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What’s the cheapest pension for DIY investors?

know so many busy people for whom a pension is yet another itch to scratch. The guilt and fear is palpable. Even thinking about trying to save the money is agony – an unbearable imposition that threatens to bring down their house of cards.

Behavioural economist Shlomo Benartzi has an explanation for this. His Save More Tomorrow programme offers one possible pension saving solution that won’t rub up your cerebellum up the wrong way:

Save More Tomorrow is not commonly practiced in the UK, however, so it’s time to get our own plan – one that’s better than sticking a large wodge on a rank outsider at Chepstow racecourse when you hit age 65.

Saving into a cheap pension means you can look forward to old age.

Following on from my reader-inspired research into financially challenged investing, I wanted to track down the cheapest pension available to someone who can only dream of shoestrings.

Important: If your employer will match your pension contributions in a company-run scheme, then you should probably snatch its hand off. To not take that money is like handing back a chunk of your salary every month!

Dirt cheap SIPP

Assuming you want a DIY pension scheme, then it needs to be a flexible, low cost vehicle that can put you on the right track while accommodating small contributions.

We’re looking for the cheapest pension that delivers:

  • Low fees: Church mice can ill-afford to lose cheese to charges.
  • Low cost index funds: Passive investing offers the opportunity to earn market returns, mostly unmolested by fees.

The cheapest DIY pension I’ve found is the Best Invest Select SIPP if your pension is worth less than £59,000 and the Interactive Investor SIPP if it’s worth over £59,000.

The Best Invest SIPP offers:

  • No set up fee.
  • No dealing fee for Unit Trust / OEIC funds.
  • A market-clobbering platform charge of 0.3% of your assets per year.
  • No switching fee (an industry standard, but still good to know).

Note: I’m not factoring in any charges incurred here when you start to take your pension. The world could look very different on that day, so it would amount to speculation.

Mind your fees and Qs

The percentage fee platform charge is very important for an investor with a small amount of assets.

A 0.3% nibble of £10,000 will cost you £30 per year, in comparison to the £176 flat-rate charge you’d pay to Interactive Investor.

Percentage fees turn into a real burden as you amass wealth, however. Best Invest’s 0.3% would cost you £177 annually, if your SIPP was worth £59,000.

Meanwhile Interactive Investor would still be charging you a flat-rate of £176, no matter how much you’d stashed away with them.

So as you approach the £59,000 mark, consider switching to Interactive Investor if you can restrict your trading to twice a month and can take full advantage of II’s trading cost rebate feature.

Once your SIPP is up and running, you can then pick a low cost index fund portfolio from the SIPP’s fund list, diversified along the lines of the Monevator Pound Stretcher portfolio or The Slow and Steady portfolio.

Use this recipe and the only extra fees gnawing at your future will be the relatively low Total Expense Ratios (TERs) of your funds.

You’ll be hard pressed to run a tighter ship than this.

The bare minimum

The sticking point with the Best Invest SIPP is its minimum contributions:

  • £2,880 lump sum to set up the SIPP (tax relief is added on top).
  • £80 minimum per fund (tax relief is added on top).

On the face of things, those minimum contributions are pretty high hurdles. If they look too daunting, then a stakeholder pension can be yours for no more than £20.

Bear in mind though that assuming you can find the required lump sum, you can thereafter top-up your funds in bite-size chunks. There’s no need to pay in £80 per fund every month. You could save a smaller amount, and buy a fund when you can afford it – perhaps feeding into one fund per quarter.

I’d start off with a low cost World or International index fund (Vanguard and Fidelity have very competitive offerings) and then diversify into a gilt index fund, adding further cheap trackers (for example a FTSE All-Share fund) as you build up your assets.

Our brassic paradigm means you’ll have to shy away from the wallet-bashing fees associated with the other investments you might otherwise pop into your SIPP, such as ETFs, investment trusts, individual shares, gold bullion et al.

Ready, aim, retire!

So you have it. If you’re living on beans at the moment and you don’t want to spend your old age the same way, then choose the cheapest pension you can, get cracking, and let compound interest put the wind in your saving sails.

Take it steady,

The Accumulator

Note: We updated this article with brand new facts and figures on cheap DIY pensions in September 2014, so reader comments on the article may refer to the old, outmoded copy of yesteryear. Get hip to the new words, Daddy-o!

