SIPP Recommendations

6th Feb '22 by Gilgamesh_Investor

3 comments 415 reads

Hi all,

I am looking to open a SIPP and thought I would get some opinions and recommendations (not advice) from others who have done so.

Some companies that I am particularly interested in holding are only eligible via a SIPP and are overseas companies... This leads me onto my questions;

(1) What are the most competitively priced SIPPS that are not solely funds and allow for DIY investing? Also, do people recommend having a SIPP with the same broker you hold say a stocks and shares ISA with? i.e. Hargreaves Lansdown for instance...

(2) I am looking to add a SIPP alongside my current public sector pension; not to replace it. Does this complicate matters if you have a public sector pension?

(3) If a withholding tax is applied to dividends, lets say 20%, how does one claim this back? Also, how does it work, will I be paid all of the dividends, a percentage or do I pay the tax once I sell the holding or withdraw the capital? - I am planning on compounding the dividends alongside the SIPP for at least 30 years to come...

(4) Does anybody know of any services that can accumulate and/or locate prior pension schemes to make it easier to transfer into this SIPP?

Thank you in advance to anybody how has any insights or prior experience in such areas.

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PLS1nve5t

12th Feb '22

Its a shame to let this post go by without a comment, so here it goes :-)

I'd question if it is worthwhile starting a SIPP if you have 30 years to go before taking an income from it.....

The current rules around SIPP's must be considered as very "fluid" over that period of time.

You dont say, but your tax situation must be considered. If your paying 40 or 50% tax then it will be tempting to to start a SIPP now, but for how long will that be the case ? for at least the last five years there have been rumours of cutting the tax relief to 25% ish regardless of your current tax rate. If your a 20% tax payer now then putting it off could be beneficial !

Also you need to take into account the "Pension Lifetime Allowance", (about £1mill at the moment), if you have a public sector pension, then what will that be worth in 30 years time? You could wind paying a punitive tax on the excess (Public Sector + SIPP) I believe its 60-70% on the excess but please check for yourself.

What I'm saying is, you cannot forcast 30 years ahead as to what your public sector pension will be worth, how the lifetime allowance will change, or what the tax relief situation on contributions will be.

Also if your that young, why tie up your cash in a SIPP when you cant get your hands in the cash until your 55 (at the moment) soon 57, and in 30 years it could be 65+ !!

You dont say, but mortgages, children, uni fees etc may have a large call on the cash pile in the more immediate future, for now I'd side on ISA's (yours and partners) before starting a SIPP, at least you can get your hands on the cash if need be.

Re-reading your OP, I'm giving advice rather than recommendations :-) So toanswer your questions

(1) I've use HL and Interactive Investors fo my SIPP. Started with HL, but the 0.45% charge for funds was to much so I switched to II (£10/ month). Now back to HL as I'm in draw down. II used to be more expensive for this but now so much now - see how they shape up in 30 years :-)

No worries having HL holding SIPP and ISA's, maybe costs more than other places, but the difference is not significant to me.

(2) - See comments about "Pension Lifetime Allowance", I dont think you would want to exceed this.

(3) - A SIPP is good in that USA witholding tax can be reclaimed in full. HL as a broker will do this for you if you fill in the W8-BEN (online file and forget, have to do this every 3 years), no worries. I dont think witholding tax can be reclaimed on and ISA.

(4) - Your that young and cant remember your pensions ? :-)

Try Google plenty to choose from,

https://www.moneyhelper.org.uk...

https://www.ageuk.org.uk/infor...

Or Pensionbee - they try to manage on your behalf, but I cant see why you cant let them collect it all together then transfer into a SIPP.

KevinS1

Just seen this so her is my two-pennies worth;

Similar to PLS1.... I have most of my holdings with HL, but also a small holding with IG.

HL are often criticised for high fund costs (Unit Trusts) and I agree with this. I wasn't aware how much I was paying them monthly for this privilege, but now all my holdings are in Inv Trusts or direct shares and the costs are very small - capped so whatever size my PF it stays the same.

HL are also cheap for drawdown and I find their platform to be very good and holding all of my investments (95% of them) easy - and can also get very simple access (and trading) for my wife's SIPP/ISA and my Mums a/c - they are all linked which is very simple.

Regards SIPP vs ISA then it is a call on getting tax-free status on the way in with your money or on the way out. In addition, you do need to take into account the LTA and what this can mean in later years.

Personally I think I got it wrong - I have enjoyed all of the tax-free returns by adding to my SIPP, but risk in later life being hit with a 55% tax charge on anything over the LTA. With hindsight I'd rather have contributed more to my ISA to allow me greater flexibility which as I get older and try to juggle multiple withdrawals & pensions could get quite messy. (Although ironically on any big down days I take satisfaction that 55% of the losses are the tax-mans & not mine potentially - I know this is the same for any good days as well, but I try and ignore these :-) )

As PLS1 said, you really need to think about your circumstances, what the future may look like and take into account any future changes to the tax regime. I think the tax-rebate on pension contributions is a very likely target in the near future, plus I also think the LTA could end up getting more complex or a similar treatment.

Best if luck. K

Gilgamesh_Investor

Thank you @PLS1nve5t & @KevinS1 - I didn't go too much into numbers and figures for obvious reasons; no Tinder Swindlers on this chat, I suspect!

I will take the information on board and diligently check whether a SIPP would be in my best financial interests. I am due a £7,000 pay-rise of the next 3-5 years so was debating just paying this into a SIPP as I do not need it, but there may be better options for me than locking that money away for 35 years +

Thanks again :)

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