Should I keep Hargreaves Lansdown SIPP for income drawdown?
|Retirement | SIPP
Asked by pvcdoc, submitted
27 May 2013.
I have temporary annuity with Living Time, plus a SIPP using OEICs with Hargreaves Lansdown. When the LT annuity matures in 12 months time I'm intending to put my SIPP into income drawdown and combine the two into one drawdown pot using investment trusts.
Are there any problems with this and would it be better to use another SIPP drawdown provider?
Answered by Justin on 13 August 2013
Yes, you will be able to transfer the maturity value from your Living Time temporary annuity to another pension provider. This can then be used to provide retirement income via an annuity or income drawdown.
I can't see any problems with this, the main potential issue being whether there is sufficient money in your combined pension pot to provide a reasonable income for the rest of your life - and this will also obviously depend on investment performance along the way.
Hargreaves Lansdown (HL) will have to change its SIPP charging structure by next April in line with new rules (applying to all discount brokers/platforms) banning commission payments from fund providers to brokers and platforms where no advice is given. Put simply, HL will no longer be able to receive the average 0.66% initial commission and 0.77% annual commission payments it currently receives from fund payments. The company will instead have to use lower cost fund versions without commissions built in and charge customers directly for its services (as Alliance Trust Savings and Charles Stanley Direct already do).
Technically the current commission system can continue to apply to existing discount broker/platform clients until April 2016, although maintaining two concurrent pricing models would get very messy.
If you hold investment trusts these changes may not be an issue, since investment trusts don't pay sales commission. HL currently charges 0.5% year capped at £200 to hold shares and investment trusts within its SIPP, although whether this charge will change when the new pricing is announced is currently anyone's guess.
If you only want to hold investment trusts then Sippdeal is likely to be the cheapest route at present. There is no annual SIPP charge and dealing is a flat £9.95. Unlike HL it charges drawdown setup and annual fees, £180 and £90 respectively, but these would soon be outweighed by the lack of annual SIPP fee.
Given a lot could change over the next few months, I would defer a decision until more platforms, including HL, have announced their new charges. But unless Sippdeal puts its prices up I would expect it to remain very competitive in your scenario.
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Readers' Comments (2) - To post a comment please register or login
Comment by pvcdoc at 3:29pm on 13 Aug 2013:
Thank you very much for your comments, Justin.
Comment by hybrid at 4:14pm on 08 Sep 2013:
I would point out that Sippdeal currently say that they rebate back up to 0.50% in fact this amount is more like 0.25% on average based on my current portfolio.
On a similar topic I have been waiting now for 3 months for Sippdeal to convert an Invesco Perpetual fund into a clean share class with the result that I am receiving 0.20% rebate on a 1.50% amc? How can the providers/ nominees get away with this in the so called "treating customers fairly" era.