Freetrade SIPP: What Makes It Different?

Freetrade's SIPP is renowned for its zero commission on trades and straightforward pricing model, appealing to investors looking for a cost-effective way to manage their retirement savings. Their mobile-first approach resonates with a younger demographic.
  • Last Updated: 18 Apr 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui
Discover the Advantages & Drawbacks of Freetrade & How It Stacks Up Against Its Competitors. Make an Informed Decision Today.
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Key Takeaways
  • The Freetrade SIPP is favoured by active traders owing to its low-cost structure and flexibility in trading options.
  • The charges for Freetrade SIPP include a flat annual fee with no additional costs for buying or selling investments.
  • The platform is designed for ease of use, offering a straightforward and intuitive interface for investors.
  • You can transfer existing pensions to consolidate your retirement savings for easier management.
  • Freetrade offers a substantial range of investment options, including stocks, bonds, ETFs, and investment trusts, catering to diverse investment strategies.

In a world where a surprising 30% of survey respondents anticipate relying only on the state pension come retirement, private options like the Freetrade SIPP stand out as potential alternatives.1 

This SIPP, or Self-Invested Personal Pension, with its intuitive app and adaptable investment options, attracts the modern, money-smart individual.

In This Article, You Will Discover:

    The Every Investor team is here to delve into what the Freetrade SIPP offers, evaluate how this offering aligns with various investment aims, and highlight the importance of dependable advice. 

    To help you ensure you are fully informed before making your next move, all our content is thoroughly checked for quality and compliance before publication.

    Ready to dive in?

    Who Is Freetrade?

    Freetrade is a UK-based fintech company that offers a user-friendly app for commission-free investing. It aims to make investing accessible to everyone, regardless of their financial background.

    Unique for its simple and intuitive platform, Freetrade allows users to buy and sell stocks and ETFs without traditional brokerage fees, democratizing investment.

    What Is a Freetrade SIPP & How Does It Work?

    A Freetrade SIPP, or Self-Invested Personal Pension, is a type of pension account that allows individuals to take control of their retirement savings and invest in a wide range of assets.

    Unlike traditional pension schemes, a Freetrade SIPP gives you the freedom to choose and manage your own investments, including stocks, bonds, and exchange-traded funds (ETFs).

    By opening a Freetrade SIPP, you can benefit from tax advantages, such as tax relief on contributions and tax-free growth on investments, helping you to maximize your retirement savings.

    With a Freetrade SIPP, you can enjoy the convenience of managing your pension investments through an intuitive mobile app or web platform.

    This enables you to easily track your investments, make contributions, and access a wide range of investment options.

    Additionally, Freetrade offers a low-cost fee structure, making it an affordable solution for individuals who want to take control of their retirement savings.

    By using our platform, you can harness the power of technology to build a diversified investment portfolio tailored to your risk tolerance and retirement goals, ensuring a comfortable and financially secure future.

    How Does the Freetrade SIPP Work?

    The Freetrade SIPP works by helping investors find their old pensions so these can be incorporated into their new pension product, and the firm also does not charge commission when you make trades.2

    What Are the Advantages of a Freetrade SIPP?

    The advantages of a Freetrade SIPP include low-cost trading.

    Other benefits are:

    • a user-friendly app that aims to simplify investment management.
    • low fees, with no account management or platform fees.
    • the option to invest in a wide range of investments, including stocks, funds, and ETFs.
    • access to educational resources to help you learn about investing.

    What Are the Drawbacks of a Freetrade SIPP?

    The drawbacks of a Freetrade SIPP provider include the fact that the withdrawal options are limited to an uncrystallised funds pension lump sum.3

    Other potential drawbacks are:

    • Options for depositing and withdrawing are limited.
    • Platform fees on the Plus plan may be expensive for those with smaller portfolios.
    • OEIC funds are not available to invest in.
    • Freetrade does not offer readymade portfolios.4

    Who Is Eligible to Open a Freetrade SIPP?

    Any UK resident under 75 is eligible to open a Freetrade SIPP, whether they are new to investing or already have a portfolio.5

    What Should You Consider Before Choosing a Freetrade SIPP?

    You should consider your risk tolerance and investment goals before choosing a Freetrade SIPP. 

    Other factors to keep in mind include fees, withdrawal options, and customer support.

    Fees & Charges

    The Freetrade Plus plan, which includes a SIPP account, charges a £9,99 monthly (or £119,88 annual) platform fee.6

    There are no charges for domestic share dealing and transfers, and a 0,39% FX fee applies to US and European stock trades.7

    Investment Options

    You will be able to invest in an array of UK, US, and European stocks, ETFs, and investment trusts.8 

    Freetrade also offers the option to trade in fractional US shares.

    Flexibility & Accessibility

    Manage your SIPP on the go through the intuitive mobile app, and adapt your investments as your financial situation evolves.

    Tax Benefits & Implications

    Maximise tax relief on contributions and enjoy potential tax-free growth within the SIPP. 

    Be sure to keep abreast of changing regulations.

    Withdrawal & Retirement Options

    You can start withdrawals of your funds from age 55 (57 from 2028). 

    With Freetrade, you can take an uncrystallised funds pension lump sum when you withdraw your investment.9

    Customer Support & Service

    Freetrade has a dedicated customer support team that is available to help you with any questions or issues you may have. 