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{ 44 comments… add one }
  • 1 Adrian Buck March 6, 2012, 12:56 pm

    Have you looked at Sippdeal? A J Bell are now a substantial company and well regarded.

  • 2 saveonarola March 6, 2012, 1:08 pm

    Agreed that a custody charge is a big hit if you have a very small portfolio, but I’m guessing it gets affordable pretty quickly, if you factor in the lower TERs and the better tracking of Vanguard funds. Hard to get precise numbers on this, of course.

  • 3 Guy March 6, 2012, 8:45 pm

    Interesting to see that SIPPs can be had relatively cheaply – I’ve been told that they’re too expensive to have a place in small investors’ arsenals. For me, not being able to access the money until a certain age is still too big a negative to offset the tax rebate. If/When I become a higher-rate taxpayer I’ll take another good look.

    Best regards,

    Guy

  • 4 The Accumulator March 6, 2012, 9:04 pm

    @ Adrian – I did look at Sippdeal but their £9.95 dealing fee for funds counted them out.

    @ saveonarola – That £120 custody fee is a massive drag. If we compare Vanguard’s FTSE All-Share fund (TER 0.15) versus HSBC’s equivalent (TER 0.27) then we need to get to a break even point where the custody fee = 0.12% of your portfolio. Only then does Vanguard’s TER = HSBC’s. That breakeven point is £100,000. So it all depends on how quickly you can get to that point. There’s no doubt that in the long term Vanguard wins, but that could easily be 10 years or more.
    Note I’ve not factored in the Vanguard stamp duty initial fee as that will show up in HSBC’s tracking error. Obviously tracking error is the wild card here.
    If we assume long-term tracking error actually makes the Vanguard fund superior to the tune of 0.43% (as per this piece: http://monevator.com/2012/02/21/how-to-use-tracking-error-to-uncover-the-true-cost-of-an-index-tracker/)
    then the break even point is more like £28,000. That’s a massive assumption though, not really a sustainable one given the short track record of the Vanguard fund.

    It depends on how quickly you can get to the breakeven point versus the next best option. For example,

  • 5 The Accumulator March 6, 2012, 9:07 pm

    @ Guy – yeah, I was surprised too. Do you invest in a S&S ISA instead to overcome the accessibility issue? Not that a lack of accessible temptation is all that bad an idea.

  • 6 Dave March 6, 2012, 9:26 pm

    I’m not in my employer’s 5% match pension scheme because I’d rather have 5% of my salary to invest as I see fit (in a low cost ISA) than 10% of it to invest with a big-name, high-fee provider and 5% less in the ISA pot.

    Maybe I’m being shortsighted, but it just doesn’t seem worth it to me – especially as I plan to be drawing on my investments long before the state retirement age of 75.

  • 7 pinner ram March 7, 2012, 12:45 pm

    @Dave

    There is no state retirement age any more, the state pension age is moving ever higher and the age when you can start to draw a pension is now 55. You no longer have to purchase an annuity at age 75 either.

    PR

  • 8 The Investor March 7, 2012, 12:59 pm

    @Dave — I’d definitely look closely, as it’s very hard to match 100% gain in a year, which is effectively what a matching contribution is. Even after horrid fees etc are taken into account.

    You should certainly also look into what funds you have to invest in. Obviously I don’t know what your company’s scheme offers, but there’s usually more flexibility than there was. The only one I’ve ever had was a SIPP which is the gold standard as far as I’m concerned (though too complicated for many everyday folk I fear) but even a moderately pricey TER cheap-ish pension is going to be worth considering with matching contributions.

    Also, you may move employer and be able to move your pension with you; I’m not sure about this, perhaps other readers who know more can tell us.

    As @pinner_ram says, pensions look a lot more attractive than they did. The big danger is that they are made unattractive again, and you can’t get your money out.

