I’ve never had any dealings with HL, because the Ermine is a cheapskate when it comes to platforms, and Hargeaves Lansdown has the rep of being a high-cost full-service shop. However, given that that nice Mr Osborne seems to indicate that we can now draw our pension funds in full subject to regular taxation, I want a SIPP. Held in cash, possibly, though I need to reflect on that at my leisure. The rationale is here – although I can’t draw it as of yet, I’m not far from the 55 cutoff.
When I researched the original article I looked at Cavendish Online, for a stakeholder, which would be the cheapest. But they wanted me to fill in forms sent through the post with all the money laundering fun and games of certified copies of this and that. There’s not enough time for that given that the end of the tax year is tomorrow so I didn’t fancy my chances with the post. Online is the way to go.I would have thought a SIPP wouldn’t need all that garbage because presumably they go to HMRC and go ‘have you got any records of this geezer with national insurance number xxx name An Ermine living at this address. If it matches, fine, if not the alarm bells go off and somebody sends a SWAT team out. But no.
So I attempted with TD Direct, on the principle I already have an ISA with them, so all the know your customer malarkey has been done already. Had a go a couple of days ago, they seem to have lost the application, and certainly haven’t asked me for any money yet. In the unlikely event they find it and do something I’ll tell them they’ve missed their chance under the 30-day cooling off rule, basically for gross incompetence 🙂 They know what the end of the tax year is all about, FFS, and although I normally expect people to get their act together about the end of the tax year for ISAs and SIPPs it’s not like Osborne gave us huge amounts of notice to process what’s changed and how to use it.
Since I am a canonical example of somebody who can use a short DC pension to my advantage I want some. And since I have no income, the most I can lob in in a tax year is £2880, so missing out this tax year costs me £720 (less running costs). As a minor snarl, why is it that whenever I fill in a form and it has status of employment, do they have no entry of Gentleman of Leisure? I am not employed, and I am not unemployed either. I’m not down the Labour Exchange claiming JSA. At least HL had the ‘other’ category.
So I take a leaf out of Boardgamer’s book, and figure I may as well give it a go.
Obviously I simulated the effect of their charges; there are no opening charges, but there is a 0.45% p.a. hit on all investments (including shares!!!!) and there is a stupendous £354 flexible DD/exit charge. So be it, there’s still a win from the £720 the taxman lobs into the pot, and since these are savings I will be living on anyway I may as well park them in a pension and get my tax back from them – it beats the hell out of the interest on any cash savings account I can get.
Now I have to say that as I went through the application I saw why HL gets its rep as a slick operation – they took the cash via a debit card, opened the account, allowed me to defer investment choices to later and the whole experience was a lot better than the un-joined-up mess that TD were offering. They may still manage to make a muddle somewhere but so far so good. Even with that shocking exit charge the simulation indicates I am good for about a 16% ROI on cash over the next three years after costs and assuming 3% inflation. 5% p.a. real return is worth getting out of bed for. Presumably all the know your customer crap is coming my way, but at least that can be done at my leisure after the deadline.
Using Hargreaves Lansdown’s website brought it home to me just how crappy all the low-cost platform websites I’ve used were. TD Direct probably just about get the wooden spoon award for usability, though I don’t really get on with Charles Stanley that well either. CS looks prettier but I still get lost in it. III’s was serviceable but the funds selection was truly horrible, hopefully they’ve improved it since I told III to sling their hook for ramping charges.