This means clients can build up a pension pot through the other fund options, then take advantage of self-investment option at a later date. They may, for example, build up their pension pot using the other funds then add the self-invested option when their fund value is large enough.
The Sipp provides access to a range of investments including shares, collective investment funds and UK commercial property. It has a fund supermarket option, providing easy access to over 800 funds from Cofunds. Clients also have access to 150 discretionary investment managers.
Prudential says it designed for investors who want to self invest at the outset and those who prefer to self invest at a later date.
The Sipp has a £300 set-up fee and an annual charge of £425 which will be applied only if investment is held in the Sipp bank account. It has no annual management charge or bid/offer spread but these types of charges may be applied on the underlying investments.
There are various investment-related fees such as dealing charges which range between £25 and £100 depending on the nature of the investment and whether dealing is through paper or paperless transactions. Extra charges also apply to property purchase. Clients can borrow up to 50 per cent of the net asset value of their fund to make investments in assets other than property but this will incur a borrowing facility fee of £100 a year. An establishment fee for this will vary, dependent on the costs incurred and time spent on the transaction. Prudential points out that borrowing to invest can be risky as there is a chance that the investment growth rate will not exceed the interest rate on the amount borrowed.
Prudential realises that service is particularly important to IFAs who deal with Sipps, so it has appointed Suffolk Life to administer the product. This should go down well with IFAs as it has a good reputation, particularly for commercial property and listed shares.