Setting up a SIPP to hold a fixed term bond?

[youngsyr]

Hi all, I work for my personal service company and am looking to put some money into a 3 year fixed term asset backed corporate bond that returns 8% p.a., but I'd like to do it in lieu of paying into my occupational pension schemes held from previous employment to get the tax advantages (I'm happy to lock the money away until I retire).

I understand that I can do this through a SIPP, but the ones I've seen seem set up to hold equities with you actively trading them (including fees!).

I just want a vehicle to set up and exist for three years holding the bond with minimal fees.

Can anyone suggest an appropriate SIPP?

Thanks in advance for any help offered.

Edited by youngsyr on Monday 2nd May 12:54

[PurpleMoonlight]

What would you consider an appropriate fee?

[youngsyr]

PurpleMoonlight said:

What would you consider an appropriate fee?

Well, in all honesty a "reasonable" fee would be £0, seeing as the SIPP provider is almost literally doing nothing - I've found the bond, will sort out all the paperwork and the SIPP will just sit there receiving interest for 3 years, but as it seems anything to do with pensions seems to be a licence for people to charge a fortune regardless of their performance, I would accept up to £300 over the course of 3 years.

I'm aiming to invest around £10k in the bond.

Is that even close to achievable?

[MisterJD]

You'll need a pension provider and separate arrangement to be the custodian of the Bond you intend to buy.

There will be an element of due diligence involved by the custodian and possibly the pension provider depending on the nature of the debt issue you want to buy. On that note will you be able to invest £10k, is it possible to invest such a small amount in the issue you've found?

You want the pension wrapper and the custodian facility for £300 all in over 3years to include setup costs, transfer fees and arranging the investment?

[sidicks]

youngsyr said:

Well, in all honesty a "reasonable" fee would be £0, seeing as the SIPP provider is almost literally doing nothing - I've found the bond, will sort out all the paperwork and the SIPP will just sit there receiving interest for 3 years, but as it seems anything to do with pensions seems to be a licence for people to charge a fortune regardless of their performance,

It seems like many people you are confused between the wrapper and the underlying investment and also fail to appreciate the regulatory requirements and administration required for a pension / SIPP provider.

youngsyr said:

I would accept up to £300 over the course of 3 years.

I'm aiming to invest around £10k in the bond.

Is that even close to achievable?

I think the Hargrave Landsdown SIPP should meet (exceed?) your requirements.

http://moneytothemasses.com/saving-for-your-future...

[youngsyr]

Seems absolutely bonkers that I need anyone to be involved at all, to be honest - it's about as straight-forward a financial instrument as you can get, besides a wad of cash.

This is the bond provider:

https://www.londoncapitalandfinance.co.uk/

Why would I want due diligence, a custodian or a pension provider involved? Is this SIPP not just a "wrapper" I can put around the bond to make it tax efficient?

[sidicks]

youngsyr said:

Seems absolutely bonkers that I need anyone to be involved at all, to be honest - it's about as straight-forward a financial instrument as you can get, besides a wad of cash.

This is the bond provider:

https://www.londoncapitalandfinance.co.uk/

Why would I want due diligence, a custodian or a pension provider involved? Is this SIPP not just a "wrapper" I can put around the bond to make it tax efficient?

And you don't think the government require significant administration and reporting around such 'tax efficient' investments?

[MisterJD]

youngsyr said:

Why would I want due diligence, a custodian or a pension provider involved? Is this SIPP not just a "wrapper" I can put around the bond to make it tax efficient?

It's not your money, it belongs to the pension and subject to regulation so the due diligence will be to ensure the investment you intend to make is legitimate and eligible to held in the wrapper.

Are you a 1) High Net Worth Investor or a 2) Self-Certified Sophisticated Investor ?

[youngsyr]

sidicks said:

youngsyr said:

Well, in all honesty a "reasonable" fee would be £0, seeing as the SIPP provider is almost literally doing nothing - I've found the bond, will sort out all the paperwork and the SIPP will just sit there receiving interest for 3 years, but as it seems anything to do with pensions seems to be a licence for people to charge a fortune regardless of their performance,

It seems like many people you are confused between the wrapper and the underlying investment and also fail to appreciate the regulatory requirements and administration required for a pension / SIPP provider.

youngsyr said:

I would accept up to £300 over the course of 3 years.

I'm aiming to invest around £10k in the bond.

Is that even close to achievable?

I think the Hargrave Landsdown SIPP should meet (exceed?) your requirements.

Thanks - looks like that could well do the job.

[youngsyr]

MisterJD said:

youngsyr said:

Why would I want due diligence, a custodian or a pension provider involved? Is this SIPP not just a "wrapper" I can put around the bond to make it tax efficient?

It's not your money, it belongs to the pension and subject to regulation so the due diligence will be to ensure the investment you intend to make is legitimate and eligible to held in the wrapper.

Are you a 1) High Net Worth Investor or a 2) Self-Certified Sophisticated Investor ?

It's an asset backed fixed term corporate bond from an FCA regulated company, how much due diligence could possibly be required?

I am a sophisticated investor (ACA).

[youngsyr]

sidicks said:

youngsyr said:

Seems absolutely bonkers that I need anyone to be involved at all, to be honest - it's about as straight-forward a financial instrument as you can get, besides a wad of cash.

This is the bond provider:

https://www.londoncapitalandfinance.co.uk/

Why would I want due diligence, a custodian or a pension provider involved? Is this SIPP not just a "wrapper" I can put around the bond to make it tax efficient?

And you don't think the government require significant administration and reporting around such 'tax efficient' investments?

As above, it's about as vanilla a financial instrument as you can get, from an FCA regulated company. How much admin and reporting can you possibly cook up?

[sidicks]

youngsyr said:

I am a semi-sophisticated investor (ACA).

ACA?

Edited for accuracy...

[youngsyr]

sidicks said:

youngsyr said:

I am a semi-sophisticated investor (ACA).

Edited for accuracy...

How witty.

[sidicks]

youngsyr said:

How witty.

And there was me thinking that accountants were well known for their sense of humour?

[youngsyr]

sidicks said:

youngsyr said:

How witty.

And there was me thinking that accountants were well known for their sense of humour?

[sidicks]

youngsyr said:

As above, it's about as vanilla a financial instrument as you can get, from an FCA regulated company. How much admin and reporting can you possibly cook up?

How much would you charge to review someone's paperwork, input the details onto an administration system, report to the customer and the regulator on an annual basis and provide ongoing customer support?

[youngsyr]

sidicks said:

youngsyr said:

As above, it's about as vanilla a financial instrument as you can get, from an FCA regulated company. How much admin and reporting can you possibly cook up?

How much would you charge to review someone's paperwork, input the details onto an administration system, report to the customer and the regulator on an annual basis and provide ongoing customer support?

As much as I could, doesn't mean I'm providing value for money. Much like most of the people involved in the pension industry.

[MisterJD]

Lord Darlington: "...

[sidicks]

youngsyr said:

As much as I could, doesn't mean I'm providing value for money. Much like most of the people involved in the pension industry.

Of which you apparently understand very little.

I'll rephrase the question, what do you think would be a fair price for you to charge for the above?

[youngsyr]

sidicks said:

youngsyr said:

As much as I could, doesn't mean I'm providing value for money. Much like most of the people involved in the pension industry.

Of which you apparently understand very little.

I'll rephrase the question, what do you think would be a fair price for you to charge for the above?

Try again: fair to me or fair to the customer?