SIPP - Private Pensions

(Kenny Grant) #1

Eventually I’d love to see Freetrade offer a SIPP for a modest monthly charge (free for Alpha of course), which allowed payments from employers and employees and transfers in from other pensions. Adding this topic so that people can vote on the idea.

Personally I’d rate this far below the ISA and many trading features, as it’s a complex area that would probably take some time to get right, but eventually it’d be nice to manage a SIPP within freetrade too. Perhaps Freetrade could partner up with an established pensions company to do this?

:white_check_mark: ISA - Individual Savings Account for tax free saving
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(Daniel) #2

Hi Kenny,

I’m fully aware of the benefit of the positive disruption Freetrade is having on the financial services market.

Right now for me I’m in that 10 year timescale of ‘Accumulation’ in my working career (i’m 42) where I’m putting every spare penny into my pension. I’ve maxed out employer/ employee contribution and AVCs. My next port of call is my private pension with a well known financial services provider, who charge a considerable amount in various formats.

I’m fully aware of the impact on savings of this nature, that fees can have. Because of this, if Freetrade can open up a SIPP (and JSIPP - I have both JSIPP and JISA for my 5 year old daughter) account with the reduction in fees that Freetrade are looking to bring about in all stock market investing, then I think you would be able to grab a massive section of consumers who currently pay over-the-odds with a whole host of other companies.

Seriously, this needs to be one of Freetrade’s priorities - there is money and customers out there that would come to you in a flash.

To use Football parlance, SIPPs is an open goal for you.

I really hope you guys make it big and I think you are carrying out your business in a very professional manner. Slowly but surely you’ll clear the way from the stuffier companies out there, that really couldn’t care less who you are, as long as you keep on paying the large fees each month.

If I was you, I’d be looking into this growth opportunity quicker than is down on you current backlog.

Freetrade has only been going for a while but already so many people are saying positive things about you - I think you’d be daft to leave it any longer!

9 Likes
(Alban Roger) #3

With auto-enrolment, the future of stock investment wrappers is pensions. Just like in Oz and others, people will soon have most of their investments in pensions and as far as FreeTrade and others are concerned, it means SIPPs will become No1.

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Multi-currency accounts
(Kenny Grant) #4

Just had a look at my HL SIPP and am paying almost 5x the fees I pay them for my ISA with a similar mix of investments. The 0.45% fees really do kick in because they’re capped at £200 a year for the pension, as opposed to £45 a year for the ISA now (I don’t use funds), if you use funds it’s even worse as I think it’s not capped at all.

This is certainly a product Freetrade could compete on price with as the established players tend to charge quite a lot for a product which is pretty much identical to an ISA during the accumulation phase. Looking forward to being able to transfer my SIPP over to Freetrade at some point.

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#5

I believe you can open as many SIPPs as you want in the same tax year, so it might also attract business from investors who use up their ISA allowance elsewhere.

1 Like
(Ben) #6

Just to reiterate what has already been said.

Only a narrow selection of folks are going to have cash to spare for ISAs. Unless you are really wealthy or have a super mortgage rate you will make more money paying off loans.

However, SIPPs are not available for repaying off loans and should you make it to oldhood (made that word up) then you may have a chance of cashing in. So with auto-enrollment now 3% this year material amounts of money are going into pension funds.

I couldn’t agree more - SIPPs should be one of the number one targets for HL for 2020. I think tidying up the app and probably adding a few thousand more stocks with some analysis and filter functions etc should be priority for 2019 though.

3 Likes
(Jim) #7

11 million ISAs were opened / topped up in 2017 / 2018 of which 3 million were Stocks & Shares ( source HMRC ) so there’s plenty of scope there I think.

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(Ben) #8

Ok - but more than £1,000? £10,000? Most young people can’t even afford a house deposit.

Anyone who has had a SIPP for 10 years is likely to a lot of cash and they might be penniless.

#9

High rate loans sure, but investing should beat most mortgages these days.

#10

Hence LISAs, which Freetrade should also offer.

1 Like
#11

It’s not just young people who will be attracted to Freetrade - there will be experienced (and older) investors who are not worrying about house deposits but who will be able to max out their ISAs every year and also consider a SIPP with Freetrade if/when available.

5 Likes
(Louis Otto) #12

I’d still take a LISA over a SIPP where possible, because I may as well get that 25% free up to the 4k limit while I can!

I guarantee the LISA won’t be around forever, or they’ll drop the yearly limit - so it’s good to get it maxed while you can, and use a SIPP for overflow.

1 Like
#13

Yes, best of both worlds!

#14

There are a few things in favour of a SIPP.

LISA can be liquidated to repay debt, even if you get stung with the penalty charge.
Pensions can’t typically.

£100 into a pension costs standard rate tax players £80 and higher rate payers £60, so close to or better than government contribution to a LISA.

Pensions can now be drawn at age 55, LISA only at 60.

I think there are very limited circumstances where a Lisa would take precedence as a retirement product.

1 Like
(Louis Otto) #15

Indeed, by having a limit of £4,000 a year, a LISA should never be your main pension contribution.