How do I deal with exit fees when switching SIPP provider?

SIPP Exit Fees

A reader asks: I have a SIPP with a value circa £800K, I am thinking of changing from my current platform. I’ve been told AJ Bell are a good choice. Would I need to speak to them direct regarding exit fees and possible incentives to move to them?

The beauty of self-invested personal pensions (SIPPs) lies in their flexibility. Not only can you invest how you want, but you can transfer when you want too.

It makes sense to keep an eye on what your SIPP provider offers and how it matches up to the competition. Fee structures change and you might be stumping up more than you need; technologies advance and a new provider may offer a user experience your current one does not; or your circumstances change and you need a new platform better suited to your needs.

While a transfer may be in your best interests, there are caveats and the biggest one is exit fees.

Understandably providers want to hang on to your money and they want compensation if you choose to leave. However, there has been a real backlash against some of the more unreasonable exit charges made by SIPP providers, and the environment for those wanting to make a move now looks more favourable.

Fortunately for this GoodMoneyGuide user, their potential new provider, AJ Bell, offers to help pick up the exit fee tab.

“We will help cover any exit fees levied by the current provider. We will pay £35 per each investment transferred to us and £100 for general exit fees up to a maximum of £500,” an AJ Bell spokesperson says.

AJ Bell also claims to be competitive on management fees. There are no fees for transferring and the annual platform charge starts at 0.25%.

The spokesperson adds: “The annual fee is capped at £100 a year for investing in shares and for funds it reduces to just 0.1% for investments of between £250,000 and £1 million.”

They add that if any of the charging structure is unclear, they would be keen to talk directly to any reader who would like to know more.

Among other incentives, AJ Bell offers easy and almost instant access, as well as arranging the transfer on the investor’s behalf.

“A SIPP can normally be opened with us quickly and easily online in a matter of minutes, all you will need is your national insurance number and a few other personal details.  Once the account is open you can submit a transfer request for your exiting pension, and we will then take care of the transfer for you.  The length of time it will take depends on the investments you hold in your current pension and whether you want to transfer those investments or sell them and transfer over the cash,” AJ Bell says.

Irrespective of how good a transfer looks on paper – or screen – this is a considerable sum at stake and the pot might need to see you through your retirement, so it might make sense to seek professional advice from a wealth manager or independent investment adviser.

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ALL INVESTING CONTAIN RISK: The information contained in this website is for informational purposes only and does not constitute financial advice. The material does not contain (and should not be construed as containing) investment advice or an investment recommendation, or, an offer of or solicitation for, a transaction in any financial instrument. Always seeking independent financial advice.