Why does PH have an obsession with SIPPs?

Why does PH have an obsession with SIPPs?

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Discussion

Edinburger

Original Poster:

10,403 posts

167 months

Saturday 12th April 2014
quotequote all
I work in financial services and I sometimes visit the Finance section on PH, but I rarely post here for various reasons.

One thing which always amazes me here is the PH obsession with SIPPs. Why is that?

There are various types of pension products and in fact there are various flavours of SIPPs. Some will be appropriate for some people, but not others.

Costs vary too and if someone doesn't need the full SIPP flexibility and functionality then why not invest in, for example, an Individual Personal Pension which invests in funds or collectives? Why pay for a full SIPP when you'd never use it, or when you can upgrade to a SIPP in X years when you do need it? Or save in an ISA if there's unused allowance?

It's a bit like someone saying "I need a car to go to Tesco" and people calling "get a Porsche 911"!

Whenever any poster askes about retirement planning the majority of responses are "you need a SIPP!". Why? I know there are some regulated financial advisers who post here but most posters aren't?

I'm just curious smile

PurpleMoonlight

22,362 posts

156 months

Saturday 12th April 2014
quotequote all
It's almost always the cheap end SIPP's being suggested. Sippdeal and Hargreaves Lansdown.

Whether or not they remain cheap for much longer with the FCA trying to put them out of business via the back door is a different matter though ....

Edited by PurpleMoonlight on Saturday 12th April 14:40

Simpo Two

85,148 posts

264 months

Saturday 12th April 2014
quotequote all
I moved to a SIPP last year because I wanted to get out of an inflexible Skandia pension and my (then) IFA recommended a SIPP. IIRC the fee is £180pa, which sounded very cheap. No idea how often they stir the pot for that though.

Edinburger

Original Poster:

10,403 posts

167 months

Saturday 12th April 2014
quotequote all
PurpleMoonlight said:
It's almost always the cheap end SIPP's being suggested. Sippdeal and Hargreaves Lansdown.

Whether or not they remain cheap for much longer with the FCA trying to put them out of business via the back door is a different matter though ....

Edited by PurpleMoonlight on Saturday 12th April 14:40
You can get some (probably most) PPs cheaper than SIPPs, if price is a factor.

My point is that many people take SIPPs out and then only invest in funds - which you can do cheaper in a PP. So they're often paying for functionality and flexibility that they just don't need. If that was the result of a recomendation by an IFA, he'd be pulled up for it by the regulator.

Edinburger

Original Poster:

10,403 posts

167 months

Saturday 12th April 2014
quotequote all
Simpo Two said:
I moved to a SIPP last year because I wanted to get out of an inflexible Skandia pension and my (then) IFA recommended a SIPP. IIRC the fee is £180pa, which sounded very cheap. No idea how often they stir the pot for that though.
What do you mean "stir the pot"? Review your investment strategy? Rebalance? £180 p.a. for a SIPP is probably on the cheaper end.

Simpo Two

85,148 posts

264 months

Saturday 12th April 2014
quotequote all
Edinburger said:
What do you mean "stir the pot"? Review your investment strategy? Rebalance? £180 p.a. for a SIPP is probably on the cheaper end.
Stir the pot - do something useful.

They won't be doing any 'IFA-ing'; I think it is £180 to keep it in their 'wrapper'. I presume somebody is doing something with the funds... it made good sense last year when I moved but I've forgotten it now. That's how I am with finance - load up my brain, assess the facts, make a decision - then clear the space for something more interesting.

NB: I don't pay in any more so it's just a lump of money.

Edited by Simpo Two on Saturday 12th April 17:31

Condi

17,088 posts

170 months

Saturday 12th April 2014
quotequote all
At a guess because people on PH like to be in control, or feel they are in control. SIPPS provide that, managed pensions dont.

mph1977

12,467 posts

167 months

Saturday 12th April 2014
quotequote all
Edinburger said:
I work in financial services and I sometimes visit the Finance section on PH, but I rarely post here for various reasons.

One thing which always amazes me here is the PH obsession with SIPPs. Why is that?

There are various types of pension products and in fact there are various flavours of SIPPs. Some will be appropriate for some people, but not others.

Costs vary too and if someone doesn't need the full SIPP flexibility and functionality then why not invest in, for example, an Individual Personal Pension which invests in funds or collectives? Why pay for a full SIPP when you'd never use it, or when you can upgrade to a SIPP in X years when you do need it? Or save in an ISA if there's unused allowance?

It's a bit like someone saying "I need a car to go to Tesco" and people calling "get a Porsche 911"!

Whenever any poster askes about retirement planning the majority of responses are "you need a SIPP!". Why? I know there are some regulated financial advisers who post here but most posters aren't?

I'm just curious smile
same as a 'roid head tradesman becomes a 'powerfully built company director',

same as a BTL and 'property development' were the keys to all riches and nothing at all to blame for the ridiculous state of the property market


it also fits with the PH stereotype of

- self employed or contractor
- borderline socipopath in denial , believes they are a Libertarian and/or 'kipper
- belief that the politico-industrial- military complex is out to get them



ringram

14,700 posts

247 months

Saturday 12th April 2014
quotequote all
As has been said

1. Clearer charges
2. Flexibility
3. Control
4. Generally cheaper

GT03ROB

13,207 posts

220 months

Saturday 12th April 2014
quotequote all
mph1977 said:
same as a 'roid head tradesman becomes a 'powerfully built company director',

same as a BTL and 'property development' were the keys to all riches and nothing at all to blame for the ridiculous state of the property market


it also fits with the PH stereotype of

- self employed or contractor
- borderline socipopath in denial , believes they are a Libertarian and/or 'kipper
- belief that the politico-industrial- military complex is out to get them
yes


gaz1234

5,233 posts

218 months

Saturday 12th April 2014
quotequote all
Edinburger said:
I work in financial services and I sometimes visit the Finance section on PH, but I rarely post here for various reasons.

