Yahoo Finance How to get £5,000 by switching investment platform – but time is running out
Investors looking to boost their returns could get thousands just for moving their savings to a different investment platform. Hargreaves Lansdown (HL) and Interactive Investor are both offering cashback deals worth up to £3,500 and £5,000 respectively – but you’ll have to move a significant sum to get the maximum payout.
Those transferring over £10,000 in pension funds into a HL self-invested personal pension (Sipp) or HL drawdown pension can earn as much as £3,500, while transfers of £4,000 or more into a stocks and shares Isa or one of its fund and share account can get you up to £1,000 in cashback.
To get £5,000 from Interactive Investor, you’d need to transfer a £2m pension to its Sipp. Those with smaller sums will get cashback payouts from £50 for transferring at least £4,000 to its general investment account.
The offers run until Feb 29. Here, Telegraph Money explains who is eligible for the cashback deals, and what to consider before making the switch.
Who is eligible for the cashback deals?
These cashback deals are only being offered on investment transfers, so you must have an existing account that can be moved to either providers’ eligible Sipp, Isa or general investment accounts to qualify.
The cashback you get depends on the account you’re transferring to, and the amount of money you’re moving. Both providers offer bigger cashback sums for larger transfers.
If you’re switching to an Interactive Investor Isa or investing account, you’ll get £100 cashback for transfers between £2,000 and £9,999. This rises to £150 if you move between £10,000 and £19,999, increasing in increments up to £1,500 cashback if you transfer £500,000 or more. Cashback for Sipp transfers start at £100 for a £10,000-£24,999 transfer, up to £5,000 when you move £2m.
If you switch to a Hargreaves Lansdown Isa or investing account, you can get £50 cashback for moving £4,000-£9,999, rising to a maximum of £1,000 cashback for a transfer of at least £80,000. Sipp transfers between £10,000 and £29,999 get the minimum cashback sum of £100, and you can get the maximum £3,500 for transferring £1m or more.
These minimum transfer amounts may be out of reach for some. The average saver aged between 45-54 has £75,500 in their pension pot, according to the Office for National Statistics. Transferring this across to a Hargreaves Lansdown Sipp would earn you £500 cashback, or £200 with Interactive Investor.
Finally, you must have applied for the transfer by that date in order to qualify. However, Hargreaves Lansdown said it may give you a three month extension if you are considering your options.
Is it worth making the switch?
If you’re thinking of making a switch, it’s worth taking some time beforehand to make sure the product you choose is right for you, as even a generous cashback incentive won’t be worth it if the account doesn’t offer what you want.
Cashback and other switching offers are not uncommon from investment providers, with each trying to increase their market share. But the process isn’t as simple as switching to a new bank account, and you’ll need to factor in things like exit fees from your current provider, whether you’ll lose any valuable benefits or guarantees by transferring, whether you’ll pay more with your new provider.
For example, while it is free to set up, Hargreaves charges fees for the management of your funds under Sipp.
For the first £250,000 the charge is 0.45pc. This means that if you invest £40,000 in funds and £20,000 in shares, your account charge would be £22.50 per month or £270 a year.
Fees charged as a percentage can be fairly cheap if on small investment amounts, but can quickly rack up as your savings grow.
By contrast, Interactive Investor charges a flat fee – this can be more expensive for those with small pots, but relatively cheap if you have a large amount invested.
It’s also worth considering the fact that you won’t be able to make any changes to your investments during the few weeks it takes for the transfer to take place.
Some providers offer smaller switching incentives to cover fees; AJ Bell offers up to £500 for transfers to a Sipp, Isa or dealing account (for buying and selling investments) to help pay for exit fees from your existing provider, but the amount you transfer needs to be £20,000 or more.
CMC Invest also has a transfer promotion currently running. The investment platform is offering up to £1,000 cashback when transferring their general investment account (GIA) or ISA across.
Cashback starts at £350 for a transfer of £25,000 - £49,999, while you need to send across £100,000 or more to claim the whole £1,000. The deal ends May 5.
CMC allows you to invest in both UK and US shares, equity traded funds, investment trusts and mutual funds, although you will need a ‘Plus plan’ subscription to access certain products.
The cashback offers are more generous for those transferring to a Sipp – but, again, it’s not worth switching to one for cashback alone.
Sipps allow you to transfer different pension pots into one place under a single wrapper. You can then manage your own investments or pay a financial adviser to help you.
They often provide wider investment options than other pension systems and what is on offer will differ between investment platforms, but it may not be the cheapest choice.
Contributions to Sipps still qualify for tax relief, but are still subject to limits on the maximum you can contribute before you are taxed.
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This article was first published on February 4 2024, and has since been updated.
