What are the differences between a SIPP and a stakeholder pension?
Both schemes are Personal Pension Plans and governed by the same contribution allowance and tax relief rules.
Stakeholder pensions were introduced with simplicity in mind. They can accept contributions as low as £20 and carry a maximum annual charge of 1.5% for the first 10 years, dropping to 1% thereafter. Investment choice can be limited, often to about 20 funds, managed by the pension provider.
A SIPP offers a far more extensive and flexible approach to investment which can be great for someone who wants to take control of their pension. You can choose from more than 2,500 managed funds within the HL SIPP, as well as direct investment in shares, corporate bonds, gilts, investment trusts and cash. You are in control of the investment decisions. If you do not need this flexibility and choice then a stakeholder could be more suitable.
The HL SIPP is a low cost SIPP. The charges depend on the investments you make and hold. Some investments available have running costs lower than those available in a stakeholder pension, but others are more expensive.