    Personally I’m with you on control and have only a small portion of my net worth in my SIPP, but for as long as I was offered matching contributions I bit their arm off. 🙂

  • 9 Moneyman March 7, 2012, 5:24 pm

    A timely reminder, as the tax year is drawing to a close. Of course, this pension does not have to be you – it could be your partner or kids (it may be a good way to leave them something completely tax-free). And that £2880 figure is important: that’s the most you can pay into a non-working person’s pension. And with good reason because it produces an effective 25% return instantly.
    http://www.the-diy-income-investor.com/2011/03/instant-25-return-uk.html

    By the way, I vote for Sippdeal, because my trades are few and far between (in specific securities, not funds).

  • 10 Guy March 8, 2012, 10:10 am

    @The Accumulator
    Yes, originally I started it as a way to diversify as I’d started buying shares in my employer and felt that having job, pension and savings all in one (admittedly large) place wasn’t a good idea! I’ve also just started putting some money into Zopa (and Funding Circle will probably follow, at some point) in the interest of further diversification, since my ISA is weighted pretty heavy on S&S and rather light on gilts/bonds.

    Having funds locked away is definitely a good idea – my only defence is an unwritten rule to make no withdrawals! In a few years time I might have to break that rule but thankfully I’ve been able to resist so far.

    Guy

  • 11 AnAdmirer March 8, 2012, 12:58 pm

    Always good to keep an eye on these things. The territory is quicksand and moves constantly.

    Personally, I draw the line at total costs < 0.5% (fund TERs, as much tracking error as you can work out and all platform fees) and of course as low as possible. Anything above this is expensive.

    Don't overlook portfolio funds either as instant diversification. However, there is only one I know of (Vanguard LifeStrategy) that is index fund based and cheap enough.

    HSBC have recently released a series of World index tracker portfolio funds but these lack structural simplicity and come with eye-watering costs (0.85% TER) – much higher than their other (reasonable) single market trackers.

    It seems both industry and legislation sees no advantage in pension simplicity as there is a lot of money to be made. I suspect the majority of people would do well with a basic portfolio index fund, regular DCA and low costs, yet there is extremely narrow range of products are offered nor does the tax simplicity/legal structure exist to encourage this approach – instead you need to use a SIPP which is potentially more complex/heavyweight than you need (as above), wade through the active/passive debate, read blogs like this, DOYR, find the limited selection etc.). Stakeholders were designed to get around this to a degree but have failed with limited choice and "generous" 1%/1.5% fee caps.

  • 12 Rob March 8, 2012, 11:54 pm

    Just been looking at Best Invest’s website after reading this. It looks like the low-cost indexed linked gilt funds (L&G, Vanguard, Royal London at a push) all carry a custody fee. This would make me think twice about it if you’re going for a slow-and-steady type portfolio (where a decent chunk is in IL gilts).

    TA, did you look at Fidelity’s SIPP? There’s not as large a fund choice, and I don’t think you can hold ETFs/stocks/etc, but if all you want are low cost trackers (and why would you want more!) they have the HSBC ones, L&G’s index linked, and BlackRock for emerging markets. No custody charges as far as I can see.

  • 13 ermine March 9, 2012, 7:29 pm

    Save More Tomorrow is not commonly practiced in the UK

    This guy is right on the nail – it’s sort of practised at my employer, where you can choose 25,50,75 or 100% or your bonus to go into pension AVCs. I took the 75% saved option, which is a nice fit. You get something to blow on jam today, but without the shocking loss to the taxman. And he’s right, you don’t really feel it, because you make the decision about 9 months before it all happens.

  • 14 saveonarola March 10, 2012, 1:36 pm

    @Accumulator

    I presume we’re talking about Bestinvest here. Yes, I hadn’t realised the SIPP custody charge was £120pa; I was thinking about the ISA charge of £60pa. Should have steered away from commenting on a pension thread, since I haven’t done my homework!

    There are a couple of things that bring down that break-even point a little, though:
    i) If you want a portfolio of regional trackers, including emerging markets, the weighted average using Vanguard trackers (or a Vanguard LifeStrategy fund) is a bit more competitive.
    ii) Most of the HSBC TERs are slightly higher with Bestinvest than with, say HL. eg. All-Share 0.29% vs 0.27%; US 0.31% vs 0.28%; Japan 0.31% vs 0.28%; Pacific 0.4% vs 0.37%. (The European Index is slightly cheaper: 0.31% vs 0.37%.)

    On the essential point, of course, you’re quite right. These things are small and don’t outweigh the higher custody charge.

