Low Cost SIPP

Low Cost SIPPS and QROPS


Not a Low Cost at All

Low Cost SIPP

Not low cost at all

I have just seen an international  publication promoting “new” low cost SIPPs and QROPS to the offshore advice market. Since we offer the most competitive low cost SIPPs and QROPS in the international marketplace, we should always consider new options.

Being keen to see the best deals for clients, we looked at the article straight away – International Pensions Article – but were sorely disappointed when examining the details of the low cost SIPPS and QROPS.

We did an appraisal against what we offer, which are whole of market offerings,  from the UK and Malta on a fee basis.  These offerings, typically, charge less than 1% per annum and that includes the fund fees.

The “new”  low cost SIPPs and QROPS on offer, is actually a massive five times the cost when compared to several popular UK SIPP platforms in year 1. Yes, you have read that correctly, 5 times the cost.

From year two it is at least 2.5 times the cost per annum.  Further, the minimum fund  size requirement allowed is below what many would consider appropriate for anything other than a low cost Stakeholder type pension in a good index fund.  Funds of less than £150,000 probably should not be considering a QROPS, other than in exceptional circumstances.

Small funds and high charges are not good bedfellows.

So, what do we offer as a positive?

SIPP- Self Invested Personal Pension

The major benefit of a SIPP over an older style personal pension is the ability to select, or “Self- Invest”, a wide range of funds. The market leading UK SIPPs have platforms that allow investment into thousands of differing low cost funds at charges lower than 1% per annum, including fund fees, and with no up-front fees or hidden charges.

We offer these best of breed SIPPs and we offer the platforms within QROPS as we have spent years setting up regulation in all the main territories including the UK, the USA and most of the EU. In fact, we believe we offer low cost SIPPs and QROPS to anyone wanting our advice, and who want to avoid hidden commissions.

Why don’t offshore firms offer “best of market SIPPS” or true low cost SIPPs and QROPS?

“Hidden commissions” to sum it up in two words! It is paid to the offshore salespeople that will market a product, and there is no information in the public domain. Further, unless the offshore salesman actually works for a company with a “real” FCA registered office in the UK , then it means they cannot deal with many of the market leading, cost-effective UK SIPP firms in the first place!

SIPP Lite

The “new” low cost SIPPs and QROPS on offer in this article only allow the appointment of a specific non-UK asset manager based in the Channel Islands- somewhat defeating the principle  of self-investment which is the whole idea of a SIPP. There are much better alternatives available in the UK.

Tweet

When this article appeared on Twitter, a UK IFA responded “Why on earth would anyone place their £20000 in something like that ?“

Why indeed?

The moral of the story is not to take the headlines of an advert as fact and to ask your adviser to look at the whole market before making a recommendation.

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.

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