Mainstream SIPPS

Mainstream SIPPs enable the investor to participate in a variety of different investment classes, including property. They generally require someone with capital of GBP50K to GBP100K to place in the SIPP due to the more sophisticated costing structure.

Budget SIPPS

These SIPPs are fairly common as they suit most investors, although they don’t allow property. 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 policies 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 the 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 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%. Generally, most pension providers will review their charging structures every 3 years.

Initial Charges

Some providers may impose an initial fee on taking out a policy, 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 from just under the bank base rate to as little as 1%. 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 often these fees can rack up.

Exiting

When you retire, cash in your pension, purchase an annuity or drawdown an income you can expect to pay from zero to GBP1K.