One thing which always amazes me here is the PH obsession with SIPPs. Why is that?

There are various types of pension products and in fact there are various flavours of SIPPs. Some will be appropriate for some people, but not others.

Costs vary too and if someone doesn't need the full SIPP flexibility and functionality then why not invest in, for example, an Individual Personal Pension which invests in funds or collectives? Why pay for a full SIPP when you'd never use it, or when you can upgrade to a SIPP in X years when you do need it? Or save in an ISA if there's unused allowance?

It's a bit like someone saying "I need a car to go to Tesco" and people calling "get a Porsche 911"!

Whenever any poster askes about retirement planning the majority of responses are "you need a SIPP!". Why? I know there are some regulated financial advisers who post here but most posters aren't?

I'm just curious smile
I thought sipps are for peeps earning c100k and saving say 20, 30, 40k in their pension?

Jockman

17,912 posts

159 months

Saturday 12th April 2014
quotequote all
Perhaps SIPPS are simply the acronym du jour ??

Much the same way as NISAs will be going forward.

I've gone from a SSAS to PPs without much fuss but now I want to put a commercial property in my pension - back to SSAS or SIPPs it would seem yes


gaz1234

5,233 posts

218 months

Saturday 12th April 2014
quotequote all
Our company pensions are sips I believe and don't charge employees. I also have fp one which charge admin fees of .9% p/a, for what?
Will be moving it soon.

gaz1234

5,233 posts

218 months

Saturday 12th April 2014
quotequote all
Our company pensions are sips I believe and don't charge employees. I also have fp one which charge admin fees of .9% p/a, for what?
Will be moving it soon.

menousername

2,106 posts

141 months

Monday 14th April 2014
quotequote all
so what are the best Individual Personal Pensions out there then?

I went for a SIPP because, being relatively uneducated about pensions, I needed advice or a pension manager and everyone seemed to want chunky fees for their advice or to set it up for me

I opened a SIPP to mirror the holdings within my stocks ISA, which are managed by the usual managers so I researched their holdings and tried to replicate it as best I could


walm

10,609 posts

201 months

Tuesday 15th April 2014
quotequote all
Don't forget, everyone on here is taxed at 40 or 45% so, particularly now, pensions are a far better deal than ISAs if you can tie up the money that long.

So then it is a question of self invested or PP in funds managed by someone else.

Since the other main characteristic of PH Company Directors with 40-45% marginal tax rate is their ability to beat the market by "doing research into great companies". Hence a SIPP is the obvious way to maximise their pot while maintaining the control necessary to pick the next Google, Apple and Netflix rather than pay fees to professional fund managers who will underperform.

I use a SIPP to buy trackers and I am only now realising that might not be the cheapest way to do it.

Mr Noble

6,535 posts

232 months

Tuesday 15th April 2014
quotequote all
walm said:
I use a SIPP to buy trackers and I am only now realising that might not be the cheapest way to do it.
What might be cheaper or better than that? I do the same (HL sipp and passive index trackers mostly) and wonder if there is a 'better' way of doing things.

I moved all my pensions into an HL sipp about 4 years ago after realising just how much money my IFA company was creaming off the top of my pension! Compounded up over the 35 years I had left, it was quite eyewatering!


Mellow Matt

1,343 posts

206 months

Tuesday 15th April 2014
quotequote all
I've been thinking about opening a SIPP - I can't see a reason not to?

I would just invest in funds, so if I opened a SIPP with Best Invest, I'd be charged 0.3% per year for this. Is there a cheaper way to have a pension and still be able to pick funds...?

Dr_Gonzo

959 posts

224 months

Tuesday 15th April 2014
quotequote all
Mellow Matt said:
I've been thinking about opening a SIPP - I can't see a reason not to?

I would just invest in funds, so if I opened a SIPP with Best Invest, I'd be charged 0.3% per year for this. Is there a cheaper way to have a pension and still be able to pick funds...?
I'm in exactly the same situation. I don't necessarily want a SIPP per se, just the cheapest way to have a pension which I can choose the funds in which to invest.

Any recommendations would be apprectiated! smile

Ginge R

4,761 posts

218 months

Tuesday 15th April 2014
quotequote all
I started 4 personal pensions for clients today, all four recommendations were different. Which is best depends on your input and what features you require, how much you have and what your other assets/plans are.

I am seeing a client tomorrow who is maxing out her unused annual allowance for the past few years and it's going into very cheap funds to dimply sit there and gather the tax relief for 3 years time. No need for fund management sophistication, uber functionality and expense - rather, focus on drawdown characteristics and good admin from the life company.

Post budget a Higher Rate tax payer might just want the cheapest wrapper before drawdown, or a professional person might want a personal pension to work hand in glove with an investment bond and other investments, which might suggest a platform or Wrap.

If you have a SIPP and if you like your research, you should have been on top of Lipper these past few weeks. If you have a SIPP and are letting the funds role - fine.. but are you paying for something you don't need? Many personal pensions with decent managed funds or passives can be had for peanuts these days. And getting monkeys if you pay peanuts is so 2005.