SIPP Wrappers and Platforms
Ever since the government introduced the ‘pension simplification’ of 2006, SIPPs have continued to grow in popularity – and for good reason. Of course, SIPP wrappers offer a lot to the experienced investor, but they’re also one of the most complex retirement products on the market.
In this article, you’ll learn more about how SIPP tax wrappers work, how to do a SIPP platform cost comparison and how to find the best SIPP fund platform for you.
Here’s what’s covered in this article:
What is a SIPP wrapper?
The phrase ‘SIPP wrapper’ is often used synonymously with the term ‘SIPP’ itself.
A Self Invested Personal Pension (SIPP) is a kind of tax vehicle that you ‘wrap’ your funds in, before income tax is applied to your contribution.
Once within your SIPP pension wrapper, the money can be invested into a range of assets, including shares, cash, investment trusts, corporate bonds, gilts and more.
So, you could think of the SIPP wrapper as a way to make multi-asset investing more tax efficient – even though you won’t be able to draw down any money until you turn 55 (like with all pensions).
Typically, people choose to invest their SIPP through a ‘platform’.
What is a SIPP platform?
The word ‘platform’ is usually used to describe the provider that holds your SIPP. Some SIPP platform providers include Hargreaves Landsdown, Nutmeg and Interactive Investor.
SIPP platforms provide you access to a range of different investment options, charging a fee for the service. Some provide more features than others, typically (but not always), the more you pay, the more you get.
That said, it’s not uncommon for people to be paying more than they need to. This has lead to significant growth in low-cost SIPP platforms over the last few years.
What’s the best platform?
It’s really hard to say. It depends mainly upon your personal needs and circumstances.
This is where the pensions advisors we work with come in as they can help you find the right product, one that’s tailored to you as an individual. They can review your financial situation, offer bespoke advice along the way and help you find the right SIPP platform.
What do I need to know to compare platforms?
Despite the strict laws and regulations around pensions, there can be a lot of difference between SIPP wrapper providers – and there are a lot of platforms to choose from.
Here are a few things to bear in mind when doing your own SIPP platform comparison, but keep in mind that the advisors we work with can carry out a more thorough product comparison on your behalf if you make an enquiry.
The best SIPP platforms provide you with a large range of investment options. One of the major benefits of holding a SIPP is the flexibility and ability to access a range of asset classes – especially important as the markets change and new investment opportunities arise.
If your provider is falling short in this area, it may be wise to consider a new platform – the advisors we work with can help you find the right one for you if you make an enquiry.
Some providers won’t accept anyone with a pot that falls below a certain size.
Compare the platform charges
SIPP platform fees are usually at the top of any investor’s mind, and for good reason. High charges can drastically reduce your returns, increasing the chances that you won’t achieve optimum growth of your investment.
Set up fees
Some providers will charge you to set up your SIPP with them, though some won’t.
Some will charge you to transfer in and some might charge you to exit.
Some providers will charge you a fee every time you buy or sell investments within your SIPP.
‘Admin’ and ‘platform’ charges
Typically a flat fee, charged annually.
Fund manager charges
These are fees incurred from the fund that the platform invests in. Some providers use their size to negotiate lower charges from the fund manager.
What’s the cheapest platform?
There isn’t really one cheapest platform for everyone – the kind of deal you get will depend largely on the size of your pension pot, how often you invest, and the kind of things you invest in. Everyone’s circumstances are different.
This absolutely comes with the territory when it comes to SIPPs. If you need help putting together an investment strategy, or want some help making a thorough SIPP platform charges comparison, get in touch, and we’ll connect you with one of the expert pension advisors that we work with.
It’s also worth saying that you probably shouldn’t only be looking at the cheapest SIPP platforms. It could be worth paying a little extra to get access to access to a larger investment pool, a better service, or more feature rich platform (assuming you actually need these features, of course).
Talk to an expert today
If you have questions about SIPPs and want to speak to an expert for the right advice, call us today on 0808 189 0463 or make an enquiry here.
Then sit back and let us do all the hard work in finding the SIPP pension advisor with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.