Cashback for Isa and Sipp transfers

What’s the deal?

Up to £250 cashback for transferring unit trusts, individual savings accounts (Isas) or pensions into Hargreaves Lansdown’s low-cost Vantage service.

The payment depends on the value of the funds transferred to the investment company: £10 for switches worth £5,000 to £9,999; £25 for those between £10,000 and £24,999; £50 for £25,000 to £49,999; £100 for £50,000 to £99,999; and £250 for those valued over £100,000. Transfers can be in stock or cash form.

Pensions are switched into Hargreaves Lansdown’s self-invested personal pension (Sipp). The company will accept transfers of personal and stakeholder pensions, Sipps, most “paid-up” money- purchase plans (those that are no longer being contributed to), contracted out/protected rights pensions, executive pension plans (EPPs), free-standing additional contribution plans (FSAVCs) and retirement annuity plans.

Transfer forms must be received by June 30.

Is this good?

The cashback is an additional incentive to transfer to what is already a good-value service.

Hargreaves Lansdown waives initial charges on a wide range of funds and gives annual loyalty bonuses of up to 0.5 per cent on unit trusts held in Isas or as standalone investments. The loyalty bonuses could mount up to hundreds of pounds. The company’s Vantage Sipp, while not paying the bonuses, has no plan charges for fund investors.

The offer could be an opportunity for investors to consolidate their portfolios to make them easier to manage. The Vantage service offers online access, allowing users to see where they are invested, what their holdings are worth and place dealing instructions. Investors can choose from more than 2,300 funds as well as shares, investment trusts, exchange traded funds, gilts and corporate bonds.

Any catches?

Investors could be charged by their existing provider or plan for transferring out. Switching from some pensions could also mean losing benefits such as high guaranteed annuity rates.

Hargreaves Lansdown says most pensions will only be transferable in cash, and investors could be out of the stock market for about a week. If prices rise in this period, profits would be missed.

What are the alternatives?

Selftrade offers to cover up to £100 of exit charges incurred in transfers of Isas, Sipps or dealing accounts to its online stockbroking service. But the broker is also introducing an annual management fee of £35 plus VAT. Killik & Co, an advisory company, will also refund exit charges for Isa transfers.

How do I find out more?

Hargreaves Lansdown is at www.h-l.co.uk or 0117 900 9000 Selftrade is at www.selftrade.co.uk or 0845 0700 720; Killik & Co is at www.killik.com or 020 7337 0520