SIPPs v Pension providers

[zico]

Would appreciate advice on pros and cons of using SIPP v a pension provider.

I have an AVC pension plan built up with Halifax Financial Services with 3 different funds (which I selected) and the current charges are 0.9%.

I'm thinking of transferring these to a flat rate SIPP, mainly to reduce the management charges.

What pros and cons to this I should be aware of?

My idea is to replicate the type of asset allocation I have with Halifax, so I'd be looking at a mixture of FTSE Tracker, International Growth, and Gilts/Fixed Interest.
Don't need this money for quite a while, so happy not to tinker frequently with my holdings. I don't have any expectation of being able to outperform experts' funds by picking individual shares, as I plan to buy/sell funds.
Presumably any funds I buy will have their own annual charges, in addition to the costs of having the SIPP, so would I end up saving much in charges?

One con that I'm aware of is that currently if I do change from (say) FTSE Tracker to Intl Growth with Halifax, it doesn't cost me anything (either to trade or buy/sell spread) but if I had a SIPP then I would incur buy/sell charges and spread. Am I right on this?

As far as I can see, it doesn't make any difference to how my money is managed, as I currently decide what Halifax funds to invest in, and this risk would be unchanged if I decided to pick funds within a SIPP.

Grateful for any views on other considerations I should have before deciding whether or not to make this change.

[JohnB]

A SIPP will cost £100-200 pa to run, either fixed charges or capped %age fees, and you will have dealing fees of £5-10, less if you reinvest. ACC units would avoid the problem of reinvestment, though you'd have to make an arrangement to pay the fees from outside the pension pot. A lot depends on how big your pot is, so how much 0.9% is.

Broker charging can have odd anomalies, where index tracker funds cost money to hold, while the same thing in an ETF is treated as a share and costs less or nothing. So check the small print on what a SIPP provider does.

[melonfool]

I use YouInvest.

It costs me about £100pa which I think is fair.

I use accumulation units where I can but leave/put c£100 in the pension pot to pay the fees. (putting the money in there has the advantage of giving a tax rebate you would not get if you just paid the fees from net pay from your bank)

In terms of any other gathered up divis, I use the regular investment option which costs £1.50. Just turn it on before you buy, let it execute (10th of month) then turn it off. Not all funds can be bought this way but most seem able to be.

I'm just about to move £80k from L&G into my SIPP - wish me luck!

Mel

[StepOne]

You are right on incurring charges for trading.

I've just set up a SIPP with iWeb, having previously had a Fidelity Funds Network pension. With FundsNetwork the money went in each month and was automatically allocated to my selected funds. This costs for this seemed to be included in the management charge (0.2%) which was deducted each month on top of fund charges.

With my SIPP, though, it looks like I will need to log on each month as funds are deposited and make a purchase, incurring a £5 charge plus 0.5% Stamp Duty.

Allowing for a deal per month, my annual costs (SIPP fee plus dealing costs) should be less than 0.2% of the pension value, and with tracker funds and ETFs being available with annual management charges around 0.1-0.2% I should still be better off.

The main worry will be resisting the temptation to tinker, especially as my standard dealing account is with iWeb, and every time I log on the SIPP will be there, available to trade..!

StepOn