Question
I have a Scottish Widows stakeholder pension (value £170k). To make sure that going forward I benefit from the trail commision I have decided to move the pot of money and all future contributions. The options I am considering are:
1) re-pension i.e. transfer the SW pension to a low cost broker or
2) transfer the entire value to a SIPP. I am planning to do this via Cavendish.
My question is whether I am better off doing 1) or 2)?
I'm financially savvy and already use Hargreaves Lansdown for ISAs and share dealing. I'm not thinking of holding shares or any other assets - just 5 or 6 well established funds in a SIPP. I've already completed the SIPP form (FundsNetwork) and sent ro Cavendish a couple of days ago but am getting cold feet! I would appreciate your opinion.Answer
I think a SIPP is quite sensible on a £170,000 pension fund. Even if you only want to hold half a dozen funds the wider investment choice should more than outweigh any additional fees on a competitive low cost SIPP.
The FundsNetwork SIPP offered by Cavendish Online offers a good choice of funds. The annual £291 FundsNetwork SIPP charge is a bit steep versus competitors, but given the size of your pension fund it's hardly something to lose sleep over.
Possibly of more concern longer term is the level of annual fund commission/platform fee rebates. Cavendish Online rebates all trail commission, typically 0.5% a year, which is very good. However, because they use the FundsNetwork SIPP platform Cavendish has no scope to rebate any of the annual platform fees that Fiidelity receives from fund managers (typically 0.25%). SIPP providers like Alliance Trust Savings and Interactive Investor who run their own platforms do this, which means typical overall rebates tend to be a bit higher than Cavendish (but not always), although they charge dealing fees for funds.
Bottom line, I certainly don't think you've made a mistake. If the pension will be in situ longer term (perhaps 10 years or more) then Alliance Trust Savings or Interactive Investor will likely prove cheaper (depending on your choice of funds), but as this would mean yet another pension transfer I'd be inclined to stay put or now and see how the SIPP market evolves over the next few years (I daresay FundsNetwork will reduce their fees in time) to be more competitive.
I have a Scottish Widows stakeholder pension (value £170k). To make sure that going forward I benefit from the trail commision I have decided to move the pot of money and all future contributions. The options I am considering are:
1) re-pension i.e. transfer the SW pension to a low cost broker or
2) transfer the entire value to a SIPP. I am planning to do this via Cavendish.
My question is whether I am better off doing 1) or 2)?
I'm financially savvy and already use Hargreaves Lansdown for ISAs and share dealing. I'm not thinking of holding shares or any other assets - just 5 or 6 well established funds in a SIPP. I've already completed the SIPP form (FundsNetwork) and sent ro Cavendish a couple of days ago but am getting cold feet! I would appreciate your opinion.Answer
I think a SIPP is quite sensible on a £170,000 pension fund. Even if you only want to hold half a dozen funds the wider investment choice should more than outweigh any additional fees on a competitive low cost SIPP.
The FundsNetwork SIPP offered by Cavendish Online offers a good choice of funds. The annual £291 FundsNetwork SIPP charge is a bit steep versus competitors, but given the size of your pension fund it's hardly something to lose sleep over.
Possibly of more concern longer term is the level of annual fund commission/platform fee rebates. Cavendish Online rebates all trail commission, typically 0.5% a year, which is very good. However, because they use the FundsNetwork SIPP platform Cavendish has no scope to rebate any of the annual platform fees that Fiidelity receives from fund managers (typically 0.25%). SIPP providers like Alliance Trust Savings and Interactive Investor who run their own platforms do this, which means typical overall rebates tend to be a bit higher than Cavendish (but not always), although they charge dealing fees for funds.
Bottom line, I certainly don't think you've made a mistake. If the pension will be in situ longer term (perhaps 10 years or more) then Alliance Trust Savings or Interactive Investor will likely prove cheaper (depending on your choice of funds), but as this would mean yet another pension transfer I'd be inclined to stay put or now and see how the SIPP market evolves over the next few years (I daresay FundsNetwork will reduce their fees in time) to be more competitive.
Read this Q and A at http://www.candidmoney.com/questions/question668.aspx
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