  • 15 RonnieM March 14, 2012, 2:53 pm

    For any sophisticated investor (& not widely known about), Equity Index Loan Stock (EILS) notes offered by Investment Trusts are the cheapest way of getting a matched return to any Equity Index, as there are no annual costs to holding them(at all), only the costs of buying & selling them. They can also be held in SIPP and ISA investment vehicles.
    Unfortunately, to the best of my knowledge the only one on offer at the moment is the 2013 EILStocks offered by British Empire Securities Investment Trust and they expires in 2013. I held EILS Investments from British Assets Trust and Selective Assets Trust in the late 1990’s, through to their expiry dates and I don’t know why more Investment Trusts don’t offer them?
    They are brilliant Investments to hold, with the Investments Trusts guaranteeing to “match the EXACT returns of the Index” to the EILS Note Holders, both in Capital & Interest (the interest paid quarterly matching the yield of the All Share Index).
    Come on Investment Trust Managers, offer up some more of them! They they are a very useful & cheap method of gearing the performance of the Investment Trust itself. If the Trust manager can outperform the index he/she investing in (whether it a rising or falling market), it boosts the returns to the to the Investment Trust shareholders. Sadly the reverse is true if the Trust under performs the market, so only the bravest Trust Managers will use/offer EILS notes to investors. I wish more would have the courage to offer them.
    The only downside to holding EILS investments is that unlike ETF investments, the share price of the EILS Notes can fluctuate a little, so that the dealing price of the note might deviate by a % point or two from the actual index. In practice that deviation is very small and if it is trading at 2-3% discount then it is always worth buying more notes as over time that discount gap will close, (the nearer the note is to its expiry date).
    If any other Investment Trust Managers in the future are brave enough to create more EILS notes for any of the markets they invest in, for anyone looking for cheapest method of investing in a long term Index Tracker, nothing can match the efficiency of EILS investments. Have a look at them and see if your SIPP will allow you to invest in them.

  • 16 The Investor March 15, 2012, 1:43 am

    @RonnieM — Have to admit they’re new to me. Interesting — like everything is to me! 🙂 — but I don’t really see the relevance to cheap pensions, although presumably they can be held in a SIPP. Anyway, thanks for sharing. I’ll do some research when I get a chance.

  • 17 RonnieM March 15, 2012, 5:23 pm

    I mentioned the Equity Index Loan Stock (EILS) notes above as a cheaper and more efficient Index Tracker form of Investment than others had mentioned earlier. As I said in my previous entry, apart from the purchase cost of an EILS note (same cost as buying a share), there are no ongoing costs at all to holding them, providing exactly the same returns as the equity index (something that index tracker funds can’t do – they all have annual costs associated with them). That makes them cheap!
    To hold them, you obviously need the cheapest SIPP pension wrapper and others have already covered that subject. I would defy anyone to come up with a cheaper more efficient investment structure.

  • 18 The Accumulator March 15, 2012, 9:11 pm

    Hi Ronnie – very interesting, I haven’t heard of these before. I suppose the problem is it doesn’t matter how cheap they are if they’re not available. Is the scarcity value related to how good a deal they are for the investor rather than the purveyor, I wonder?

  • 19 john June 21, 2012, 7:34 pm

    Is it straightforward to transfer an existing pension, Lloyds TSB Managed (1% TER), currently under Scottish Widows jurisdiction, into a Sipp?
    It would be about 30k and I think the intention is to contribute about £40/50 a month plus annual increase of 3% for the next 20 years or so.
    Who would be best for this sort of monies? Probably looking at going down the tracker route, maybe looking at the slow and steady portfolio, then again is a Vanguard LifeStrategy feasible or does custody fees put paid to keeping it keen?

  • 20 john June 25, 2012, 6:39 pm

    Hi Accy
    Do you know would the break even point be on investing in a Vanguard LifeStrategy fund v an equivalent range of HSBC funds ?

  • 21 Ham August 3, 2012, 10:46 am

    I was just wondering – as I understand the paying of trail commission by funds will be banned from the end of the year due to the RDR. Does this mean that at that time, *all* funds held in BestInvest will start to incur a custody charge?

    Thinking of moving my SIPP to BestInvest (from Alliance Trust Savings) but wondering whether the lack of custody fee for HSBC funds will soon be a thing of the past!

