Can I move my Hargreaves Lansdown SIPP?
|Retirement | SIPP
Asked by inghamt, submitted
21 July 2013.
I was quite suprised when I read the drawndown article in the Sunday Times today quoting you.
I have my SIPP with Hargreaves Lansdown Vantage and l always believed they were cheap. As a result I have a couple of questions...
The first is I am thinking of moving £120,000 into drawdown. Can I move that amount from HL and put it in drawdown with a new provider or do I need to leave it with HL?
Second, assuming I can move it I want to take the £30,000 tax fee lump sum but leave the rest of it. What would you recommend?
Answered by Justin on 23 August 2013
To answer your first question, yes you can move your pension from Hargreaves Lansdown to another pension provider. You can do so either before entering income drawdown or after entering income drawdown with Hargreaves Lansdown (the former is probably more straightforward).
And yes, you can take £30,000 (i.e. 25% of the fund) as a tax-free cash lump sum, leaving the balance invested from which to draw an income.
Hargreaves Lansdown (HL) tends to be more expensive than some rivals when holding funds because it effectively pockets an annual platform fee out the charges you pay to fund managers. On average HL keeps about 0.6% of the commission it receives from fund providers after paying back an average 0.17% to customers as a ‘loyalty bonus’. So customers with commission paying funds are, on average, effectively paying an annual 0.6% fee for HL's services, which is high versus many competitors. The figures I supplied the Sunday Times reflected this.
HL will have to change its charging by April 2014, as will other platforms and discount brokers who haven't already done so, in line with new rules banning platforms/discount brokers from receiving payment for their services via fund managers. This will result in having to offer lower cost 'clean' versions of funds, which have no commission or platform fees built into charges, coupled with an explicit fee paid directly by customers for the service provided.
You may wish to wait until HL reveals its new charging before making a decision. It will be interesting to see what happens as HL would have to cut its profit margin somewhat and/or negotiate cheaper fund versions than the competition to look competitive on price overall.
Meanwhile, you might want to use my other site www.comparefundplatforms.com to get a feel for how the competition stacks up in terms of fund choice and cost.
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Readers' Comments (3) - To post a comment please register or login
Comment by brucedodsworth at 8:44am on 10 Nov 2013:
HL currently provide the TER where appropiate which to me is transparent ie Fund managers charge breakdown is-of this the fund pays a % to HL and of this HL make a Loyalty payment. This overall TER will from April be given what is in effect a new name and potentially be the same numerically (the amount I am charged) or reduced as everyone seems to believe. My question is why is HL not reducing the TER now if they are uncompetitive?
Comment by SteveJ at 3:53pm on 18 Jan 2014:
I have over £300K invested in funds in a HL SIPP & about 1/2 that in a HL ISA, invested in shares. I also have about £150K in a Barclays Stockbrokers ISA, again invested in shares. What I particularly like about these platforms is how user friendly they are, both in terms of one's investments as well as deciding what else to invest in. I'm also a regular user of Digitallook, so I realise that both HL & Barclays use the Digitallook website. There is no doubt that Alliance Trust, Cavendish & iii (to name but 3) are all cheaper & will continue to be so. I would dearly love to change, but where to? Where will provide me with the user friendly tool that I am used to?
Comment by schapman at 4:34pm on 26 Jan 2014:
I have over 400K in my SIPP with HL and 70 in an ISA and was getting worried about the new charging rates. But I agree with the previous comment that flxibility is also key. I used the comparefundplatform part of this web_site and found that none of the listed platforms could offer me the mix of funds, shares and investment trusts that I currently hold in my SIPP. Also, I am expecting the rebate or Loyalty bonus to somewhat offset the management charge, I hope!