Contractor SIPP (advice for 2013)

[SimonMac]

I drip feed a small but regular amount (£300) and top it up at the end of the year if I can't take any more dividends

[SueEllen]

Interesting - the approach recommended by my advisor was to do things regularly rather than in larger lump sums.

Many personal pensions use to be set up so you had to put in money monthly. They presumed that people had a regular income stream so could do this.

Unfortunately this is not now true for many people especially people who work as freelancers/contractors/self-employed who have a fluctuating income. So putting in varied amount every quarter or year just ensures that the person actually saves for a pension. With the traditional personal pension model the person would find they can't afford it for one or more months so would stop saving into a pension.

[jlo1983]

Thanks all, great advice..

Just a quick follow up question, looking at the HL site and their most popular fund, the "Invesco Perpetual High Income", it has the following fees:


Fund manager's initial charge 5.00%
HL saving on initial charge 5.00%
HL Dealing charge Free
Net initial charge 0.00%

Fund manager's annual charge 1.50%
HL Annual saving (loyalty bonus) 0.25%
Net Annual charge 1.25%

Fund manager's other expenses 0.19%
Performance fee No
HL Platform charge Free

So essentially a net annual charge of 1.25% + 0.19% overall. (If I haven't missed any hidden costs).

Isn't this very similar when compared to the IFA Aegon SIPP recommendation (fund management fee 1% and 0.19%)? I'm not sure what the extra 0.4% charge the IFA SIPP relates to?

But when you mention 1% is a huge sum of the gross capital growth, does the same not apply to the HL fund, with their net annual charge of 1.25%?

Thanks

[jlo1983]

To confirm the 0.4% is an annual charge made my Aegon (for their SIPP).

[jlo1983]

Ok, thinking of going for an Hargreaves Lansdown Vantage SIPP with the following initial fund set-up...

Invesco Perpetual High Income Fund (16.7%)
First State Global Emerging Mkt Leaders Fund (16.7%)
Newton Asian (16.7%)
Income Fund (16.7%)
Lindsell Train Global Equity Fund (16.7%)
Cazenove UK Smaller Companies Fund (16.7%)

Planning monthly Direct Debit payments of £500/month initially from my Ltd Company business bank account. I can then top-up at the end of the tax year if I have additional funds available to save on CT.

Also considering transferring my share portfolio (currently with First Direct) and my previous final salary pension scheme to the SIPP from which I had as an employee (circa 7 years of contributions). Just need to look into implications and any fees associated with a transfer to see if it's worth it.

Any comments on the fund selection? (Basically taken from the "Top funds in the Vantage SIPP from clients in their 30's" on the HL website).

[RSoles]

and my previous final salary pension scheme to the SIPP from which I had as an employee (circa 7 years of contributions). Just need to look into implications and any fees associated with a transfer to see if it's worth it.

I'd be VERY careful and double-check my sums before transferring out of any final salary pension.
This is (presumably) a defined benefit, with all the risk taken by the issuing company.

Then again mine was with Nortel....

[MadDawg]

I'd be VERY careful and double-check my sums before transferring out of any final salary pension.
This is (presumably) a defined benefit, with all the risk taken by the issuing company.

Then again mine was with Nortel....

WHS - all the advice I've been given is to leave final salary scheme well alone.

[SimonMac]

If you transfer a final salary into a SIPP you won't be able to do it without speaking to an IFA first who will create a report (advising you against it) and confirmation you waive any liability on the new provider if returns are less than you would get from you scheme, although I did some real research for a good few months before deciding to go the way I did, rather than ask on an internet forum

[eek]

Interesting - the approach recommended by my advisor was to do things regularly rather than in larger lump sums.

When I looked into that many years back the fees for drip feeding were far higher than one off lump sums.

[jlo1983]

Ah ok, that's a fair point about the monthly payments possibly leading to higher overall fees than a one off lump sum payment at year end. I guess this is the case with HL?

Also thanks for the heads up on the final salary warnings- I'll take some advice on that one.

Any comments on earlier post re. fee comparison. Is it simply the 0.4% fee difference or are there hidden cost with would make HL far superior over IFA recommendation?