In research seen by FTAdviser, consumer champion Which compared the costs for setting up and managing a Sipp in the first year across 13 providers.
Hargreaves Lansdown emerged as the most expensive provider with regards to charges on larger self-invested personal pensions while James Hay charges the most on smaller pots.
Which found that fixed-fee providers such as The Share Centre, Interactive Investor, Halifax and Alliance Trust Savings were the most cost-effective for larger pots of £500,000 and more, typically charging a fee of 0.05 per cent.
Hargreaves Lansdown on the other hand was the most expensive for those type of pots, charging a platform fee of 0.45 per cent (£1,125) on the first £250,000 and 0.25 per cent on funds between £250,000 and £1m.
Danny Cox, head of communications at Hargreaves Lansdown, said: “We aim to provide our clients with excellent value for money, and continue to invest in the services we provide, such as our expert helpdesk, our easy to use mobile app, and the recently launched active savings platform.”
Which's analysis also revealed that for smaller pots, providers that charge percentage fees were more competitive.
AJ Bell, Charles Stanley, Close Brothers, Halifax and Fidelity had the lowest fees when it comes to a £50,000 Sipp, charging platform platform fees of between 0.25 per cent and 0.35 per cent (between £125 and £175 over a year).
Providers that applied both fixed annual administration charges and percentage platform fees were the costliest. James Hay was most expensive when looking at a £50,000 pot (£359, including the transfer fee).
A spokesperson at James Hay said: "Our Sipp proposition has never been designed for an individual who has £50,000 to invest. There are many other more suitable options available in the market place.
"We are however very competitive for individuals who have over the £200,000 threshold, hence our average case size is in the region of £420,000."
Which also found that only a small number of providers charged a fee to transfer an existing pension to a Sipp.
Barclays has a fee of £90 per transfer (capped at £375). Halifax and James Hay charge £60 and £50 (with caps of £300 and £200).
Source: Which
Jenny Ross, Editor of Which? Money, said: “Sipps have become increasingly popular in recent years, offering savers freedom over how they invest their pensions and the option to easily switch to income drawdown when the time comes.
“However, our research has found that the cost of managing a Sipp can vary drastically depending on which provider you choose, and how much your pension is worth."
She added: “Sipps may seem like an attractive alternative to other pensions, but it’s important to do your research to make sure you understand the costs involved, and that you feel confident in making your own investment decisions.
“If you’re unsure whether a Sipp is right for you, speak to a financial adviser about your options.”
Last month (July 30), the Financial Conduct Authority called for full disclosure of all fees charged by Sipp providers as it warned complex products and charges in the non-workplace pension market were hampering competition, as part of its research into competition in the non-workplace pensions market.
It found that “highly complex” charges across the industry were driving down consumer engagement and resulted in little switching between pension providers.
Due to this, the FCA proposed to introduce a requirement for firms to provide clearer information on the total charges incurred by the consumer and their impact at the point of opening a non-workplace pension as well as on an ongoing basis.
Also, in the FCA’s final policy statement of its Retirement Outcomes Review, also published on July 30, the regulator revealed that adviser fees will be one of the many charges included in self-invested personal pension (Sipp) providers’ cost breakdown for consumers in drawdown.
This information should be provided annually and include all fees presented as a pounds and pence cash amount.
As part of its research, Which also asked 150 Sipp holders why they had opted for this type of pension product.
Nearly half said it was because they eventually wanted to use income drawdown.
Gaining more control (41 per cent), optimising growth (38 per cent) and bringing various pensions together (26 per cent) were other reasons given.
amy.austin@ft.com
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