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New bank rate cut tightens squeeze on Sipp firms

The Bank of England’s latest 0.5 per cent rate cut has further squeezed the cashflow of many Sipp providers and made it increasingly likely that charges will rise.

Aegon and AJ Bell were previously retaining 1 per cent of the interest rate in Sipp cash accounts while Standard Life did not retain anything.

Suffolk Life was retaining between 0.25 per cent and 1 per cent while James Hay was keeping 0.9 per cent.

Aegon, AJ Bell, Suffolk Life, and James Hay have taken a 0.5 per cent reduction in income, although James Hay is reviewing its position. Standard Life has reduced its 1 per cent rate payable to 0.65 per cent.

Hornbuckle Mitchell pays between 0.1 per cent and 0.15 per cent. Before last week’s 0.5 per cent cut in bank rate, it paid 0.15 per cent to 0.5 per cent.

Director Mary Stewart says: “Advisers need to look carefully at the charging structure of different firms because some will be forced to make up the lost income by increasing margin elsewhere.”

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