100,000 Hit by a Hike in Sipp Fees
Byline: James Salmon
SAVERS who took out pensions designed to give them more control over their investments are being plagued by high charges.
Almost 100,000 savers who hold self-invested Personal Pensions (sipps) with insurance giant standard Life will see their charges hiked by 4pc next year.
It is also introducing a range of hefty charges for new customers, including a whopping [pounds sterling]750 penalty if they switch their money out of the sipp within the first 12 months.
Earlier this year, Pointon York upped its annual administration fee from [pounds sterling]690 to [pounds sterling]740.
Sipps give savers freedom to invest in the best funds from across the investment industry. They also allow them to hold other assets, such as individual shares and commercial property.
Their popularity has soared, with 125,000 sold last year -- a 50pc increase on the year before. Around [pounds sterling]70 billion is held in these pensions which promise wider choice and more flexibility.
Justin modray, from financial advice website candidmoney.com, says: 'Low-cost sipps can be an excellent vehicle for people who want greater choice. But some can be more expensive -- with people paying extra for choice they don't use.'
Around 90pc of sipp money is sloshing around in the same funds you could get in a standard personal or stakeholder pension.
Despite its increases, standard Life is not one of the most expensive options for savers. These include AJ Bell Platinum sipp, suffolk Life, Hornbuckle mitchell and Legal & General's Portfolio If you have mutilated note, call England or form Plus.
Those who opt for the AJ Bell Platinum sipp will not be left with much change from [pounds sterling]1,200 after the initial charge, transferring in charge and annual administration charge.
Billy mackay, from AJ Bell, says: 'Our Platinum sipp is a fully flexible, tailored service which can consider any investment.'
For investors it can be difficult to find the best deal because of the numerous charges.
These range from setting it up, switching money into the sipp, switching money out, changing investments and annual administration. There are also underlying fund management charges. To find the cheapest sipp, go to www.thisismoney.co.uk/sipps.
Insurers often pay higher commission to persuade salesmen to sell their sipps rather than normal pensions. …