At times when you don't feel like investing, it is always worth checking that you are getting the best deal in terms of charges on your portfolio. Pensions are often something that you sit on and then forget about, even in the area of self-invested personal pensions (Sipps), because you are investing for the long term. But competition is also hotting up between Sipp providers who all want a bigger slice of the ever growing Sipp pie, leading in many cases to reduced charges.
When choosing a Sipp you need to take into account your investment types and trading frequency. If you just invest via funds, for example, you might concentrate on the cheapest Sipp provider for funds. Our Sipp columnist David Stevenson concluded that he would be better off switching his Sipp from Hargreaves Lansdown to Alliance Trust Savings because he trades frequently.
Hargreaves Lansdown's Sipp has no charges and offers an excellent range of heavily discounted funds (its funds have no initial charge plus discount a large portion of the ongoing annual management charge). But if you are a regular dealer in investment trusts, exchange-traded funds (ETFs) and listed company shares, it isn't the cheapest stock broker in the business.
Alliance Trust Savings doesn't usually have a free Sipp - the annual cost is £125. But it is removing its annual Sipp charge for all new customers to its Select Sipp until 1 February 2012. In addition, all Select Sipp transfer in fees, normally £50 plus VAT per transfer, will be waived for customers where the transfer request is received before 29 July 2011.
As well as waiving the fees, Alliance Trust Savings offers a unique commission rebate structure on funds which returns 100 per cent of all commission received from fund management groups directly back to a customer's Sipp account. In many instances, this rebates up to 50 per cent of the fund's annual management charge (AMC). This is better than the Hargreaves Lansdown fund AMC discounts, but Alliance doesn't have as wide a range of funds on offer, which might be important to some investors.
The difference that full AMC fund rebates can make to a pension is significant. Imagine you invest £50,000 in a fund for 10 years with an annual growth rate of 7 per cent. If the fund had an annual management charge of 1.5 per cent, the Alliance Trust Savings' full rebate of 0.75 per cent could amount to £4,200 over the period.
If you trade frequently and have a large portfolio you might also like Suffolk Life's recently launched SmartSipp, with a simple pricing structure. It has an annual fee of £250, but no charges for buy, sell and switch transactions.
Meanwhile, Bestinvest has launched a Best Sipp, offering investors a wide range of investment options with thousands of funds, investment trusts, ETFs and shares. Unlike some competitors, Bestinvest pays a bonus on most funds in the Sipp. In addition, Bestinvest will also pay and transfer exit fees incurred by moving investments into its Sipp up to £500 per investor.
We can't make a recommendation as the best Sipp you have depends on what type of portfolio you have. But if you have been with a Sipp provider for many years, it might make sense to shop around and see if you can get a better deal elsewhere, particularly as there has been a lot of innovation in this area recently.
Bestinvest has produced this table showing how its Sipp compares to its main rivals:
|Bestinvest Select||Hargreaves Lansdown||Barclays Stockbrokers||Fidelity||TD Waterhouse|
|Proprietary rating system||Y||N||N||N||N|
|Share news and research||Y||Y||Y||N||Y|
|Share dealing||£7.50*||£9.95- £29.95||£6.95 (25 deals per month)- £12.95||Not available||£8.95 (15 trades or more per quarter) £12.50 for under 15 trades|
|Fund dealing commission||£0||£0||£0 to buy, £15 to sell non-Funds Market funds||0.25% switch fee||£0|
|Initial charge on funds||Most funds 0%||Most funds 0%||Most funds min 0.5%||20% of funds have 0%, all fund in SIPP 0%||66% of funds have 0%|
|SIPP annual admin fee||£0||£0||£200 p.a.||£0||0.5% upto £200 p.a.|
|SIPP income drawdown set-up or annual fee||£0||£0||£275 p.a.||Not available||£150 p.a.|
|Account fee - SIPP||£100 p.a.**||0.5% upto £200 p.a.||£200 p.a. (including SIPP annual fee)||Not applicable||0.5% up to £200 p.a. (including SIPP annual fee) & £40 p.a. inactivity fee|
|Account fee - ISA||£50 p.a.**||0.5% upto £200 p.a.||£50p.a.||Not applicable||£30 p.a. (up to value of £5,100) & £40 p.a. inactivity fee|
|Account fee - investment Account||£50 p.a.**||£0||£48p.a. (inactivity fee)||Not applicable||£40 p.a. inactivity fee|
|Annual loyalty bonus|
|Number of funds offering rebate||1706||1397||0||1672||0|
|Eligibility for rebate||£50,000***||£0||n/a||£100,000||n/a|
*Special launch offer until Sept 2011, after which investors with portfolios over £50,000 will continue to pay £7.50 and those with under £50,000 will be charged £12.50
**Only charged when holding investments not paying an annual commission (ETFs, Shares, Investment Trusts & Non-trail paying funds)
***The Bestinvest rebate is available for family portfolios with £50,000 or more (across all accounts, shares, ETFs, Investment Trusts funds and cash)