You get nothing for nothing. Make your own investments with after tax money.
Do not trust anyone but yourself to provide your income in retirement.
| I'm currently being persuaded that the HL Vantage SIPP is a good idea.
| I've read the terms and conditions and it all seems too good to be true. | Any comments?
A reasonable summary, but a few points I'd make...
He writes: "Either way, the income you take from a pension is taxed at the
rates - 10% starting rate, 22% basic rate, 40% higher rate. It doesn't matter
that income was generated inside the pension fund, because it is taxed on the
from the pension to you, not on the way into the pension. In particular, the
taxation rates for dividends (which are effectively 0% starting- and basic-rate
25% higher-rate after you've taken the tax credit into account) will not be
This is misleading as it implies you get a worse deal from dividend income
pension. This is not true, because you are receiving dividends on a larger sum
pension assuming the same net investment. Eg assuming basic rate tax on the way
and the way out, every 100 you invest in a SIPP will be grossed up to 128, so
get 28% more in dividends. If this is all taxed at 22% on the way out you break
But it isn't, as you get 25% of it is tax free, so you get better tax treatment
dividends within the pension.
"For example, if you're a higher-rate taxpayer now, tax relief boosts your
contributions to 1.667 times as much in the pension as you contributed. If the
contributions you're thinking of making will affect your basic-rate income in
retirement, that downgrades the value of those 1.667 times your contributions to
0.835 * 1.667 = 1.392 times your contributions. If you reckon the restrictions
downgrade the value to you further by a third, the overall value to you is 0.667
1.392 = 0.928 times your contributions. Not a good bargain as far as you're
Other than not being able to get at the money until 50/55, there are no
on 25% of the value of your pension fund. So reducing that part by a third is
nonsensical. Even for the rest, the restrictions reducing the value by a third
bit over the top, the restrictions can actually be beneficial (as he did point
although no mention of means tested benefits).
I've got one too, which I started after reading recommendations in this fine
newsgroup. No problems so far, though they do send skiploads of marketing
But seriously - how safe is this, or any other SIPP? A possible reason for
HL's low costs may be an over-aggressive and over-risky investment strategy.
I've no idea if that's true - just speculating. So in a serious stock
market downturn they might be more exposed than competitors.
Might be a good idea to freeze your current SIPP every 3-4 years and start a
new one with a different provider, to spread the overall risk.
Bitstring , from the wonderful
person news outlook said
Depends, what did you invest it in?
?? What do you suppose the 'SI' in SIPP stands for? You invested it
yourself, all HL do it provide the wrapper necessary to satisfy the
government (unless you picked some HL fund to invest in).
Having been on their mailing list for about 10 years, my opinion is
that HL are sales orientated and were pushed into, rather than
embraced, low cost pensions such as stakeholders and SIPP's. At every
opportunity they will try to sell managed funds with large initial and
ongoing commission so that they can crow about the discounts they
give. They do a fair job of making SIPP's seems like with profits
funds what with their selection of 'recommended' funds. You can of
course do your own thing and invest in equities, Investment Trusts and
Exchange Traded Funds, but they don't publicise that nearly as
I have one with them (and some smaller ones elsewhere for comparison) and
they seem fine so long as you choose your own funds and don't just follow
their advice. They're certainly a fair bit cheaper than places like
Fidelity's FundsNetwork - for non-pension investments - so their SIPP should
be good value too (as it's just a wrapper).
The only criticism I'd make is that their online fund valuations are slow to
update. Most places have fund prices updated by early evening but HL take
till the following morning.
One question that this chat has provoked is - how secure is a SIPP?
What happens if the provider of the wrapper goes broke?
Also as I'm nearer to drawing a pension than starting one I make the
investment performance is not as important as getting an average return. Is
You will find that Hargreaves Lansdown (or any insurance company) do
not actually "own" the assets within your SIPP or your pension plan.
These are either segregated into a Trust or Nominee Account. If they
went broke, your assets could not be touched.
Overall, I think the HL SIPP is a very good option if you just use
their execution-only services, make your own decisions, and ignore /
recycle all the fund marketing bumph that they inundate you with.