing all those without a PhD in Operational Statistics.
  Please look at revising this article urgently.
  NeilW
• As Ed has never done a commercial property inside a SIPP, I dont think it could be classed as a recommendation. More a case of "heres a provider that does it".
  With commerical property in a SIPP, there is more important things than cost and that is getting the trustees to agree with the property being acceptable and making sure the terms of the contract fit in with your requirements.
• Thanks for the tips dunstonh, am I correct to assume that all IFA's are qualified to advise a client on SIPPs that involve commercial property?
• All are authorised but I would say a small minority are actually capable. I have been involved in one and wouldn't do it again.
  I would go for one that specialises in the commercial side of things as they are more likely to have more frequent experience of this. It is a minority transaction so it may take a few calls. You would have to be wary of an adviser saying they can do it when they have no experience on that front. So make sure you question the experience of the adviser on that front. If they havent done one before, then dont use them.
  You need someone clued up and knows the limitations and workings of the different trustees and you only get that with experience.
• Can anyone advise if there is planned regulation coming into force to allow
  "protected rights"(Serps/S2P) pensions to be moved into a Sipp and if so when ?
  Also will the 25% cash lump sum be available from the protected rights sum and if so at what age is it allowed to be taken.
  Thanks
• No-one has mentioned Alliance Trust SIPP which I think if I remember only charges one-off fees like Ј15 for each puchase/sale and no annual mgmt or setup fee. You ahve to have some Alliance Trust shares in your portfolio , but they ahve a massive list of other funds/Trusts/shares you can purchase. They don't advertise very much so are rather unknown by the general public.