Interactive Investor has launched a self-invested personal pension plan with a flat fee of £12.99 per month.
The “Pension Builder” Sipp offers Interactive Investor’s full choice of investments and new customers are being offered the first six months of subscription for free.
Investors will be able to save monthly, through a direct debit, into funds, investment trusts, ETFs, and "popular" UK shares.
Trading costs are £7.99 each for UK shares, ETFs, funds, investment trusts and US shares.
Other international shares will cost £19.99 to trade.
The company said it is targeting those who would like to boost their retirement pots because they are not currently on track to be able to give up work and have a good standard of living when they do.
Becky O’Connor, head of pensions and savings at Interactive Investor, said pensions are probably the most important long-term saving people can make, and paradoxically they are often the most overlooked and misunderstood.
Although it is great to see more people getting excited about investing she said, more conversations need to be had about meaningful long-term savings.
“Many people are still unaware that a Sipp could be a great option for them.
“Sipps offer the same tax advantages as a standard pension, but you have added control over the investments made.”
Interactive Investor said the fee on its Sipp may look high for smaller pensions, but as the pension builds up “this flat fee comes into its own”.
“The reality of fees cannot be overlooked – and as the years roll into decades, can make a significant impact on savers’ long-term financial health, even if they don’t seem like a lot initially,” the group said.
As part of the launch, Interactive Investor commissioned a comparison with other Sipp offerings in the market, assuming a pension portfolio is split equally between funds and equities in a £100,000 pot.
Cost of Sipps
Interactive Investor (Pension Builder)
Fidelity Personal Investing
AJ Bell YouInvest
Barclays Smart Investor
Source: Compare the Platform
Richard Wilson, CEO of Interactive Investor, said: “Our pension price was amazing before. Now, at only £12.99 a month to run your pension, it breaks the mould completely.
“We are proud to launch this low cost, flat fee Pension Builder. What you see is what you get – a transparent charge in pounds and pence that stays the same as your wealth grows.
"We’ve designed this product to make building your pension pot simple, straightforward, and ultimately - satisfying. You can take true ownership of your pension and help shape the retirement life you aspire to.”
Interactive Investor said it has long advocated on the importance of being transparent about how fees and charges can eat into savers’ pockets on a monthly basis.
Research by Opinium showed that 15 per cent of UK adults did not know that savers are charged administration costs of pensions.
Some 14 per cent of 2,000 adults surveyed by Opinium between January 24 and 25 said they do not look at pension charges because “there’s not a lot I can do about it anyway”.