How To Slash Your SIPP Fees

How To Slash Your SIPP Fees
Underwater by Andy Deitsch. Why?

If you have stockmarket assets in your SIPP, check out the six tips below to ensure you're not being ripped off with exorbitant SIPP charges

Are You Paying 12 Times More Than You Need For Your SIPP?

A Sure Way To Grow Your SIPP Is To Cut Its Running Costs

According to The Telegraph, you could be paying thousands of pounds a year more than you need for stockmarket assets in your SIPP.

Simply moving your SIPP from a costly provider to a more competitive firm could leave you with considerably more money in your pension fund, without affecting your choice of stockmarket assets.

Within its article is a table comparing 17 major SIPP platforms on a like-for-like basis.  It reveals the costs of running a SIPP from a fund as small as £5,000 to one of £1 million, with a variety of fund sizes in between.

The numbers are staggering. 

At £1 million, your annual SIPP fee could £220.  Or it could be an astronomical £2,699. 

That’s 12 times more!

Actually, you could more than halve that cost! 

If you invest your money in passive funds, shares, investment trusts, EFTs, gilts or bonds, check out a SIPP from AJ Bell.  You'll pay £100 per year no matter how large your fund (at May 2018).

But it doesn’t end there.

Over the years, the compounding effect of paying way over the odds could wipe out a large part of your retirement fund. 

Literally tens of thousands of pounds: money missing from your retirement and unavailable for those you leave behind.

Six SIPP Tips To Help You Save Money


1.

If you find a cheaper SIPP than your present provider, establish what exit fees and penalties you’ll suffer when you close your current pension.  Most providers will restrict their exit charges to a maximum of 1 per cent of your fund value, though some older pensions have all manner of charges and adjustments included, which incredibly has seen some people lose as much as 20 per cent of their pension pot.

2.

If your fund value is under £100,000, you might be better off with a SIPP that’s charged on a percentage basis.  At £100,000 and above, a flat fee could work out more cost effective.

3.

If you’re a frequent trader, watch out for trading charges.  The most expensive platforms can charge almost three times as much as the cheapest.

4.

Beware of the ‘free’ SIPP, because they’re rarely that.  The SIPP operator has to make money to survive, which is fine.  You need you to know how it’s being done: for example, by hiding hefty administration charges within fund prices or by retaining interest on your cash and deposit accounts.

5.

If you’re considering moving a final salary (defined benefit) pension, it’ll need analysing by a suitably qualified pension transfer specialist to check your transfer value is large enough to compensate you for giving up the guarantees of your scheme.

6.

If you’ve reached 55 and you’ve drawn some or all of your tax free cash, leaving the balance of your fund invested, you could also be paying additional drawdown fees.  Not only can these can vary massively between one SIPP and another, the flexible features can also be very different too.

How To Check You're Not Paying Over The Odds In Charges

Check out the charges levied by AJ Bell as it regularly comes out as being the most competitive SIPP operator on the market.

A switch could save you many thousands of pounds over the years, which would be great for you and your family.

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AJ Bell Is Often The Best Value SIPP For Stockmarket Assets

That's our opinion.  Not just because AJ Bell was the first company to offer an online SIPP.  Nor that it's received many prestigious awards.  And not even because the wife of SIPPclub's Founder has an AJ Bell SIPP.  It's because it's one of the most competitive stockmarket SIPPs on the market. 

Over time, charges can wipe out a huge part of your fund.  We like AJ Bell because there are no set-up costs.  If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund.  And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment).  However, you should always compare charges in detail, because AJ Bell could be more expensive than other providers, depending on the type of stockmarket assets you hold.

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