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Vanguard launches 'low cost' Sipp

Vanguard launches 'low cost' Sipp

Investment giant Vanguard has entered the self-invested personal pension market with the launch of its “low cost” pension offering.

The Vanguard Personal Pension, which launched today (February 19), is currently only available to savers paying into their pot however drawdown will be added in the 2020/21 tax year.

Vanguard was originally meant to launch its Sipp in May 2017 when its investment platform, which also offers an Isa, Junior Isa and general investment account, went live.

The Sipp will charge an annual account fee of 0.15 per cent, which is capped at £375 a year and will apply across all an individual’s holdings on the Vanguard Investor platform.

The minimum investment is £100 a month, before tax relief, or a lump sum of at least £500.

Those saving into the Sipp will have access to 77 diversified funds and exchange traded funds (ETFs), including Vanguard’s Target Retirement Fund and LifeStrategy ranges.

Sean Hagerty, head of Vanguard’s Europe division, said: “We are very excited to launch the Vanguard Personal Pension, a pension designed to reduce the cost and complexity of saving for retirement. 

“An individual’s savings often represent a lifetime’s effort, yet many investors and retirees lose out on their own hard work to high fees and charges. Fees can have a sizeable impact on investment returns, and consequently on the quality of life in retirement.

“At Vanguard, we aim to offer investors the clarity, peace of mind and value for money they deserve, through a service that is simple, effective, transparent and fairly priced.”

Vanguard had commissioned Platforum to compare the competitiveness of its Sipp with 14 other platforms, across a range of investment scenarios. 

The research found that the Vanguard Sipp was the lowest-cost on the market for the average British pension holder who has not yet drawn from their pension.

For example, a saver investing the maximum £40,000 annual Sipp contribution in one of Vanguard’s single-fund retirement solutions would pay £172 a year in total charges including fund fees, transaction costs, and Sipp charges.

This compared with as much as £396 in total on the most expensive platform.

amy.austin@ft.com

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