How we worked it out
The Lang Cat is an independent financial services consultancy. It used its expertise to develop representative charge scenarios for older style pension contracts that were then used to make comparisons to the ii SIPP. The charges for any older-style pension you hold will depend on your personal circumstances and so are likely to be different (higher or lower). You will need to review the charges for your own pension to understand what transferring might mean for you.
For the typical 2000s personal pension fee savings example
The lang cat assumed:
- Ongoing charges for the ii SIPP are £19.99 a month (£9.99 Investor Service Plan fee plus £10 SIPP fee) and the investor chooses a passive investment with a representative charge of 0.22%
- Ongoing costs for the 2000s era personal pension are 0.75% (assuming an unbundled charging structure consisting of product charges starting at 0.3% for this example and 0.45% investment charge)
- The initial value is £150,000
- Ongoing contributions of £200 are made each month
- Those contributions, and ii’s fixed fees, rise each year in line with inflation, which is assumed to be 2%
For the example case studies
The lang cat assumed:
- Future investment growth will be at 5%. This is for illustration only and is not guaranteed. Investment returns can go down as well as up.
- The transfer is to an ii SIPP on the Investor service plan, so ongoing charges are £19.99 a month (£9.99 Investor Service Plan fee plus £10 SIPP fee)
- For customers who prefer active investment, their annual investment costs at ii would be 0.77%. This is the annual investment cost of the Royal London Sustainable Diversified Fund from the ii ACE 30 ethical investment range.
- For customers who prefer passive investment, their annual investment costs at ii would be 0.22%. This is the annual investment cost for the Vanguard LifeStrategy range from the ii Quick Start investments shortlist.
- The ongoing charge scenarios in the older-style plans used for each individual case study are as described below
- Trading and other event related charges are not covered.
Could you save £1,000s in fees?
You’ll need to review the costs of your own pension to discover exactly how much you might save, but the findings of our study are clear. If you have built up a good pension and are confident making your own investment decisions, you could be significantly better off with an ii self-invested personal pension (SIPP).
Important information: A SIPP is for those wanting to make their own investment decisions when saving for retirement. As investment values can go down as well as up, the amount you retire with could be worth less than you invested. Usually, you won’t be able to withdraw your money until age 55 (57 from 2028). Before transferring your pension, check if you’ll be charged any exit fees and make sure you don't lose any valuable benefits such as, guaranteed annuity rates, lower protected pension age or matching employer contributions. If you’re unsure about opening a SIPP or transferring your pension(s), please speak to an authorised financial adviser.