    Looking forward to hearing from you.

    Ham

  • 22 The Accumulator August 6, 2012, 9:06 pm

    Hi Ham,
    I don’t know what BestInvest’s plans are. It doesn’t necessarily follow they will make that move, brokers are reacting in quite different ways to RDR. TD Direct Investing for example only charge a platform fee on funds that pay trail commission over 0.5%, in other words, not index funds. If you only want to move once then I’d give it another 6 – 12 months before making your mind up.

  • 23 john October 15, 2013, 6:55 pm

    Isn’t H-L the cheapest SIPP option for one or two Vanguard LifeStrategy funds? I make it just £24 a year per fund compared to Best Invest’s £30 a quarter (£120 a year).

  • 24 The Accumulator October 17, 2013, 5:46 pm

    You’re right, John. This piece was written before platform charges. Bear in mind that BestInvest and especially HL will have to change their charges to come into line with the FCA’s ruling on transparent pricing.

  • 25 vanguardfan September 9, 2014, 12:04 pm

    Hi, I think it would be great if the next update could also look at personal pensions via Cavendish online, as these might be even cheaper especially for small pension pots.

  • 26 dustofnations September 9, 2014, 12:46 pm

    Got this info from iii about their pension transfer charges for the SIPP product:

    > I can confirm that if you are planning to transfer your Pension across to us over several years, you will only need to pay for the first 6 transfers, any after this will not be charged. Our SIPP transfer charges are £50 + VAT per pension transfer (maximum of £300 + Vat per SIPP). We hope that the saving you would be making in the long term with ourselves will help you to change your mind. If you require any further information please advise.

    This is important for the likes of me, where my employer is only willing to match contributions to the company pension and not an external one (due to the deal they have with the pension co). They will contribute to another pension sans the matched element, so it isn’t an administrative issue…

    For my scenario it’d be ideal if they offered a single free transfer per year so I can exfiltrate the cash (transfer out of company pension is free), but the cap may still prove value for money under more limited circumstances.

  • 27 qpop September 9, 2014, 2:07 pm

    An interesting point is when it becomes sensible to jump ship.

    Take my small HL SIPP for example, with ~£15k and receiving £350 a month. HL’s 0.45% fee is currently £67.50 PA, where BestInvest’s cheaper effort is ~0.30%, £45. £22.50 PA.

    If I decide I’ll eventually transfer to a fixed free provider at ~£60,000, assuming 6% growth gross of platform fees, this will take ~7 years with HL (with an value of £59,210 at that point).

    With BestInvest the value at that point would be £59,700, a £490 difference.

    £490 amortised over 7 years results in a disinclation to bother “rocking the boat”. Am I missing something here?

    (Also, BestInvest is an unknown; the service could be poor, the technology could be less snazzy, they might not have access to the funds I want, and so on)

  • 28 Mildyputout September 9, 2014, 2:34 pm
  • 29 Sam Stickland September 9, 2014, 6:06 pm

    I have a fund held with Scottish Widows that is 0.45% AMC. This seems hard to beat if the best broker deal is 0.3% AMC before the funds AMCs are added on?

    The fund is Scottish Widows Pension Portfolio 2 and breaks down as following:

    SSgA MPF UK Equity Index: 25.88% (FTSE All-Share)
    SSgA MPF North American Equity Index: 17.92% (FTSE All-World Developed North America Index)
    SSgA MPF Europe (ex UK) Equity Index: 17.62% (FTSE All-World Developed Europe ex UK Index)
    SSgA MPF Asia Pacific Index: 8.71% (FTSE All-World Developed Asia Pacific index)
    SSgA MPF Japan Equity Index: 8.40% (FTSE All-World Japan Index)
    Scottish Widows Corporate Bond: 15.07%
    SSgA MPF Emerging Markets Index: 6.20% (FTSE All-World All Emerging Markets Index)

    Sam

  • 30 John September 11, 2014, 1:48 pm

    Trying to get my head round the best approach for me. Have around £20k in a pot from my old company (an investment bank) that I was thinking to transfer to a Bestinvest SIPP and buy Vanguard Lifestrategy 80% Acc – not planning to add to it immediately but will in the near future.