    You can reach out to the team via email, live chat, or by submitting a support ticket on the Freetrade website. 

    The company has won several awards for its customer service, including the ‘Best Commission-Free Stockbroker’ award from Good Money Guide in 2021.10

    What Are the Contribution Limits on a Freetrade SIPP?

    The contribution limits on a Freetrade SIPP are the same as those on other UK pension products, meaning you will receive tax relief on contributions of up to £60,000 per tax year.

    What Are the Fees & Charges Associated With a Freetrade SIPP?

    The fees and charges associated with a Freetrade SIPP include a monthly fee of £9,99.11

    Here are the typical fees and charges associated with a Freetrade SIPP:

    • Buying and selling shares is free.
    • US stock transfer out (per holding) costs £17.12
    • There are no setup, exit, or trading fees.
    • US and EU stock trades are subject to a 0,39% FX fee.

    While Freetrade charges a monthly fee and specific transfer costs, its SIPP stands out with free share trading and no setup, exit, or hidden fees.

    Who Is the Freetrade SIPP Suited to?

    The Freetrade SIPP may be suited to cost-conscious investors seeking low fees for share and ETF trading as the firm charges no commission on share trades. 

    The flat platform fee of £9,99 may suit higher-value portfolios better than percentage-based fees. 

    How Does a Freetrade SIPP Compare With Other Options?

    The Freetrade SIPP compares well with other options in terms of low-cost trading based on a flat fee, as the percentage-based platform fees charged by other firms may be disadvantageous to investors with larger investment portfolios. 

    A quick look at some of Freetrade’s competitors in the sphere may help you form an idea of how different fees and charges stack up.

    Hargreaves Lansdown:

    • Annual SIPP charges on shares are 0,45% of your share value, up to a maximum of £200 a year.
    • The holding charge for funds starts at 0,45% and tapers on a sliding scale.
    • There are no dealing charges on funds (including unit trusts and OEICs).
    • Trade fee: £11,95 for up to 9 trades, £8,95 for 10 to 19 trades; £5,95 for 20+ trades.13
    • FX fee: 1% on the first £5,000, which then tapers to 0,25%.14

    Interactive Investor:

    • The Pension Essentials plan comes at a £5,99 monthly fee, and, for those whose investments are worth over £50, the Pension Builder plan is available at £12,99 per month.
    • US and UK trades are priced at £3,99 per trade.
    • Other international share trades cost £9,99.
    • FX fee tiers: 1,5% (up to £24,999.99), 1,25% (£25K-£49,999), 1% (£50K-£99,999.99), 0,5% (£100K-£599,999), 0,25% (£600K-£999,999.99).15

    AJ Bell:

    • SIPP charges: 0,25%, capped at £10 a month.
    • Funds account charges: start at 0,25% and taper on a sliding scale.
    • Trade fee: £3,50 (if you made 10 trades the previous month).16
    • Per-deal charge on online international share trades: £5
    • FX fee tiers: 0,75% (<£10,000), 0,50% (£10,001-£20,000), 0,25% (≥£20,000).17

    Remember, fees are not the only metric on which to base a comparison of your different SIPP options; however, looking at the different charges can provide a useful springboard for the rest of your research.

    What Are Clients Saying About Freetrade?

    Many clients praise the ease of use of the platform, the low fees, and the customer service.

    There are some negative reviews as well, but these tend to focus on specific issues or problems with individual accounts.

    On the whole, Freetrade seems to have a positive reputation with its customers. 

    The company’s Trustpilot rating is 4 out of 5, based on 3,676 reviews.18 

    On Google Play, the Freetrade app has scored 3,9 out of 5 stars from over 19,800 reviews.19

    Opening a Freetrade SIPP

    Opening a Freetrade SIPP is a straightforward online process. 

    The steps you need to follow include downloading the app, verifying your identity, and answering a few financial questions. 

    You will need a valid ID, proof of address, and a National Insurance number for verification.

    Regulatory Details

    The Financial Conduct Authority (FCA) authorises and regulates Freetrade SIPP (ref. number: 783189),20 and the firm is registered with Companies House (reg. number: 09797821).21

    Common Questions

    Why Is Freetrade SIPP Considered Good for Active Traders

    What Are the Charges Associated With Freetrade SIPP

    How User-Friendly Is the Freetrade SIPP Platform

    Can I Transfer Existing Pensions Into a Freetrade SIPP

    What Investment Options Does Freetrade SIPP Provide

    Why Choose Freetrade SIPP for Your Retirement Planning

    Can I Access My Freetrade SIPP Funds Before Retirement Age

    Is a Freetrade SIPP safe

    Can I Transfer My Existing Pension into a Freetrade SIPP

    How Long Does It Take to Open a Freetrade SIPP

    What Happens to My Freetrade SIPP When I Die

    How Often Can I Access & Manage My Investments Within a Freetrade SIPP

    Can I Seek Professional Advice While Investing in a Freetrade SIPP

    What Happens to My Freetrade SIPP if I Change Jobs

    Can I Manage My Freetrade SIPP Online

    In Conclusion

    When deciding on the best SIPP product for your needs, ensure your investment goals align with Freetrade’s offerings to avoid a potential nosedive. 

    A quick word with a qualified financial adviser can tip the scales between retirement bliss and a letdown. 

    If you have checked all the right boxes, a Freetrade SIPP could very well be your next big financial move.

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