Changes to charges April 2017 - Partnership SIPP

Some of the charges applicable to the Partnership SIPP will be changing with effect from 31 May 2017. If you are affected by this change you will have been informed in writing.

We have seen the operational and regulatory costs of providing our SIPP services continue to increase, for example, following the introduction of pension freedoms in 2015. In addition, when bank interest rates were higher we were able to keep our product charges for SIPP administration lower by retaining an element of interest paid by banks from cash held within our products, in accordance with the product terms and conditions. However, the continuing low interest environment, which we expect to remain for the foreseeable future, prevents us from being able to continue this approach to the same extent.

We need to respond to these challenges, ensuring we can continue to look after your SIPP for the long term and enable a sustainable level of future investment to improve the service we offer to you. This ongoing investment in people, technology and service is therefore critical and whilst we acknowledge any increase in charges will be unwelcome, we are confident this is the right thing to do.

Please refer to your notification letter and charges schedule for confirmation of the charges that are changing or are being introduced on your SIPP.

The changes to charges will be introduced on 31 May 2017. The frequency and timings of when the charges will be taken are detailed in your SIPP charges schedule (enclosed with your notification letter or available here) and all amounts will be deducted from your SIPP bank account.

Depending on the type of investments you currently hold in your SIPP, the changes may have an impact on the level of charges you will pay in the future. It is therefore important that you:

• Read through the notification letter, the charges schedule and product comparison document enclosed with your letter.
• Read all of these questions and answers.
• Consider whether the changes we are making will result in your current SIPP continuing to meet your needs and financial circumstances.
• Consider (with your financial adviser if you have one):
• moving to the Modular iSIPP, which may result in you paying lower charges than you will pay in your current SIPP, or
• moving to a SIPP product available from a provider other than James Hay, or
• staying within your Partnership SIPP, accepting the new charges and terms.

You can find more information on our literature page but please speak to your financial adviser if you have one to discuss the best option for you and your circumstances.

Before you make a decision, we strongly encourage you to discuss your options with your financial adviser. If you do not have a financial adviser but would like to speak to one, please visit www.unbiased.co.uk or call them on 0800 023 6868 to obtain a list of financial advisers in your local area.

The Modular iSIPP is our flagship product and offers a broad range of investments and a charging structure which allows customers to pay for what they use, when they use it.

Please refer to the product comparison which was included with your notification letter and the question below. This explains the main differences in charges between your current SIPP and the Modular iSIPP. The Modular iSIPP may suit your needs at least as well as your current SIPP product.

• Through the Modular iSIPP, you can access over 3,700 investment funds from leading fund managers through our online Investment Centre, and use an integrated online stockbroker to buy and sell stocks and shares.
• In addition to a SIPP, by taking out the Modular iSIPP you also gain access to other modular products including the Modular Individual Savings Account (ISA) that provides access to stocks, shares and cash, and the Modular General Investment Account (GIA), which offers a wide choice of investments if you want to invest outside of a pension or ISA.
• The Modular iSIPP provides access to an enhanced web service using James Hay Online, which offers a wide range of functionality, user friendly tools and a wealth of information to help you monitor and manage your investments online when you want to.
• The Modular iSIPP does not allow you to self manage commercial property. Instead, we will appoint a property manager on your behalf to manage the property.
• External bank accounts i.e. accounts other than the SIPP Bank Account or those on our cash panel, are not permitted on the Modular iSIPP.
• The Modular iSIPP is a sole trustee product meaning you would no longer act as a joint trustee on your SIPP. This is explained further below.

A dual trustee SIPP means that two or more trustees are appointed to hold assets for the SIPP. For our dual trustee products both the member and James Hay Pension Trustees Limited are trustees. Dual trustee products are generally subject to higher charges than sole trustee products as the dual trustee processes are more complex and time consuming. With the Modular iSIPP, James Hay Pension Trustees Limited is the sole trustee. Whilst you as the member are not a trustee and so assets will not be registered in joint names with you, you still retain control over investment decisions as the member.

You can find more information on our Modular iSIPP page or speak to your financial adviser.

Please click here for a transfer pack or call us on 03333 202 733. Alternatively, please speak with your financial adviser who may be able to assist you with arranging the transfer.

If you notify us that you wish to move your current SIPP to the Modular iSIPP within 120 days of receipt of the notification letter, we will waive our standard transfer out charge on your current SIPP. If you hold a property in your SIPP, we will waive our property transfer out charge (where a panel solicitor is used). We will also waive the first year’s annual administration charge on the Modular iSIPP, and other charges will be waived depending on the investments you transfer to the Modular iSIPP. Please click here for a transfer pack and further details. Any charges that are due on your current SIPP will remain payable in full and if you hold property in your SIPP there will be other charges (e.g. re-registration charges) for which you will be liable.

We would normally expect this to take between 6 and 12 weeks but this may take longer if the assets you hold are considered ‘non-standard’ or if there any delays by third parties which are outside of our control.

Yes, we will send you these details once the product has been transferred.

Yes, we will continue paying your income as per any existing instruction; however, we may need confirmation of your income levels. If you have disinvestment instructions or direct debit arrangements in place on your existing SIPP to fund your income payments, these will need to be re-established once your SIPP has transferred.

No, the Partnership SIPP is in the same pension scheme and shares the same Pension Scheme Tax Reference (PSTR) as the Modular iSIPP. This is, however, a move to another product with different charges and investment options. The Modular iSIPP charges schedule provided as part of the transfer pack shows the charges that will be applicable from 31 May 2017 and the Permitted Investments List indicates which investments may be held in the Modular iSIPP.

Yes. If you wish to transfer your pension to another provider, you should speak to your financial adviser in the first instance. We have also produced a guide to transferring your pension away from James Hay Partnership which you can access here.

