The Lemon Fool

I thought I'd ask a question that I am sure occurs to others.

This year I may exceed the £42k taxable income threshold at which point it becomes attractive to tuck any excess in a SIPP. Let's say £3k over.

For my general investments I use II as their charges tend to be the lowest for the shares and Vanguard index funds that interest me (http://www.iii.co.uk/shares/charges). They don't charge an additional fee for each account, so I pay just the one £80/yr fee which covers both a trading account and an ISA account. I am able to max out my ISA allowance each year by the way. I probably do a dozen trades a year.

However they do charge a SIPP admin fee of £80/yr. So assuming a 5% yield then I would need to put £1600 in just to pay the SIPP admin fee. Since I have managed to organise my finances to not go over the £42k limit much in this year, and don't anticipate doing it much again in the future, is it really worth it. One thought I have is that if I pop the £3k in a SIPP then the facility is bought & paid for and it becomes more attractive to take extra jobs in the future.

So .... has anybody seen a better SIPP fee (I haven't) and are there any perspectives on this I have not thought of ?

regards, dspp

Try AJ Bell.

They charge 0.25% up to a maximum of £25 per quarter. They also have a regular investment service at £1.50 a trade.

https://www.youinvest.co.uk/sipp/charges-and-rates

Interesting, thanks. I've check the AJ Bell / youinvest charges and they are 0.25% per quarter.

So on that basis the charge (for £3k invested) would be £30/yr at AJ Bell versus £80/year at II.

AJ Bell cap their fees at £25/quarter whereas II are £80/year. The crossover point is £8,000 invested, above that it becomes almost equal.

I guess for my purposes it will be affected by how much I fancy going through another set of registration hoops.

regards, dspp

Don't III give you £20 credit a quarter in SIPPs too? So if you trade twice a year, you'll be evens.

And that's not counting if £20 a year difference is worth the hassle of re-registering elsewhere anyway.

dspp wrote:Interesting, thanks. I've check the AJ Bell / youinvest charges and they are 0.25% per quarter.

Not quite. Youinvest charges 0.25% per year, just taken quarterly. (Also, Interactive Investor's additional SIPP fee is actually £80 + VAT -- so £96/year to you -- on top of the £80 standard annual charge)

So your £3,000 would cost you £7.50/year to hold at Youinvest, by my reckoning. Break even for a flat fee broker such as Interactive Investor would be around £32,000 then, though you also have to factor in trading fees to get a completely fair comparison. The biggest hassle with starting small and working up is that it will cost around £100 or more to switch platform if/when flat fee becomes the cheaper option.

The charges put me off starting a SIPP, but I'm glad I opened one. I invest my entire earnings, that exceed £43k, to maximise my use of the 40% allowance. It works out as as 67% 'uplift' and more than justifies the account charge. I'm hoping that I can build up enough money within my SIPP, so that the charge is eventually less than 1% of received dividends. I calculate the required amount to be about £250k.

(£100 annual charge / 1%) / 4.0% yield = £250,000

I don't have £250k and it isn't going to magically appear, so I'll just have to 'stomach' paying £100 per annum to generate £X000 in tax rebates.

TedSwippet
- it is definitely 0.25% per quarter, i.e. 1% per year. I checked with AJ Bell by phone to be sure of my understanding.
regards, dspp

dspp wrote:it is definitely 0.25% per quarter, i.e. 1% per year. I checked with AJ Bell by phone to be sure of my understanding.

Well, that disagrees with their own published SIPP charges document, which clearly shows 0.25% in the 'Annual charge' column for the first £250k of funds, unit trusts and OEICs: https://www.youinvest.co.uk/sipp/charges-and-rates

Shrug.

I have also been pondering this question.

Charles Stanley direct have dropped their annual fee if you have 30k invested with them, in aggregate across all accounts. Their total fee across all accounts would be max £240/annum charged monthly but waived if you placed 1 trade in that month.

That makes it very tempting to open a sip IF you had enough investments AND you placed a trade a month.

While I hate to invest for tax rather than 'pure' reasons, the argument for investing a bit into a sipp if you're just slipping into the higher bracket is compelling.

Cavendish online are very good for small pension pots. Just a single annual charge of 0.3%. No dealing charges for open ended funds and no exit charges. So you can start off small with them and transfer out when it becomes cost effective to do so. They will take their charges by selling small numbers of your units at no charge as well so you don't have to mess about making sure you have cash in your account, which I think is a great feature.

Cavendish use the Fidelity platform which gives a huge range of funds including very cheap trackers.

I think the person you spoke to has erred. Sippdeal charges 0.25% per year with a maximum of £25 per quarter. I have had a sipp with them for a long time, and this is what I pay.

Best wishes

Noslien

I came across this guide to SIPP platforem fees on Money Observer

http://www.moneyobserver.com/sites/default/files/sipp-platform-charges-and-fees.png

AJ Bell (SIPPdeal) comes out pretty well but there are good alternatives.

Noslien wrote:I think the person you spoke to has erred. Sippdeal charges 0.25% per year with a maximum of £25 per quarter. I have had a sipp with them for a long time, and this is what I pay.

The charging structure has been changed. You now pay 0.25% (max of £25 per quarter) for shares, ETFs and ITs. The charge for funds depends upon what you hold, but it isn't cheap - 0.25% up to £250k (£625), then 0.1% on the next £750k (£750) and 0.05% for the rest.

https://www.youinvest.co.uk/sipp/charges-and-rates

£96pa as well as the £80. See:

http://www.iii.co.uk/sipp

Happy to be wrong, because I started a SIPP with them last summer.

CB