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Two SIPPs - 2 fees is it worth it?

Including Financial Independence and Retiring Early (FIRE)
Shazspun
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Two SIPPs - 2 fees is it worth it?

#437294

Postby Shazspun » August 25th, 2021, 12:44 pm

Hi
I am currently employed by a company whose pension scheme is to pay contributions into a Hargreaves Lansdown SIPP account into a Blackrock underperforming fund as they have a preferential fee structure. I have therefore built up some monies into this account over time as I have diversified the portfolio into various funds.

However the fees are now quite hefty at nearly £500 per annum for a fund worth only £150k. I am currently diversifying this further into Equity index pots to reduce the fees but still this is going to cost me nearly £400 pa. I therefore started a Vanguard SIPP a few months ago to put excess cash into. I would like to transfer all my holdings into Vanguard BUT as my employment pension has to go into HL I am stuck with then trying to transfer this in bits over time (if this is even doable).

What are peoples thoughts on how I can reduce my fees on this and would it be worth transferring parts of my HL SIPP to Vanguard?

JohnB
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Re: Two SIPPs - 2 fees is it worth it?

#437303

Postby JohnB » August 25th, 2021, 1:33 pm

If you changed your HL SIPP to invest in ETFs rather than funds, your fees would be capped at £200 a year. How committed are you to that fund, even if you have to invest in it, you should be able to sweep the funds out each year to a HL ETF?

I hold lots in Vanguard ETFs in my HL SIPP.

DrFfybes
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Re: Two SIPPs - 2 fees is it worth it?

#437348

Postby DrFfybes » August 25th, 2021, 4:06 pm

I am a bit confused - if the company pays into a HL SIPP then surely changing your investments is a trivial exercise, and as John says your fee is then capped below wat you would pay with Vanguard's cap.

Vanguard also charge a percentage, athough at 0.15% it is a fair bit lower than HL, and capped at £375 pa. However they are restricted as to what you can buy (IIRC it is only their funds).

Interactive Investor are £10/month for a SIPP, on top of their £9.99/month *per person* for an ISA and/or Investment account, so a fixed £240/year. Also you get one trade per month included (they charge for trading funds), and no charge for transferring in.

Shop around, as your pot grows the savings mount, someone with £0.5m split across ISA, investment account, and SIPP could be paying £2250 to HL , £750 for Vanguard,and £240 with ii. It was the charges per account rather than per person that made us leave HL.

Paul

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Re: Two SIPPs - 2 fees is it worth it?

#437377

Postby Hariseldon58 » August 25th, 2021, 6:15 pm

Sensible comments but HL are fine if you avoid funds and stick to ETFs and Investment Trusts etc. Pension is capped at £200 pa for non funds and the ISA is capped at £45 for ETFs, Investment Trusts etc. Ie £245 a year for the lot.

We have ii as well, which is pretty good, works out much cheaper with ii if you have a SIPP that contains both Crystallised and Uncrystallised funds and you get a free trade a month.

Shazspun
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Re: Two SIPPs - 2 fees is it worth it?

#437620

Postby Shazspun » August 26th, 2021, 4:44 pm

Thanks guys n gals. I’m in the process of swapping all the funds bar the one my employee insists it’s got to pay into ( the Blackrock one) over to ETFS and investment trusts, so hopefully I’ll reduce the costs. Although as there is the blackrock fund I can’t do anything about this may have done minimal fees providing I kept switching the money out to the etfs.

Yes I’ll have to factor in the ISA as well as I’ve started putting the max away each year in those too. I’ll definitely look at the others you quoted and run some figures. I didn’t realise I could partly transfer some of the SIPP if I wanted to, so at some point when I cease to be employed I’ll probably switch the whole lot to the lowest fees I can get with the largest range of funds.

b0f77
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Re: Two SIPPs - 2 fees is it worth it?

#437635

Postby b0f77 » August 26th, 2021, 5:32 pm

As others said, with the HL SIPP it is cheaper hold ETFs, shares, ITs etc. My own HL SIPP was set up through a previous employer and at that time there was a default Blackrock Consensus 85 fund with a preferential fee new money from my employment was paid into. I found out that in the online account administration with HL that I had access to via my login I could choose which fund the new money from my employment pension went into so I started getting some money going into other funds that way. I am pretty sure I could have chosen an ETF if I wanted to. I am surprised they are not giving you the option of which fund your new money goes into - especially as HL would get £11.95 off you dealing charge each month if you had it going into an ETF instead of a fund, so I doubt it is their restriction. Eventually the charges on my funds built up to such a level that when I knew what I was doing through reading Monevator etc I switched it all to a balanced portfolio of equity / bond ETFs so charges are now capped at £200 per year.