If you notify us that you wish to transfer out within 120 days of receipt of the notification letter we will waive our standard transfer out charge as well as any additional product charges incurred as a result of these pricing changes. If you hold a property in your SIPP, we will waive the property transfer out charge if you use a solicitor on our panel. However, there will be other costs associated with transferring a property for which you will be liable. Your new provider may also charge you their standard costs for opening a SIPP and transferring in your pension assets.

We would normally expect the transfer to take between 8 and 14 weeks but this may take longer if the assets you hold are considered ‘non-standard’ or if there are any delays by third parties which are outside of our control.

Once these changes have been made we have no current plans to increase our charges again in the near future. However, there are some external factors, which we cannot control that can have an effect on the charges we apply. For example, future changes in regulation may increase the amount of work we are required to carry out and, therefore, it may be necessary to adjust our charges. If this happens we will notify you in advance of any further changes. Please note that our charges will increase on 1 April each year in line with the Average Weekly Earnings Index (see below for further details).

The Average Weekly Earnings Index reflects the average change in the level of wages in the UK over time.

Most of our costs are linked to staff wages, which tend to rise over time, in common with wages nationally (the latter of which is measured using the Average Weekly Earnings index, or AWE). Linking our fees to AWE means we do not need to make periodic increases in order to realign our charges with costs after they’ve risen, which could be difficult for customers to anticipate. We believe that customers can plan their finances with more confidence if we explain how our charges are expected to increase in the years to come.

If these charges are triggered we will contact you in advance to confirm that they are payable, to explain what the charges cover, and to provide an estimate of the amount, and, where applicable, to seek your approval before commencing the work. If, following commencement of the work, it becomes apparent that there will be significant additional costs, we will contact you to confirm a revised estimate and, where applicable, seek your approval before continuing.

James Hay is still required to report on the operation of the property. This includes reviewing bank account transactions to ensure compliance with the regulations and tax rules, carrying out periodic regulatory reporting, providing ad-hoc guidance on property issues, administering expenses, fees and third party invoices as well as allocating rental income.

James Hay has a panel of preferred solicitors where we have developed efficient processes to support property transactions. Other solicitors often require significantly more support from James Hay because they are unfamiliar with James Hay’s requirements and the specialist work involved in commercial property SIPP transactions. They may themselves incur higher costs owing to this lack of familiarity.

More information can be found here.

Specialist investments are also sometimes referred to as Non-Standard Investments or NSIs.

The following investments are classed as specialist investments:

• Intellectual property
• Land banking
• Overseas commercial property
• Peer to peer lending
• Unconnected loans (whether secured or unsecured)
• Carbon credits
• Storage pods
• UK unquoted shares
• Overseas unquoted shares
• Unquoted loan notes and bonds
• Second hand/traded endowment policies
• Fractional property investments, including property syndicates and other fractional ownership structures where ownership is held jointly across different SIPP products or with other third parties. Please be aware that fractional property investment relates to property syndicates that are not held on the land registry by the pension scheme. Commercial property which is held via direct ownership is not classed as fractional property investment by James Hay.
• Non-mainstream pooled investments, including:
• Unregulated collective investment schemes such as offshore unregulated funds and exempt property unit trusts
• Closed-ended investment companies not realisable within 30 days (e.g. no active secondary market)
• Other special purpose vehicles and pooled investment structures meeting the Financial Conduct Authority definition of non-mainstream pooled investments

Our policy for holding and dealing in specialist investments, also known as non-standard investments (NSIs), is changing. Since 9 January 2017, we have not permitted customers who are new to James Hay Partnership to invest in and hold specialist investments in their SIPPs. In addition, with effect from 9 May 2017, we will no longer allow SIPP customers who opened their product prior to 9 January 2017 to invest in new specialist investments. We will allow customers who already hold a specialist investment to increase that investment holding, subject to a due diligence review and in line with our policy in force at the time of the proposed purchase. This policy is currently defined as: the top up investment must be appropriately advised; the total value of NSIs cannot exceed 40% of the SIPP value and it must be acceptable to us.

We do not wish to place cost based restrictions on customers wanting to either top up holdings or dispose of their existing NSIs so we are reducing the dealing charges accordingly.

All customers who either hold a specialist investment, or those that have the option to do so in accordance with the features of their product, will have received a letter informing them of the policy change. For further details, please refer to www.jameshay.co.uk/NSI.

This charge has remained unchanged for many years, despite increases in our costs. The income review process is time consuming and can be complex, so the change to this charge is a reflection of this.

Please note – if as a result of the change to the income review charge you are considering converting your SIPP to flexi-access drawdown, you should be aware that you will then become subject to the money purchase annual allowance rules. This means that the amount you can contribute to your SIPP in a tax year and still benefit from tax relief will be £4,000 rather than the current £40,000 limit applicable to capped drawdown. You should also be aware that making large withdrawals through flexi-access drawdown can quickly deplete your pension fund.

For further information on taking benefits from your SIPP, please refer to our Accessing Your Pension guide.

Following changes to the interest James Hay receives from its banking partners we can no longer link interest rates directly with the Bank of England’s base rate.

We publish our rates of interest on our bank account page.

A key element of these changes will be to enable us to invest in people, technology and services to ensure James Hay is a viable and healthy business for now and for the future. We have already put in place an extensive customer service and operational efficiency programme which aims to highlight the areas in which we need to improve to enable us to provide a better service for our customers.

We strongly recommend that you seek independent financial advice from a qualified financial adviser. If you do not have a financial adviser but would like to speak to one, please visit www.unbiased.co.uk or call them on 0800 023 6868 to obtain a list of financial advisers in your local area.

Yes. If you have a financial adviser appointed for your SIPP, we have already sent them details of the changes we are making.