Every penny counts when it comes to saving for your pension, which may be why investors are increasingly on the lookout for the cheapest SIPP fees.

But with a plethora of SIPPs (Self-Invested Personal Pensions) boasting ‘low fees’, navigating the cost landscape can feel daunting. 

Fear not, budget-conscious retirement saver!

In this article, the EveryInvestor team unpacks the secrets of cheap SIPP fees, empowering you to identify the platform that lets you keep more of your hard-earned cash working for your future. 

All our content undergoes strict quality and compliance checks before publication so we can be sure of bringing you only the most relevant and useful information.

Buckle up, and read on to discover the sweet spot between affordability and functionality in the world of SIPPs!

What Are the Different Types of SIPP Fees?

The different types of SIPP fees can be categorised into several main types, each reflecting a particular aspect of pension management or activity. 

Understanding these fees is crucial for anyone looking to manage their pension effectively. 

Here are the common types of fees you might encounter:

• Set-Up Fees
• Annual Management Fees
• Contribution Fees
• Transaction Fees
• Transfer Fees
• Inactivity Fees
• Drawdown Fees
• Exit Fees

A brief look at each of these fee types may help you form a better understanding of how they all fit together.

Set-Up Fees

These are charges incurred when you initially set up your SIPP. 

Not all providers charge a set-up fee, but it is worth checking as it can be a significant one-off cost.

Annual Management Fees

These are ongoing fees charged by the provider for managing your SIPP. 

They may be a flat fee or a percentage of your pension pot. 

Some providers may have a tiered structure where the fee percentage decreases as your pension pot grows.

Contribution Fees

Some providers charge fees for each contribution you make to your SIPP. 

This could be a flat fee or a percentage of the contribution amount.

Transaction Fees

These are charges for buying or selling investments within your SIPP. 

They can vary significantly depending on the types of investments and the frequency of transactions.

Transfer Fees

If you transfer your pension from another scheme into a SIPP, or vice versa, you might be charged a transfer fee. 

Similarly, fees may apply if you are transferring investments within your SIPP from one provider or fund to another.

Inactivity Fees

Some SIPPs charge a fee if your account is inactive for a certain period. 

This is less common but worth checking, especially if you plan to make infrequent contributions or transactions.

Drawdown Fees

If you’re at the stage where you are drawing a retirement income from your SIPP, you might encounter drawdown fees. 

These can be charged for setting up the drawdown facility, each withdrawal, or as an ongoing annual fee.

Exit Fees

Some providers may charge a fee if you decide to transfer your SIPP to another provider or withdraw your funds completely.

Carefully review the fee structure of any SIPP provider you are considering, as fees can vary widely and can have a significant impact on your pension pot over time. 

Always consider the overall cost, not just the headline annual management fee, and compare different providers to ensure you are getting a competitive deal.

How Do Different SIPP Providers’ Fees Compare?

Different SIPP providers’ fees reflect a diverse range of charging structures and services offered. 

When comparing SIPP providers’ fees, look beyond the amount on the page and consider the fee structure and related services. 

Key considerations include:

• Flat vs. Percentage-Based Fees: Flat fees may suit larger pensions, while the latter option may be more suitable for smaller pots but become more expensive as your investment grows.
• Tiered Fee Structures: Some providers offer tiers where fees decrease as your pension increases.
• Transaction Costs: Fees for buying and selling investments vary, with some offering free trades and others charging per transaction.
• Additional Service Charges: Costs for services like pension drawdown or fund transfers vary, with some providers charging per transaction.
• Penalties & Hidden Fees: Be aware of penalties for transferring pensions or fees for services not included in other charges.
• Value for Money: Higher fees might offer better service, investment options, or performance, while low-cost providers could have limited offerings.

Compare providers’ fee structures to your pension size, investment style, and required service level, and determine the best value by calculating your total annual cost.  

Comparing Fees Among Top UK SIPP Providers

Comparing fees among top UK SIPP providers reveals a spectrum of charging structures, each tailored to different types of investors, from the active trader to the long-term, set-and-forget investor. 

Here is a brief look at how the fee structures tend to compare among some of the leading SIPP providers in the UK.

AJ Bell 

AJ Bell offers a competitive pricing structure, especially attractive for investors with mid to large-size pension pots.

Dealing charges are also being reduced from 1 April 2024.¹

What to know:

• Charges a tiered annual management fee, similar to Hargreaves Lansdown, but generally at lower rates.
• Lower share dealing fees compared to some competitors, with a cap on charges for holding funds.

