Changes to charges April 2017 - Q&As

Some of the charges applicable to the Modular iPlan, Modular iSIPP (pre-Modular iPlan), iSIPP and eSIPP will be changing with effect from 31 May 2017. If you are affected by these changes, you will have been informed in writing.

We have seen the operational and regulatory costs of providing our services continue to increase, for example, following the introduction of pension freedoms in 2015. In addition, when interest rates were higher we were able to keep our product administration charges at a lower level by retaining an element of interest from cash held within our products. 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 investments 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 product charges schedule for confirmation of the charges that are changing or are being introduced on your product.

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 product charges schedule (enclosed with your notification letter or available here) and all amounts will be deducted from your SIPP Bank Account (and if applicable, your Modular GIA and ISA Bank Accounts).

Depending on the type of investments you currently hold, 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 and the enclosed charges schedule (as well as the Modular iSIPP factsheet if you hold the iSIPP or eSIPP).
• Read all of these questions and answers.
• Consider whether the changes we are making will result in your current product continuing to meet your needs and financial circumstances.
• Consider (with your financial adviser if you have one):
• staying within your current product, accepting the new charges and terms, or
• moving to the Modular iSIPP within the Modular iPlan (if you hold the Modular iSIPP (pre-Modular iPlan), eSIPP or iSIPP) which provides additional investment options, or
• moving to a product available from a provider other than James Hay as this may be more appropriate for you.

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 (within the Modular iPlan) 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. By taking out a Modular iSIPP (within the Modular iPlan) you also gain access to other 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.

You can find more information on our Modular iPlan 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.

There is no charge for moving your SIPP to the Modular iSIPP.

We would normally expect this to take approximately 5 working days.

No, these will stay the same as your current SIPP.

Yes, we will continue paying your income as per any existing instruction.

No, the eSIPP, iSIPP and Modular iSIPP (pre- Modular iPlan) are in the same pension scheme and share the same Pension Scheme Tax Reference (PSTR) as the Modular iSIPP (within the Modular iPlan). This is, however, a move to another product with different charges and investment options applicable to each product. 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 hold the Modular GIA or Modular ISA, these will also need to be moved to an alternative provider or be fully encashed. It is not possible to continue to hold a Modular GIA or ISA with us without holding a SIPP.

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 6 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 cost, we will contact you to confirm a revised estimate and, where applicable, seek your approval before continuing.

If you have more than one James Hay SIPP, charges are payable on each product. If this is the case, it may be possible to merge the products into one SIPP to avoid paying duplicate charges. Please contact us if you wish to merge your products.

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.

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, we have already sent them details of the changes we are making.