Shazspun
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Re: Two SIPPs - 2 fees is it worth it?

#437645

Postby Shazspun » August 26th, 2021, 6:10 pm

b0f77 wrote:As others said, with the HL SIPP it is cheaper hold ETFs, shares, ITs etc. My own HL SIPP was set up through a previous employer and at that time there was a default Blackrock Consensus 85 fund with a preferential fee new money from my employment was paid into. I found out that in the online account administration with HL that I had access to via my login I could choose which fund the new money from my employment pension went into so I started getting some money going into other funds that way. I am pretty sure I could have chosen an ETF if I wanted to. I am surprised they are not giving you the option of which fund your new money goes into - especially as HL would get £11.95 off you dealing charge each month if you had it going into an ETF instead of a fund, so I doubt it is their restriction. Eventually the charges on my funds built up to such a level that when I knew what I was doing through reading Monevator etc I switched it all to a balanced portfolio of equity / bond ETFs so charges are now capped at £200 per year.


That’s interesting I didn’t know I could have the contribution from the employment going into a different fund, our company and HL when we had our introduction to them a few years ago didn’t mention that. I’m going to have a look now as that would save me a lot of faffing around in dealing each month.you’ve done what I’m going to do and monevator was the one who put me into all this a few years ago.

Hopefully Monevators tips have paid off for you and your either retired or close to it.

b0f77
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Re: Two SIPPs - 2 fees is it worth it?

#437891

Postby b0f77 » August 27th, 2021, 6:42 pm

Shazspun wrote:That’s interesting I didn’t know I could have the contribution from the employment going into a different fund, our company and HL when we had our introduction to them a few years ago didn’t mention that. I’m going to have a look now as that would save me a lot of faffing around in dealing each month.you’ve done what I’m going to do and monevator was the one who put me into all this a few years ago.

Hopefully Monevators tips have paid off for you and your either retired or close to it.


If you log into the HL account in a web browser (not the phone app) on the SIPP there is a section “Company Contributions”. In my account I can either choose “retain as cash pending further instruction” or there is an option to invest into various funds I choose assigning by percentages. I’d be surprised if you didn’t have the same. You could always give the HL people a call, they are very helpful. Basically it is your money and you should be able to do what you like with it in the account once the employer has paid it in.

I came quite late to figuring out what I needed to do with investments for retirement so made a few mistakes along the way, all now hopefully corrected. For the SIPP I decided on an ETF allocation based on something like the “Simplicity Portfolio” on the blog by the Escape Artist chap Barney. I chose some different ETFs and allocations to him. I use a spreadsheet to tell me what amounts of ETFs to purchase when I transfer in money from other employment pensions or there is some dividend cash to reinvest. There is no absolute correct plan with these things, but having a plan of some sort and sticking to it a good start. For my ISA I took a different approach with investment trusts, shares and ETFs. I’ve retired but not drawing anything down yet as spending down uninvested redundancy cash and other money first and need to consolidate some of the employment pensions before doing drawdown. It turned out that leaving some of the other pensions in the default funds rather than fiddling around when I didn’t know what I was doing worked out Ok for me. There is a lot of good advice on here and on Monevator.

Myfyr
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Re: Two SIPPs - 2 fees is it worth it?

#439807

Postby Myfyr » September 5th, 2021, 11:24 am

I have two crystallised SIPPs now which will have to be kept separated due to LTA calculation issues. I have no LTA left.

I have one with Hargreaves Lansdown 90% invested in dividend IT’s and 10% cash so pay a capped fee of £200 per annum. Just did a large crystallisation into an already crystallised pot and paid an LTA charge of approximately £56k. Currently up 1% on crystallised value. Will draw down the dividend yield once retired.

I have a larger. one with A J Bell Youinvest which is invested in ETFs so pay a capped fee of £120 per annum. This is 40% global, 25% dividend / quality, 10% Emerging, 5% FTSE-100 and 5% FTSE-250 and 15% cash. This was formerly in ITs but I changed tactics here after they recovered from the Covid slump. Currently 15% up on crystallised value. Will draw down as needed.

I have just over £20k uncrystallised with Hargreaves Lansdown invested in cash so I can take my 2 remaining available small pots allowance. The rest in excess of £20k will be crystallised after the final small pot is taken.

I would save £200 per year moving all to A J Bell Youinvest, but will then have a complex LTA juggling act to perform. Need to get both below their crystallised value by 75 by drawing income and the Youinvest SIPP is well ahead percentagewise at the moment. Still working so not drawing income at the moment.