The platform offers many investment options and easy online or app-based management, but active traders should note that trading and holding fees can eat into their investments.

Fees include:

• a tiered platform fee structure, starting at 0,25% for balances up to £250,000, dropping to 0,10% for the portion of your investment between £250,000 and £500,000, and no cost for the portion over £500 000.
• dealing charges of £9,95 (£5,00 from 1 April 2024) on shares.
• a reduced dealing charge of £4,95 (£3,50 from 1 April 2024).
• a fund dealing charge of £1,50.
• a dividend reinvestment charge of £1,50.² 

Vanguard

Vanguard is known for its low-cost index funds and ETFs, and this SIPP is one of the most cost-effective for those who prefer Vanguard’s own funds.

Vanguard’s SIPP is slightly different from its counterparts because it only offers its own range of index funds and ETFs. 

This can be restrictive to investors looking for a broader range of investment options.

What to know:

• Low, capped annual account fee as a percentage of assets.
• Does not charge for fund dealing but does not allow non-Vanguard investments.

Users can manage their investments online and access customer support via phone or email. 

Fees include:

• an annual fee of 0,15%, which is capped at £375 for assets over £250,000.
• ongoing costs ranging from 0,06% to 0,80%.
• fund transaction costs ranging from 0,01% to 0,86%.
• one-off ETF costs between 0,02% and 0,46%.⁴

Fidelity

Fidelity offers a wide range of investment options with a focus on funds.

Known for its straightforward fee structure and a wide selection of funds, Fidelity is a strong option for those seeking a balance between cost and investment options.

What to know:

• Charges a service fee as a percentage of your investment, with a cap on the fee for holding shares.
• No fees for buying and selling funds, but trading shares incurs a charge.
• While it offers perks such as no platform fee on cash, this SIPP requires a minimum deposit of £800 or £20 a month.⁵

Thousands of funds and shares are available, along with free online fund trades and decision-making tools.

Fees include: 

• a tiered platform fee that starts at 0,35%
• a reduced service fee of 0,20% for investments of £250,000 or more 

Larger investments over £250,000 can benefit from the services of a dedicated Relationship Manager.⁶ 

Keep in mind

Compare these providers’ headline fee rates and how each fee structure fits your investment style, pension pot size, and trading frequency. 

Lower annual management fees may mean higher trading costs, or vice versa. 

Besides raw numbers, consider additional services, platform ease of use, customer service, and investment options. 

Always read the latest fee schedules and terms as these can change periodically.

Things to Know About Low-Cost SIPPs

Things to know about low-cost SIPPs include understanding that while they may appear financially appealing, especially for individuals looking to minimise their pension running costs, there are several important considerations to bear in mind.

These include:

• Fee Structure: Low-cost SIPPs often have a straightforward fee structure, usually comprising an annual management fee. However, transaction fees, transfer fees, and charges for services like pension withdrawals must be considered.
• Limited Investment Choices: Some low-cost SIPPs offer fewer investment options to cut costs. Make sure your investment options match your strategy and do not sacrifice your financial goals for lower fees. 
• Passive Investment Focus: Low-cost SIPP investors may prefer index funds or ETFs, which have lower annual management fees than actively managed funds. 
• Self-Management Expectations: Many low-cost SIPPs offer only execution and not advice. If you need advice or a managed service, a low-cost SIPP may not be right for you.
• Online Management Platforms: Many low-cost SIPPs offer online platforms for investors to manage, view, and transact. This reduces provider overheads and lowers fees.
• Platform Functionality & Support: Advanced platform features, tools, and customer support may be sacrificed for low prices. Check the platform’s usability, research tools, and customer service to make sure it meets your needs.
• No Frills Services: To cut costs, you may not get the same customer service or research and analysis tools offered by more expensive providers.
• Performance: While minimising fees is important, investment performance should not suffer. Consider the track record of the funds or investments, as even a small difference in annual returns can significantly impact your pension pot.
• Total Cost: Transaction fees, exit fees, and other charges may increase your total cost beyond the annual management fee, especially if you trade frequently or change investments.
• Regulatory Protection: Verify that the low-cost SIPP provider is FCA-authorised and that the Financial Services Compensation Scheme (FSCS) protects your investments within allowed limits.

Choosing a low-cost SIPP is a balancing act between minimising fees and ensuring you have the right tools, support, and investment options to achieve your retirement goals. 

