Comparing pension drawdown charges

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How could the charges impact a £1m investment over 25 years?


Total charges*

Fund size (after charges)

Interactive Investor



The Share Centre



AJ Bell






Hargreaves Lansdown




Total charges*

Fund size (after charges)

Schroders Personal Wealth



St James’ Place













The DIY platforms

Boring Money’s analysis found that those with a sizeable pension who choose the DIY route could expect charges from 0.5 per cent a year (all passive investments, and taking regular income payments) to 1.25 per cent (actively managed funds and slightly less predictable withdrawals). Tiered charges mean these percentages will vary over the years as your investments grow. In the table above, Boring Money has used a snapshot of percentage charges at year 10 for ease of comparison. Although the differences between the platforms appear slight when expressed in percentage terms, the impact of these charges on a £1m investment could add up to as much as £60,000 over 25 years. On this 25-year assumption, Interactive Investor, the UK’s second-biggest consumer investment platform, produced the lowest fees in the sample group, of £346,000 compared with its larger rival Hargreaves Lansdown at £417,000. Ms Mackay says that providers who offer fixed fees are substantially cheaper for large investment portfolios than the ad valorem method, which charges a percentage of the funds invested.


Our methodology

Boring Money’s analysis compared the cost of investing a £1m self-invested personal pension (Sipp) using drawdown services provided by 10 DIY investment platforms and advised services.

The analysis of costs and charges was based on information firms displayed on their websites, and in one instance, an customer’s statement of charges, supplemented with phone calls and emails to the firms in question.

Where the advice fees were not specified, Boring Money assumed initial advice fees of 1.5 per cent and ongoing advice fees of 0.75 per cent.

Unless specified to the contrary, Boring Money assumed portfolios were 100 per cent invested in funds with an ongoing charges fee (OCF) of 0.75 per cent.

In the analysis of the impact of investment charges on a £1m portfolio over 25 years, Boring Money assumed 5 per cent annual returns with no withdrawals made over the period. As some advisory firms have high initial charges that then fall, the percentage charges are modelled on the portfolio valuation after 10 years.


What about financial advisers?

When you throw advisory fees into the mix, working out the impact of charges on your pension investments becomes much more difficult. Customers who need a helping hand to manage their pension investments have a much tougher time getting to grips with costs as not all of the firms analysed disclosed fee information on their websites. However, the analysis showed the differences in fees and assumed investment outcomes was more dramatic. As a rule of thumb, all of the advised services charged ongoing fees of between 2 and 2.5 per cent for advice and investment management on pensions drawdown products. Again, when you take these seemingly small percentages and apply them to a £1m investment over 25 years, the charges really mount up. At Schroders Personal Wealth, backed by Schroders and Lloyds Banking Group, the cumulative charges could total £664,000 over that period, according to Boring Money’s analysis — the lowest of the five advised services compared. In contrast, charges levied by Succession Wealth, the UK’s leading independent wealth management and financial planning business, could total about £815,000. Assuming no withdrawals were made over the 25-year period and annual growth of 5 per cent, the Schroders’ investor would be left with £2.17m and the Succession investor £1.9m — a difference of £270,000.


You can read the full piece here.

You can add your voice to our campaign with FT Money by using #ClearPensionCharges on social media

How did the platforms perform 2019-2020?

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Holly's Blog: The proof of the £500 pudding...

It’s that time of year when we put all the investment platforms into their metaphorical bikinis and parade them up and down the performance beach.

The proof of the £500 pudding...

What about 2018-2019?

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Holly's Blog: Losing £976.19 in the name of research 😰

Last January I hatched a cunning plan. We opened over 20 investment accounts to compare performance after all charges. I put £500 into each, and they were all invested in broadly the same way. We're now seeing what's left in the pot one year on.

Losing £976.19 in the name of research

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