    Basic question – is this the cheapest approach for me?

  • 31 Dawn September 11, 2014, 2:37 pm

    very good advice from monevator again.
    I wish all this info was around for me 30 years ago!
    the best I could do for myself at that time was have a guy from Norwich Union round who started me with a private pension and he put in a with profits fund. useless!!

  • 32 The Accumulator September 11, 2014, 8:54 pm

    @ Vanguardfan – the Cavendish Personal Pensions aren’t any cheaper.

    If your pension assets are worth up to £20K then the cheapest option is the Aviva Stakeholder with an annual charge of 0.55%. At £20K – 50K the Aviva Personal Pension weighs in at 0.45%.

    Best Invest @ o.3% plus costs of 0.1 – 0.15% for UK equity, world equity and gilt trackers and no dealing costs for either option, well, it’s as close as makes no difference.

    In both cases, you’ll pay extra if you want a slightly more exotic fund like an Emerging Markets tracker.

    Beyond £50K and the Aviva Personal pension tiers down to 0.4%.

    @qpop – I don’t think you’re missing anything. Everyone has to work out their own personal tolerance level for hassle vs savings.

    @ Sam – the Scottish Widows personal pension hits 0.45% between £60,000 and £180,000 through Cavendish. Is that what you have? If not could you send me a link? As mentioned above a Best Invest portfolio will come in at about the same cost depending on funds chosen. Does SW not charge extra for the Emerging Markets fund?

    @ John – looks like it, but check transfer charges.

  • 33 living cheap in London September 12, 2014, 8:44 am

    Thanks as ever for the website/blog with your great insight & excellent research.

    Accumulutor: Here is my actual Aviva example concerning why it’s worth linking up your pension money:

    I recently combined two “pots” that were both with Aviva to move me into a lower fees bracket…. of course Aviva hadn’t bothered contacting me to suggest i do this themselves. This combined pot now has an annual charge of 0.60% & receives a “large fund rebate” of 0.20% (so effectively the 0.40% you state).

    This is a huge move from a 1% charge (plus 0.10% rebate) previously.

    It’s realistically going to add 30K or so to the pension over the next 15 years…. next up is to move to InteractiveInvestor to save about the same again.

    Those little basis points & then the fixed annual fee make a LOT of difference!

  • 34 moneyshot September 14, 2014, 1:15 pm

    Great post and interesting discussion here. Very relevant to my current situation.
    My new workplace doesn’t have a company pension scheme available but they mentioned they are happy to arrange for some salary sacrifice.
    I have decided to open a SIPP with Interactive Investor…which brings me to my questions:
    I have selected 55 as my retirement age, but in retrospect, I realize this might be a mistake, and that I might want to change this to 65, as that is more realistically, the age at which I will be retiring.
    My question is, if I select 55 initially, can I continue accumulating until 65 if I am still in work by then?
    And if I select 65 can I start drawing at 55, in case of necessity?
    This hasn’t been clearly explained in any relevant literature I have found so far. I am unsure how setting a retirement age which is too high or low might affect me in the future.
    If anyone can help with my questions that would be much appreciated.

  • 35 Sam Stickland September 15, 2014, 2:15 pm

    @ The Accumulator – No, the pension is held directly with Scottish Widows for 0.45% AMC.

  • 36 The Accumulator September 15, 2014, 9:07 pm

    @ Moneyshot – I can’t imagine anyone holding you to an exact retirement age. What are they going to say? “No, you must take your money away from us at age 55 because of a box you ticked when you were 29?” By all means email them directly to set your mind at rest, but that information must be for internal use rather than contractually binding you to retire on the dot.

  • 37 RobWansbeck September 16, 2014, 1:20 am

    @ moneyshot – I had a pension age set to 75 but moved into drawdown at 58. I think the age is just so they can give you illustrations. One point to be aware of is that some products may automatically start moving you into bonds as you approach your stated pension age though this shouldn’t be a problem if you are managing your own investments.

  • 38 PassiveNoob October 7, 2014, 11:28 pm

    Great and timely post. I’ve been putting a pittance away in an old work Stakeholder pension (no company contribution), and have been meaning to start a SIPP.

