SIPP - Charges
The charges levied on a SIPP are numerous, vary from provider to provider and can really be quite substantial. Hence it is very important that a potential investor knows what they are getting themselves into before committing to such an investment.
SIPP providers will usually impose both a set up charge and an annual administration fee. A typical set up fee would be between £250 and £350 and a typical yearly administration charge would be between £400 and £500. The extent of such charges can however vary between both providers and the size of the individual's initial investment or fund value.
- What are the costs associated with using a SIPP to invest in property?
A SIPP provider is likely to charge in the region of £450 to £750 for each property transaction and charge an annual property fee of between £400 and £650. Then there are legal fees and stamp duty on purchases made by the pension fund, plus mortgage charges. In the case of foreign property purchase (holiday homes for example), there may also be foreign taxes to pay.
These charges are of course in addition to the initial set up fee and annual administration charge.
- Can a SIPP provider levy a charge for transferring benefits in or out of the scheme?
It is relatively common for a SIPP provider to impose a charge for transferring benefits both in and out of a SIPP.
- Will a SIPP provider charge me for switching funds or making an investment transaction?
It is very likely they will. There are commissions to be paid and costs involved with buying and selling investments, and switching funds. For example, a SIPP will pay stamp duty and stamp duty reserve tax on UK equity purchases.
- Will I have to pay for my annuity to be set up?
I am afraid so, a typical charge would be between £50 and £80 although as with all SIPP charges, these can vary between providers. You may also be charged a one-off payment simply for receiving your pension.
- What about income drawdown?
It is common for a SIPP investor to have to pay both a setting up fee for income drawdown and an annual fee simply for paying it. Setting up fees typically range from £50 to £100 and annual payment fees from £100 to £200.
- Are there any costs associated with banking?
If carrying out the efficient administration and investment of your SIPP leads to electronic banking methods being employed (for example, BACS), there could be a charge levied on each individual transaction. Such charges should however be relatively trivial.
Failed payments and the setting up of direct debits/standing orders usually also create a charge.
- Will a SIPP provider charge for administering a pension credit order?
It is very likely they will. A typical charge would be £100.
- Can commission charges be taken from a SIPP?
If you seek and obtain financial advice relating to your SIPP investments, the costs of this can be claimed from the fund, charged on a deal by deal basis.
Q & As