I also have two defined benefit pensions taken early due to LTA (didn’t want LTA charge on defined benefits) which are paying about £11,800 per annum between them.

rhys
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Re: Two SIPPs - 2 fees is it worth it?

#440026

Postby rhys » September 6th, 2021, 12:44 pm

Myfyr,

Rheswm arall i beidio ymuno'r ddau SIPP - ar hyn o bryd ma' gen ti'r ddiogelwch o rhannu'r cyfan rhwng ddau 'crochan'. Anaml iawn i HL neu AJB methu dy dalu, ond pam i demtio tynged.


/Rhys

Myfyr
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Re: Two SIPPs - 2 fees is it worth it?

#440116

Postby Myfyr » September 6th, 2021, 5:12 pm

rhys wrote:Myfyr,

Rheswm arall i beidio ymuno'r ddau SIPP - ar hyn o bryd ma' gen ti'r ddiogelwch o rhannu'r cyfan rhwng ddau 'crochan'. Anaml iawn i HL neu AJB methu dy dalu, ond pam i demtio tynged.


/Rhys


Y rheswm mwyaf ydi ei fod yn goblyn o strach ymuno dau bensiwn sydd eisioes wedi ei grisialu gan fy mod wedi cynilo mwy na’r lwfans oes! Mae defnydd y lwfans oes sydd wedi cael ei ddefnyddio gan bob un yn gorfod cael eu cadw arwahan ar gyfer y test pan yn cyrraedd 75 mlwydd oed.

For the Saeson …

The main reason is that it is a lot of hassle to combine two pots that have already been crysyallised since I have amassed more than the lifetime allowance! Tne lifetime allowance used by each one must still be kept separate for the age 75 test.

TUK020
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Re: Two SIPPs - 2 fees is it worth it?

#440244

Postby TUK020 » September 7th, 2021, 10:54 am

Is it just me, or are the LTA regulations becoming increasingly difficult to understand?

hiriskpaul
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Re: Two SIPPs - 2 fees is it worth it?

#440947

Postby hiriskpaul » September 9th, 2021, 12:38 pm

Myfyr wrote:The main reason is that it is a lot of hassle to combine two pots that have already been crysyallised since I have amassed more than the lifetime allowance! Tne lifetime allowance used by each one must still be kept separate for the age 75 test.

That's interesting. Not something I had considered before. Any details or links on what the issues/difficulties on combining 2 SIPPs in drawdown?

IT would be a pain and inefficient if you cannot offset negative net growth in one SIPP against positive growth in the other.

What happens if someone has a single SIPP but multiple crystallisations? Do you need to monitor growth separately in each of the flexi drawdown funds created for each crystallisation? If so, how to SIPP providers deal with this?

Myfyr
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Re: Two SIPPs - 2 fees is it worth it?

#440959

Postby Myfyr » September 9th, 2021, 1:39 pm

hiriskpaul wrote:
Myfyr wrote:The main reason is that it is a lot of hassle to combine two pots that have already been crysyallised since I have amassed more than the lifetime allowance! Tne lifetime allowance used by each one must still be kept separate for the age 75 test.

That's interesting. Not something I had considered before. Any details or links on what the issues/difficulties on combining 2 SIPPs in drawdown?

IT would be a pain and inefficient if you cannot offset negative net growth in one SIPP against positive growth in the other.

What happens if someone has a single SIPP but multiple crystallisations? Do you need to monitor growth separately in each of the flexi drawdown funds created for each crystallisation? If so, how to SIPP providers deal with this?


If you combine two SIPPs where one is up 30% from crystallisation value and one down 10% you would want to take all withdrawals from the former to reduce any further LTA usage at age 75. You cannot offset an LTA surplus against a deficit the only way is to take withdrawals from the “higher plus” one until both pots have a similar percentage gain or loss then it doesn’t matter. Even though it looks like you have one SIPP you have two. I am keeping my two SIPPs separate as it is clearer what the position of each one is.

Multiple crystallisations in one SIPP is fine as it will always count as one arrangement.

TedSwippet
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Re: Two SIPPs - 2 fees is it worth it?

#440974

Postby TedSwippet » September 9th, 2021, 2:42 pm

hiriskpaul wrote:That's interesting. Not something I had considered before. Any details or links on what the issues/difficulties on combining 2 SIPPs in drawdown?

Some previous discussion in this thread: LTA calculation - The Lemon Fool

hiriskpaul wrote:It would be a pain and inefficient if you cannot offset negative net growth in one SIPP against positive growth in the other.

Yup. Just another annoyance of the entire LTA mess.


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