Mainstream SIPPS

Mainstream SIPPs enable the investor to participate in a variety of different investment classes, including property.

Low-cost SIPPS

These SIPPs are fairly common as they suit most investors, although they don’t usually allow property investment. They are set up to attract those who have investments in insurance bonds or unit trusts. Their cost structure can start with investors contributing as little as GBP5k into their portfolios.

Bespoke SIPPS

Bespoke SIPPs can encompass a much larger and more diverse portfolio. However, these types of plans typically have much higher costing structures due to the complex nature and variety of the funds.

The fees vary on all SIPPs depending on the nature of the investment and the provider and costing structures can be complicated. When considering a pension plan you need to estimate whether the charges applied for someone managing your investment are worthwhile.

Alternatively, you can manage your portfolio yourself, but it is recommended to take financial advice from a qualified professional before embarking on any financial plans. The following is a general explanation of the more common fees:

Annual Charges

As the name implies, an annual charge that is applied by the provider. Typically this is around GBP500. Some firms make their money through commission that is applied on unit trusts or insurance bonds, whereas others might charge a flat 0.5% to 1%. Generally, most pension providers will review their charging structures every year.

Initial Charges

Some providers may impose an initial fee on taking out a plan for the establishment, however, these do not include upfront costs, commissions payable or stamp duty on investments.

Share Charges

Generally, SIPP equities or unit trusts can cost from zero to GBP30 a time and there can be further expenses when removing a security from your SIPP. It is approximately the same for gilts and bonds, but overseas equities can be more expensive.

Cash Deposits

The interest rate on cash deposits varies dependent on how much access you need or whether you want to tie up your cash for longer periods of time and the risk the bank operates (for example, non-lending banks take much less risk but also traditionally offer much lower interest rates). Most will not charge a fee for managing cash deposits.

Transferring in and out

Transfer costs can range anywhere from zero to GBP150. It should be noted that if you are trading these fees can often escalate.

Exiting

When you retire, you can expect to pay from zero to GBP1k dependent on how you want your fund paid.