Hargreaves Lansdown Pension Fees

Yes, I know a Pensione is a small hotel in Italy and not related to UK retirement savings, but the words look alike, and it is hard to find fun photos to match a topic!

A work colleague recently asked me about SIPPs that our employer can pay into, as he was looking to set up one of his own, and fees were really important to him. My SIPP is with HL, who are known to have high fees, but I have always accepted them for using a British company with great (for me at least) customer service. It did make me look at my investments, though, and see if any savings could be made. Up to now, I had all my money in mutual Index Funds for which HL charge a fee of 0.45%. I used mutual funds as they had no dealing charges, whereas ETFs are subject to dealing charges. However, whilst ETFs are subject to the same 0.45% fee, it is capped at £200 per year, which over the lifetime of a pension can build up in savings.

I looked around to see which ETF may best suit my investing risk tolerance and sold all my mutual funds to purchase the SPDR MSCI AWCI UCITS ETF, which is globally diverse and invests in both developed and global markets. HL also allows you to set up regular direct debits for over £25 a month, which removes the dealing charge, so I will be looking into buying in every month. This will initially save me over £250 a year; had I left my investments in mutual funds, then the cost would have gradually gone up. 0.45% on a £500k pension is £2,250 a year in fees!

I would recommend that everyone look to see what their charges are for any account type and see if they can be reduced. And for anyone looking at other SIPP options that your employer can pay into AJ Bell offers smaller fees than HL and still apparently provides great customer service. For now though I will be sticking with HL as I like their app, range of funds, fee-free JISA for my daughter and their customer service.