From MoneyWeek · · 2m
The SIPP fees quietly eating your pension
A fraction of a percent in platform charges, plus tax relief nobody claims, can cost a saver six figures over 30 years.
In brief
A fraction of a percent in platform charges, plus tax relief nobody claims, can cost a saver six figures over 30 years. Check your SIPP platform fee against a fee-free option, and if you pay higher rate tax, claim the extra relief through self assessment. Both are one-off jobs worth tens of thousands. Originally…
Small fees, big holes
New analysis from InvestEngine says SIPP savers can add tens of thousands to their pot just by cutting platform fees and claiming the tax relief they are owed.
What 0.25% actually costs
A basic rate taxpayer paying in £500 a month for 30 years ends up around £18,000 worse off on a platform charging 0.25% a year than on a fee-free one.
Push it to 0.45%
Same saver, same £500 a month, but a 0.45% annual fee. The gap against a fee-free platform widens to about £32,000.
The relief you have to ask for
Basic rate relief lands in your SIPP automatically. Higher and additional rate taxpayers must claim the extra themselves, because SIPPs use relief at source rather than net pay.
The £139,000 mistake
A higher rate taxpayer paying £500 a month for 30 years, on a 0.45% platform and never claiming the extra relief, ends up roughly £139,000 behind.
“Higher rate taxpayers not claiming the extra tax relief they're entitled to will miss out on even more.”
Why decades magnify it
Bob Tronson, head of pensions at InvestEngine, points out that pensions run long enough for tiny differences to compound into life-changing sums.
“A fraction of a percentage point in annual fees over decades can cost tens of thousands of pounds.”
How the platforms compare
Hargreaves Lansdown charges 0.35% up to £250,000 and Aviva 0.35% up to £500,000. AJ Bell charges 0.25% with caps. InvestEngine and Trading 212 charge no annual fee.
Trading costs bite too
Hargreaves Lansdown takes £1.95 per fund trade and up to £6.95 per share trade. ii charges £5.99 a month plus £3.99 a trade. AJ Bell charges £1.50 per fund deal.
Fixed or percentage
Which? Money editor Sam Richardson says fixed fees usually win for big pots, while percentage fees suit smaller ones. Check whether fund charges sit on top of the platform fee.
Pick for your situation
Kepler Trust Intelligence rates ii best all-round, Freetrade best for low cost, AJ Bell best for service. Ready-made portfolios can also undercut the same funds held DIY.
The essence
Check your SIPP platform fee against a fee-free option, and if you pay higher rate tax, claim the extra relief through self assessment. Both are one-off jobs worth tens of thousands.
