Hargreaves Lansdown is providing a final opportunity for savers to secure a managed pension with no account or fund charges for nine months. The offer requires new accounts to be opened and funded by midnight on July 31.
The investment platform has eliminated its 0.15% account charge and 0.30% fund charge on its managed pension until May 2027. This deal is available through the provider's self-invested personal pension (Sipp), with a minimum investment of £100 as a lump sum or £25 per month.
According to Hargreaves Lansdown, approximately 50,000 customers currently invest in the ready-made pension, with over 14,000 making regular monthly investments averaging around £200. The fee reduction is applied automatically. The 0.15% account charge will not be applied until April 30, 2027, and a rebate for the 0.30% fund charges will be provided at the beginning of May 2027.
Doug Abbott, chief product officer at Hargreaves Lansdown, noted that many clients utilize this plan as a cost-effective method for future savings, often performing a similar function to services provided by financial advisors.
How the Managed Pension Works
Hargreaves Lansdown's ready-made pension is managed by the platform's investment experts, meaning individual fund selections are not permitted. The pension is comprised of two funds: a moderately adventurous fund aimed at long-term growth with associated investment risk, and a cautious fund designed for those nearing or in retirement, focusing on lower-risk investments to preserve wealth and generate income.
Investment allocation is determined by proximity to retirement. Individuals more than eight years from retirement will have their money invested in the moderately adventurous fund. This allocation gradually shifts to the cautious fund as retirement approaches. It is important to note that the fee waiver applies only to the ready-made pension plan itself, not the Sipp account. Standard charges for other investments within a Sipp, including Hargreaves Lansdown's typical 0.35% annual account fee, remain applicable.
Comparison with Other Options
This offer provides nine months of essentially free investing on Hargreaves Lansdown's ready-made pension. Transaction charges of 0.01% per month are the only fees applied during this period. This promotion is particularly beneficial for individuals seeking to establish a consistent pension investment routine without prior experience.
However, potential investors are advised to evaluate platforms based on more than just introductory incentives. A comprehensive comparison should include general fees, customer service availability, and other relevant factors. It is also crucial for those considering a pension transfer to ensure no valuable benefits, such as a protected pension age, are forfeited.
After the fee-free period concludes, users should reassess their options to avoid future charges. The standard 0.45% all-in fee for Hargreaves Lansdown's ready-made pension is comparable to AJ Bell's offering, though AJ Bell does not automatically adjust investment risk as retirement nears.
Scottish Widows offers a similar gradual risk-reduction strategy, with an account fee of 0.3% annually. However, a minimum £5 monthly charge, along with ongoing charges of 0.1% and transaction costs up to 0.16%, could make this option potentially more expensive than Hargreaves Lansdown or AJ Bell.
Interactive Investor charges a flat monthly fee of £5.99 for portfolios up to £100,000 and £14.99 for larger amounts, in addition to ongoing charges between 0.14% and 0.22% for its managed pension. For a £50,000 managed pension, flat fees could result in annual costs of £225 with AJ Bell and Hargreaves Lansdown (factoring in ongoing fund charges of 0.22%), versus £181.88 annually with Interactive Investor.
These comparisons highlight the importance of monitoring fees and value, even when investments are managed by experts. For those preferring to manage their own investments, resources detailing the best Sipps are available.