Make Money From Your Pension Before You Are Allowed Part 1 - SIPP Switching
Pensions are of course an excellent method of saving for the future, particularly for those in a higher income bracket but it can be somewhat dispiriting locking away your funds for decades in the future. Take heart that your pension can make you money in the here and now.
This approach applies to SIPP's therefore if you only have a company pension scheme or final salary pension this opportunity is not for you.
There are two ways to make money from SIPP's before retirement:
SIPP Switching
Shareholder Perks
SIPP Switching
Much like Current Account Switching offers from banks there are incentives to move your SIPP to different providers. Examples of current offers are:
Hargreaves Lansdow are offering up to £1,500.
Interactive Investor up to £1,000 (go through TopCashBack for a possible extra £245)
Welthify are offering up to £200.
Note: Different SIPP Platforms have different charges for holding, dealing, transferring in and transferring out. It mostly seems that transferring in and transferring out seem to be being phased out. MSE do a good SIPP Platform charge review - much like life insurance where you are likely to keep it for a long time charges are very relevant and can undermine the financial benefits of this activity.
For me I have over £125,000 in my SIPP but not millions. I can see the Hargreaves Lansdown offer is an awesome deal for me as 1) I get £1500 and that is worth the hassle of switching, 2) the ongoing charges are one of the best for SIPPs, 3) Hargreaves Lansdown are very good and I have used them before.
What have I learnt from SIPP Switching?
You lose information on your historical gains and losses, and purchase history. I guess I expected something similar to switching a bank account whereby the transactions and historical positions would be downloadable - apparently this is not the case.
The paperwork was a bit annoying as you need to write down your holdings.
It takes ages for the transfer to occur - like months! But the effort from you is relatively slight.
You can switch your funds as cash or keep them invested - I struggle to think why anyone would switch as cash.
Any existing regular payments into your SIPP will need to be retargeted (such as salary sacrifice)
Some SIPP providers (actually only one as far as I know - curse you Interactive Investor!) do not allow the receipt of Shareholder Perks from your SIPP. I have a current complaint I will take to the FCA to educate them but for the mean time it is a compelling reason to leave them as I love Shareholder Perks.