Types of SIPPs
There are a few different types of SIPPs for the investor to consider.
Full SIPPs have the widest of investment choices and incur the highest charges. These are best suited to people with large pension funds. These may not be suitable for people who do not want or need a wider choice of investments which can be higher risk or less suited to producing a regular, stable income.
- Fees can be a flat rate or a percentage of the investment. There are some full SIPPs requiring initial set-up fees, trading charges and an annual management charge (approx. 1% for a £50,000 pot). Many providers will ask for a minimum contribution per month.
- Examples of full SIPPs providers: Alliance Trust, Rowanmoor, Hornbuckle Mitchell, Standard Life, Suffolk Life.
Low-cost SIPPs have a wide range of investment choice but do not include:
- Owning a property directly;
- Offshore funds; or
- Investing in unquoted shares.
Lower charges, for example – online trades will cost between £10-15 and telephone trades will cost approx. 1%.
- Fees for low-cost SIPPs should not have annual management charges (AMCs) or set up fees. This doesn’t apply to investment funds and buying stocks and shares which will have dealing costs.
- Example providers include: Fidelity Fundsnetwork, Hargreaves Lansdown, James Hay, AJ Bell Youinvest, Charles Stanley Direct, Barclays Stockbrokers.
‘Hybrid’ or insurance SIPPs
Offered by insurance companies, Hybrid or insurance SIPPs require a substantial payment into the insurance company’s own funds before you can choose your own assets.
- Fees for Hybrid SIPPs may charge initial set-up fees and annual management fees which are capped at approx. £300 and £600 respectively. Dealing fees are not normally applicable.
- Example providers: Axa, Legal & General, Aegon