Investors could pay nearly £100,000 more in pension costs while saving for retirement depending on their choice of platform, according to new research.
The data showed a starting pot of £100,000 — held on a platform for 30 years with £10,000 contributed a year — would cost £94,800 more in a Standard Life Sipp than an Interactive Investor Sipp over those three decades.
Vanguard’s Personal Pension was the next cheapest, costing £6,400 more than Interactive Investor’s, while AJ Bell YouInvest Sipp was £25,500 more expensive in this scenario.
It was not clear cut between specialist platforms and life companies, however, with Scottish Widows’ retirement account coming in cheaper than a Hargreaves Lansdown Sipp.
|Provider||Funds Portfolio Value|
Funds Value Difference
|Interactive Investor Sipp||£1,104,900||£0|
|Vanguard Personal Pension||£1,098,500||-£6,400|
|AJ Bell YouInvest Sipp||£1,079,400||-£25,500|
|Scottish Widows Retirement Account||£1,071,500||-£33,400|
|Fidelity Personal Investing Sipp||£1,071,400||-£33,500|
|Barclays Smart Investor Sipp Account||£1,065,800||-£39,000|
|Aviva Personal Pension||£1,061,500||-£43,300|
|Hargreaves Lansdown Sipp||£1,041,500||-£63,300|
|Standard Life Sipp||£1,010,000||-£94,800|
The calculations from the Lang Cat, commissioned by Interactive Investor, are based on: one buy and one sell trade a year and investment growth of 5 per cent per year, with associated dealing charges, administration fees and fund manager charges at 0.66 per cent included.
In pounds and pence terms, the actual cost to the investor could be significantly cheaper or more expensive depending on the choice of funds and whether advice is involved.
Costs and charges forked out by investors has become a hot topic in recent years, particularly since the Mifid II rules created more transparency over who exactly was pocketing the fees.
It is predicted the overall cost of investing will be pushed down over the next decade, as advisers, platforms and fund managers feel the pressure from consumers and ‘challenger’ firms.
Richard Wilson, chief executive at Interactive Investor, said: “Saving almost £100,000 with an Interactive Investor Sipp compared to a life company pension sounds incredible, but it’s a very real prospect for an above-average earning 38 year old.
“This is money that should support your quality of life in retirement, or help secure your children’s future.”
A spokesperson from Vanguard said every pound out of investors’ pockets was a “pound of their potential future returns”, adding that fees could have a sizeable impact on investment returns and the quality of life in retirement.
They added: “In looking to control costs, it’s important that investors bear in mind the “all-in” cost of investing, including both platform and fund fees.”
All other firms were approached for comment.
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