How to pick a Sipp

Choose your Sipp provider carefully: saving on fees can make a big difference to your fund.

937_MW_P31_Pensions

Keep an eye on costs they can soon add up

When it comes to picking a company that offers self-invested personal pensions (Sipps), it's not quite as straightforward as choosing the one known to be the cheapest. Providers charge in several different ways. Moreover, the most cost-effective provider for you will largely depend on the size of your pension fund and how you want to invest it.

Broadly speaking, Sipp charges during the accumulation phase (when you're building up the fund) fall into three categories. You need to consider the administration charge that the provider charges for the plan itself; dealing fees incurred when you buy and sell various investments; and the charges on the underlying funds in your Sipp. Some providers have negotiated cheaper fees on underlying funds, although they don't always pass these on in full.

On smaller pension funds, percentage-based charges, rather than fixed cash fees, typically work out more cheaply. On this basis,research just published by personal finance site Moneyto the Masses singles out

AJ Bell Youinvest as offering particularly good value for savers with pension funds of £100,000 or less. For larger funds, by contrast, providers such as Alliance Trust Savings, Halifax Share Dealingand Fidelity begin to lookmore competitive.

Add in the effect of drawdown charges, and the picture changes again. You'll still be paying for the Sipp, but many providers levy additional fees on investors as they move into the decumulation phase of their retirement planning (withdrawing money).

Looking across combined Sipp and drawdown charges, research conducted by consultancy The Lang Cat suggests AJ Bell is still cheap for small pension funds those of £50,000 or less but that Halifax Share Dealing is slightly better value.

Halifax also takes first place for pension funds worth £100,000, according toThe Lang Cat, but for larger funds other providers move up the ranks. These include Fidelity, The Share Centre, Alliance Trust Savings and Interactive Investor.

Interestingly, Hargreaves Lansdown (HL) scores poorly on The Lang Cat's analysis of charges, except for small pension funds, but Money to the Masses puts it top for tools and functionality.

Recommended

What ‘buy-and-forget’ investors really need
Advertisement Feature

What ‘buy-and-forget’ investors really need

How Alliance Trust can help you plan an effective retirement with a Sipp.
26 Mar 2021
How to get the best deal from your pension drawdown
Pensions

How to get the best deal from your pension drawdown

If you're thinking of taking out a pension drawdown plan on reaching retirement, don't just rely on the Money Advice Service’s price-comparison tool.
23 Feb 2021
Three ways a global generalist trust could work within your SIPP
Advertisement Feature

Three ways a global generalist trust could work within your SIPP

Faith Glasgow of Alliance Trust on the value of a SIPP as part of your retirement plan.
19 Feb 2021
Shop around to secure the best Sipp
Self invested personal pensions

Shop around to secure the best Sipp

If you’re one of the growing number of savers with a self-invested personal pension (Sipp), make it a new year’s resolution to check you’re getting va…
11 Jan 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
What does the Coinbase listing mean for bitcoin and other cryptocurrencies?
Bitcoin

What does the Coinbase listing mean for bitcoin and other cryptocurrencies?

As the bitcoin price hit new highs, the world's biggest cryptocurrency exchange, Coinbase, listed on the stockmarket. John Stepek looks at what that m…
15 Apr 2021
Properties for sale for around £400,000
Houses for sale

Properties for sale for around £400,000

From a converted church in Banffshire with views towards the Cairngorms National Park, to a period property in the Georgian market town of Beverley, e…
2 Apr 2021