How to sort your Sipp
There are several key factors, ranging from fees to service, to keep in mind
If organising your personal finances is on your list of New Year’s resolutions for 2024, tidying up your pension savings is a crucial part of the job. Too many people have multiple pension plans, many of which are underperforming and expensive; they will be worse off in retirement as a result.
Consolidating as many of your pensions as possible into a single account that offers good value and the potential for superior investment performance makes sense. It’s not always right to transfer pensions – final-salary schemes offer guaranteed benefits most people won’t want to give up, while certain plans come with extra valuable perks – so you may need to take professional advice. But the principle of consolidation is sound.
In which case, you almost certainly need a self-invested personal pension (Sipp), a simple pension wrapper inside which you can make the best-possible investment decisions for your needs and circumstances. There is plenty of choice: providers ranging from life insurers to stockbrokers, as well as technology-enabled new entrants to financial services, all offer these accounts.
Charges are paramount here, but comparing like with like isn’t easy, since Sipp providers levy fees in different ways. First, you’ll need to consider the charge made for the Sipp itself – often described as an administration fee or a platform charge, if you’re looking at plans held on online fund platforms. Some providers charge flat fees, which can be cost-effective if you have a large pile of savings; most levy a percentage of the value of your plans.
In addition, Sipp providers may impose charges when you buy or sell investments inside the wrappers – collective investment funds, say, or individual shares. These will be important if you regularly change investments. And there may be other charges to consider too: transfer fees, say, if you want to move your savings again in the future. There may also be charges on the investments you hold in your Sipp, especially if you use collective funds. Some providers can negotiate special deals on your behalf.
In addition to cost, you should also consider investment options when comparing Sipps. The Sipp rules allow you to invest your pension savings in a huge variety of assets – equities and bonds, for example, as well as funds that invest in them, but also real estate, certain commodities and cash holdings. However, not all providers offer the full choice. This is something to think about if you’re planning to go beyond a more conventional investment approach.
Another area to focus on is ease of use and service. With most Sipps, you run the plans online, making investment decisions over the internet, often with access to extensive research materials and support. This can work well, but you’ll need to feel comfortable with the provider’s online facilities . It’s worth having a look at several platforms with this in mind. Good service, meanwhile, is paramount, particularly if you run into a problem. Many organisations publish regular research on Sipp users’ satisfaction levels.
With so many different factors to consider, it isn’t possible to recommend one Sipp provider as the best option. The right choice for you will depend on your circumstances. However, recent research from financial-advice site Times Money Mentor picked out several plans in different categories, which could be a good starting point for your search. Its tips included AJ Bell, praised for low costs and a wide range of pensions, Wealthify, which offers “robo advice” on pension investment, and Fidelity Investments, with a much admired full-service Sipp. The research also identified Vanguard as the very cheapest provider on the market. But it only offers access to its own funds. Finally, Interactive Investor may also be worth considering, since it offers flat fees; these are good value on larger plans.