View more on these topics

Sipp into something more comfortable

I have a self-invested personal pension with an independent provider. There is only around £200,000 in it, of which £140,000 is invested for income with a stockbroker, £50,000 is in an insurance company&#39s investment fund and the rest is in cash. I am being charged by all these and am not at all happy with the investment advice I receive from my other investment manager. I am drawing down £15,000 a year income. What options do I have?

My starting position is that you probably have the best vehicle to meet your needs. I assume you fully understand all the risks with drawdown, whereby you accept the investment risk in the hope of achieving better returns. You also retain access to your capital which, under current legislation, is not lost should you die.

It is always very important under Sipp drawdown to continue to monitor your options. These include not only the ability to use all or part of your fund to buy an annuity but also the option to alter the investment structure of your fund relative to your drawdown needs. Health and attitude to risk are liable to change and should always be taken into account.

You have chosen to invest in an independent Sipp with outside fund managers. When drawdown was first introduced in 1995, my basic recommendation was always to use such vehicles where drawdown was required. Originally, once drawdown was taken, it was not possible to move from one personal pension provider to another. It was for this reason that, when drawdown was required, I always recommended an independent Sipp providing access to all investment opportunities.

The regulations have now changed, allowing you to move from one provider to another while in drawdown. This means we can change investment manager and provider.

If you are unhappy with the performance of your Sipp, I would suggest it is not your Sipp provider that is at fault but your investment adviser.

Initially, most leading insurance companies offered drawdown with their personal pension plan. It was not uncommon for commission on drawdown personal pensions to be as much as 6 per cent of the pension fund or higher. This obviously increased costs. In the early years, this was a further consideration and one taken into account when recommending an independent Sipp with outside investment managers. Today, however, we have seen how it is now possible to change Sipp provider and investment manager and, with the advent of new stakeholder pensions, the costs levied by most insurance companies on their personal pensions in drawdown have fallen dramatically.

Unfortunately, another situation has occurred, in that most of the leading insurance companies have outsourced their drawdown administration. I believe those insurance companies have done themselves a disservice and complicated issues as well as increasing costs. There still remain a handful of insurers which will provide income drawdown within their own personal pension without outsourcing the administration and now offer acceptably costed plans. Two leading companies in this area are Legal & General and Skandia Life.

If you are unhappy with the fees you are paying today to your Sipp provider and the investment performance you are achieving, then it is possible to transfer your Sipp in drawdown to another independent provider and investment manager or, alternatively, to a simpler personal pension with an insurance company. The choice of investment opportunity that you wish to have will dictate the eventual provider.

One final point is that, if you retain your existing Sipp provider and merely change the investment adviser, this will result in no change to your current drawdown structure. If, however, you change the provider of your pension, then the new pension provider will be required to undertake a review of your drawdown and apply a new three-year maximum income figure.

If your funds have fallen in recent months, you could find yourself in the position of having to take a lower level of drawdown income for the next three years.


Record year for equity release according to SHIP trade body

The nine members of the consumer protection body for the equity release industry, Safe Home Income Plans, say they had a record year for mortgage business in 2001. Total mortgage business by SHIP was up 21 per cent on the previous year to £359 million. Combined business, which includes reversion scheme totalled £572m, up from […]

Daniel enters the lions&#39 den

While much of the national press was getting excited by the FSA&#39s talk of a probe into split-cap investment trusts last week, AITC director general Daniel Godfrey&#39s speech delivered at the same conference appeared to go unnoticed.This was certainly unfortunate for Godfrey as his words, urging members to accept responsibility for troubles in the split-cap […]

Use &#39lifestage&#39 marketing to attract clients

Market analyst Datamonitor says financial services companies should use what it calls “lifestage” marketing to help them stand out from competitors in a crowded market place.It says this differs from lifestyle marketing as it targets consumers around specific events rather than just how they live their life.According to Datamonitor, lifestage marketing can be used to […]

Alpha Isa aiming for the top

Lazard Asset Management is packaging two of its flagship funds inside the Lazard alpha Isa. The Isa aims to achieve capital growth through two funds, Lazard UK alpha and Lazard European alpha. Investments can be made in either of the funds or a combination.The Lazard UK alpha fund invests in 40 to 50 UK stocks. […]

Can you put a hat on?

By Sarah Scott, marketing consultant You might think the question in the title is a strange one. Perhaps even more so when you learn that it’s one of several asked as part of an assessment for Employment Support Allowance eligibility in the opening scenes of the 2016 film, ‘I, Daniel Blake’. Daniel is a carpenter […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm