Self-invested personal pensions (Sipps) have become a popular way for savers to build and manage their own retirement pot of shares, funds, investment trusts and other assets, often at a cheaper price than traditional pension providers. But choosing a Sipp means taking on responsibility for building and managing your own investment portfolio, so savers will need to have the time and conﬁdence to do this.
The consumer champion analysed the core fees charged by popular Sipps providers and found that switching providers could save consumers thousands of pounds a year in fees, giving them a potentially huge boost to their pension pot before retirement.
Which? found the difference in costs could be significant. Annual costs for a £100,000 pot ranged from £150 to £450, while for a pot worth £250,000 switching from the most to the least expensive Sipp would save consumers almost £1,000 a year. A Halifax Share Dealing customer would have paid charges of £180 after a year compared with £1,125 with Hargreaves Lansdown.
Which? estimated that those starting with £250,000 in a Sipp aged 50 and retiring at 65 could end up with £22,808 more in their pension pot by choosing the most cost-effective provider over the most expensive.
The difference for those lucky enough to have a pension pot worth £500,000 is even starker. Savers could be £1,570 better off per year by switching to the cheapest provider, with Halifax Share Dealing again charging customers just £180 in fees while Hargreaves Lansdown was the most expensive at £1,750.
To find the best options in the market, Which? also surveyed more than 1,200 people about their Sipp providers and asked them to rate platforms across a range of factors, including investment information and online tools, as well as whether they would recommend it to others.
Fidelity topped the table after it received an excellent overall customer score of 75 per cent. The provider was named a Which? Recommended Provider alongside Vanguard (customer score 72%) and AJ Bell (72%), and was rated four stars out of five by respondents for all the aspects Which? looked at.
Fidelity customers were full of praise for their provider, with one describing it as “pretty faultless – reliable, trustworthy and great value”. Another said it offered “an excellent online platform with good investment data”.
Despite its low-cost offering, Vanguard investors only have access to a limited own brand selection of funds, not shares or investment trusts.
While Halifax’s charging structure makes it the cheapest option for pots over £250,000, it received a relatively low overall customer score (60%).
On the other hand, although Barclays Smart Investor (73%) pipped Vanguard and AJ Bell on customer score, it was relatively expensive for certain pot sizes and so wasn’t eligible to be a Which? Recommended Provider.
Aegon had the lowest customer score (59%) in the survey, receiving just two stars for investment information.
Jenny Ross, Which? Money Editor, said:
“For experienced investors, DIY pensions often come at a cheaper price than traditional pension providers and offer a flexible and straightforward way to save for retirement – but it’s clear that some offer a much better deal than others.
“Our analysis shows the best Sipps combine great customer service with good value for money, and that switching to a cheaper provider can make a startling difference to the size of your retirement pot over time.”
Notes to editor:
Which? survey of 1,235 members of the public, conducted in May. Price analysis assessed core Sipp charges (fixed and platform fees) levied on seven different pot values ranging from £25,000 to £1million. It assumed that the money was held entirely in funds. Only providers with a customer score of 70 per cent or more and no core charges among the most expensive 25 per cent of Sipps for any pot size are eligible to be a Sipp WRP.
For someone starting with £250,000 in a Sipp at age 50, growing at 4% per year over 15 years until retirement (age 65), by choosing the most cost-effective provider on charges versus the most expensive, the saver would end up with £22,808 more in their pot. This does not take into account investment choices and specific fund charges, rather applying 4% growth across the portfolio.
Annual costs table
Rights of reply
“HL’s market leading digital wealth management service offers great value for its comprehensive offering, which includes Active Savings and our award winning app, and one of the simplest and most transparent charging structures.”
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