SIPP, Hargreaves Lansdown and Funds

A question about : 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!

Best answers:

• 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
  Quote:
• 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.
• 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.
• 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.
• one nice thing about Hargreaves Lansdown's SIPP is that they pay a good rate on cash held within the SIPP, I was a Sippdeal customer in the past but moved across because of this.
• newmoneyuser, that depends on how much cash you have in your account. The HL rates are tiered; you only get the higher rate on the amount that comes into that band. It actually makes very little difference unless you hold very large sums in cash. And HL customer service stinks...
• It's interesting to look at the HL product more closely. I have recommended it in the past as the best Sipp for funds for people making regular contributions, as I understand it doesn't impose dealing charges on each contribution , so is cheaper than a regular Sipp which will charge a dealing fee every time you buy.
  But the reports seem to suggest this is outweighed by other disadvantages - poor customer service, and inept management of share brokerage being the main ones mentioned.
  There might be a couple of ways round this fund problem at the other better Sipps come A day.
  First you can always save up the regular contributions in the Sipp cash account for say 6 months, until you have accumulated enough to make it cost effective to make a new fund purchase.You won't get a very interest high rate, but it is tax free.
  Alternatively, as there is no "use it or lose it" problem with pension annual allowances anymore, you could save up the contribution money outside the Sipp and then put in a single premium once a year, incurring only one dealing fee. [Note that you are actually paying a fee to make regular contributions with lifeco pensions, it's in the 1.5% AMC - choose a SIPP without an AMC].
  Some people who buy shares do this, using the very cheap Halifax Sharebuilder account (1.50 a trade ) in conjunction with a Sipp (or an ISA) to build up a single premium and then selling and rebuying annually in the Sipp or ISA and it works well. But only for shares, not funds.
• cheerfulcat:
  I can't comment on any issues with hargreaves's support as I've not had any issues.
  As for the interest rates from the 2 companies, the only time SIPPDEAL pays better if you have less than around Ј3,000 as both companies have tiered rates.
  Also SIPPDEAL now has a base fee per year of Ј80 rising Ј160 if you have assets of Ј50,000+ in the fund. HL charges 0.5% up to a maximum of Ј200, so for small funds HL
  is better. For large funds with a large cash balance HL is also better as they pay 4.25% for cash above Ј7,000 while SIPPDEAL is only paying 2.75% for the same amount.
• Perhaps I could just clarify something about Sippdeal, which actually has two separate services.
  First is Sippdeal itself, which has no annual management charge.
  www.sippdeal.co.uk/charges.asp
  Second is Sippdealextra which allows you to use your own stockbroker and does have a (low) management charge.
  https://www.sippdealxtra.co.uk/charges.asp
• While you are here Ed can you please clarify:
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