PensionsMay 1 2013

Product review: Jarvis IM X-O Sipp

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A new self-invested personal pension (Sipp) has been brought to the market despite widespread acquisitions and predictions of consolidations elsewhere.

X-O Sipp, launched by Jarvis Investment Management today, is designed as an execution-only Sipp and focuses on a low-cost approach.

The online Sipp, which is set up for dealing exclusively in UK-listed stocks and shares, is administered by existing provider Liberty Sipp and utilises the existing sharedealing capabilities of X-O stockbroker.

A fixed dealing fee of £5.95 per trade applies, along with an annual administration fee of £95 plus VAT. No fees apply for set-up, transfers or drawdown. A £50 fee applies for purchasing an annuity or recalculating drawdown other than at the review period, and £100 will be charged if the Sipp is emptied within five years of commencing drawdown.

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Sipps are coming under increasing pressure with the approaching advent of new capital adequacy rules. As others scramble to ensure they meet the new rules, or sell off books of business that might cause trouble, it is interesting to see a new competitor launch in the market, defying predictions of consolidation.

From the provider’s perspective, this Sipp is very low liability in terms of capital adequacy. Accepting only UK-listed shares, there is no chance of it containing any of the bits and pieces the regulator is worried about.

Compared to others in the Money Management Sipp survey, its charges are relatively low. But, as always, it depends on what it is going to be used for. If somebody is only interested in investing in stocks and shares, presumably they will want to be fairly active in monitoring that. In which case, they may be dealing fairly regularly, quickly building up costs. But £5.95 per trade is significantly cheaper for sharedealing than some full Sipps that allow it as an option.

Any adviser recommending a Sipp might also question the wisdom of selecting one that only allows stocks and shares, keeping in mind that a recommendation should consider clients’ future needs as well as present ones. Although transfer elsewhere is always possible, an investor would be taking fairly high levels of risk to remain primarily directly invested in shares in the later stages of drawdown.