Make sure your SIPP matches your investment strategy and retirement goals by doing your research and talking to a financial advisor.

Learn More: Top Cheap SIPPs

What Are the Impact of Fees on Pension Growth?

The impact of fees on pension growth is substantial over time, often more than investors initially anticipate. 

Small fee differences can compound, significantly affecting pension pot sizes at retirement. 

Key considerations include:

• Compounding Effect: Fees reduce the amount of money available to grow, significantly impacting the final pension pot over decades.
• Fee Structure: Understanding how percentage-based or flat fees affect your growing pension is crucial for long-term planning.
• Investment Returns: High fees can notably decrease net investment returns, reducing pension growth.
• Fee Transparency: Being aware of all potential fees, including hidden ones like transaction or exit charges, is essential for understanding the true cost of your pension.
• Fee Variance: Different funds and providers have varying fees. Balancing these costs with fund performance and suitability is key to aligning with your retirement goals.
• Negotiating and Switching: As your pension grows, you may negotiate lower fees or switch providers to reduce costs.
• Long-Term Perspective: Assess fees with a long-term view, considering how they will affect your pension pot’s growth over time.

Actively managing and understanding these fees is vital for maximising pension growth and securing a financially stable retirement.

Strategies for Minimising SIPP Fees

Strategies for Minimising SIPP Fees involve a proactive approach to managing your pension investments, ensuring that costs are kept in check without compromising the quality and potential performance of your portfolio. 

Key strategies include:

• Understand Fee Structures: Familiarise yourself with your SIPP’s detailed fee schedule, including annual, transaction, and transfer fees.
• Select the Right Provider: Choose a SIPP provider whose fee structure and services align with your trading frequency and investment style.
• Opt for Passive Investments: Prefer index funds or ETFs with lower annual fees to actively managed funds, reducing overall fee expenditure.
• Negotiate Fees: Use the growth of your pension pot as leverage to negotiate lower fees or consider switching to a more cost-effective provider.
• Monitor and Rebalance: Regularly assess your investments for performance and high fees, adjusting your portfolio as needed.
• Consolidate SIPPs: Merge multiple SIPPs to cut down on administrative fees and possibly secure a lower combined fee rate.
• Be Transaction-Savvy: Limit the number of trades to avoid transaction fees and opt for long-term investments over frequent trading.
• Leverage Offers: Take advantage of free trades or discounts offered by your SIPP provider.
• Avoid Unnecessary Costs: Only withdraw or transfer your SIPP when it aligns with your long-term strategy to avoid incurring unnecessary fees.
• Stay Updated: Keep abreast of any changes in your SIPP’s fee structure and understand how these changes impact your retirement savings.

Implementing these strategies can lead to substantial long-term savings by keeping fees low, allowing a larger portion of your money to remain invested and grow over time.

Regulatory Considerations & Fee Transparency

Regulatory considerations and fee transparency are crucial for SIPPs, governed by UK financial regulations to safeguard investors and ensure pension providers’ fair practices. 

Key aspects include:

• FCA Oversight: The Financial Conduct Authority regulates SIPPs, setting operational standards, ensuring transparency, and monitoring customer treatment.
• Transparency Requirements: Providers must clearly disclose all fees, including management, transaction, and additional charges, ensuring investors are fully informed.
• Regular Statements & Notifications: Clients receive detailed statements of charges, promoting awareness of how fees impact their investments.
• Fair Treatment & Clear Communication: The FCA mandates fair customer treatment and clear, straightforward communication about fees, avoiding confusion.
• Assessment of Suitability: Providers must ensure their products are suitable for each investor, considering their financial situation and investment goals.
• Rights and Complaints: Investors can challenge fee discrepancies and escalate unresolved issues to the Financial Ombudsman Service.
• Ongoing Scrutiny: The regulatory framework is dynamic, with the FCA continuously updating rules to protect investors and adapt to market changes.

These regulatory measures and the emphasis on fee transparency are integral to fair treatment and informed decision-making for SIPP investors, highlighting the importance of staying informed and understanding the protections in place.

Common Questions

In Conclusion

Remember, the ‘cheapest’ SIPP fees are a mirage if they compromise your investment goals or user experience. 

Prioritise value over mere cost, seeking a balance between affordability and features that align with your needs. Ditch the race to the bottom, and discover the ‘cheapest SIPP fees’ that unlock true value for your retirement journey!