    One question. I’ve finally managed to craft a well-diversified Hale/Monevator-inspired ISA with 7 funds/ETF’s. If I’m looking to make monthly contributions to a SIPP, should I try and replicate the same structure using the same funds? It seems inefficient in some way to hold the same fund in two different places, with two sets of charges etc. …and if one is fortunate enough to have investments outside a tax shelter, does one make a third diversified portfolio? I guess an alternative approach for the SIPP would be to get a single diversified fund such as the Vanguard Lifestrategy 60 – but is it incongruous to have carefully crafted a portfolio in one tax shelter, and then picked the simple approach for another?

    I guess the fact of having two seperate shelters (ISA & SIPP) in 2 different stages of development (ISA several years in, SIPP not started) means there will have to be some overlap.

    Apologies if I’ve not phrased my question well… I’m realising that the idea of a well-diversified portfolio applies to your entire assets, and there’s a layer of complication to achieve it in multiple places!

    Any comments or observations welcomed.

  • 39 The Accumulator October 11, 2014, 9:33 am

    If both shelters are designed to do the same job i.e. fund your retirement then it’s best to treat them as one portfolio i.e. keep some of your 7 funds in the ISA and some in the SIPP. There’s no need to sell any of your funds in the ISA to achieve this paradigm of perfection, you could just start making contribs to some of those asset classes in your SIPP instead.

  • 40 Fremantle March 31, 2015, 10:47 am

    >>So as you approach the £59,000 mark, consider switching to Interactive Investor if you can restrict your trading to twice a month and can take full advantage of II’s trading cost rebate feature.

    This should be updated. II commission credit only covers 2 trades a quarter, but they do have a regular investor £1.50 trade option once a month. For the SIPP, II takes the regular investment from available funds rather than a separate DD.

  • 41 Dilip Deb September 21, 2015, 10:26 pm

    My IFA is recommending me to transfer my existing personal pension portfolios of over £500,000 from Standard Life SIPP and Met Life to Aviva Personal Pension 2000 series with cost of 1% transfer fee. He says that his fee is a meagre £1,500 and the rest is Aviva’s fee for transfer. My IFA also says that over 5 years I would save about £27,000 on fees and charges compared to what is costing me now as Aviva has recently reduced its charges. I am 70 years old. What do you think especially the reputation of Aviva as pension providers? Please let me have your comments. Thanks.

  • 42 The Accumulator September 22, 2015, 9:06 pm

    Hi Dilip, I have no personal experience of Aviva. They are of course a huge provider of financial products in the UK. You could try the forums of the Motley Fool or Money-Saving Expert to gauge opinion.

    Does the saving include the £6500 you’ll pay in fees just to get out? If so that’s whopping. I’d personally want to know the detail of what Standard/Met Life are charging and what I’ll pay for Aviva and if there is any material change in service or asset allocation. Have Standard/Met reduced their charges in recent years or not for a long time? In other words, are you in a product that’s responsive to competition and likely to cut its charges in the years ahead?

    Has your IFA mentioned whether your assets will transfer ‘in specie’ or will they have to be sold and transferred as cash? If so, has your IFA explained that you could lose out if the market goes up while you’re out of it?

    Finally, what’s your IFA doing for the £1,500? Presumably they already charge you an annual amount for looking after your assets. As a DIY-er, I’d expect to be able to transfer my pension to a new provider for the trouble of filling out a couple of forms and doing a little reading around the subject. The pension providers do the rest and are charging you a large transfer fee to cover it. So how does your IFA justify £1,500?

  • 43 Anonymous January 27, 2016, 3:46 pm

    I’m looking at loading up no pensions contributions to the AA for the current and previous 3 tax years. These contributions when added to my existing private pension provision will total £250k. I also have DB pension.

    I would like to initially hold these new contributions in cash. Searching around the best/cheapest solution looks to be an X-O SIPP which can be held in cash @ 1%. £2500 interest and a cost of £120+VAT to set up.
    Spotted this – http://forums.moneysavingexpert.com/showthread.php?t=5397588#5

    It may also be possible to hold the NS&I Income through this SIPP too which would raise the interest rate to 1.25%

    Is there a better solution? At some point once I have worked out what I’m going to do longer term I can move provider/out of cash if needed

  • 44 The Accumulator January 27, 2016, 9:26 pm

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