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Pension costs comparison - Satpal's case study

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-The need to upgrade

Satpal could potentially add £27,000 to the value of his pension over 15 years by switching to our self-invested personal pension (SIPP).

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Before switching

£2,300 annual charges in year one.

  • Based on 1% annual product & investment charges.

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After switching to the ii SIPP

£1,378 annual charges in year one.

  • Based on a flat fee of £239.88 (12 months x £19.99) + 0.495% fund charges.

Satpal's story

Satpal has worked as an independent contractor for most of his career. He took out a stakeholder pension when they began in 2001 and always made it a priority to pay in. It’s now worth £230,000. Satpal’s recently taken a permanent job with one of his clients and has joined their workplace pension plan for the future, to benefit from employer contributions.

He’s an experienced investor and understands that, at higher values, paying flat fees for your pension plan can leave you with more money to invest than the percentage-based charges he’s paying for his stakeholder plan and his new workplace pension.

Satpal loves what he does. He’d like to keep working until he’s 65. In the meantime, he decides to upgrade his stakeholder pot money to an ii SIPP. His total monthly charge with ii is £19.99, which includes £9.99 for the Investor Service Plan plus a £10 SIPP fee.

Satpal decides to split his money equally between two popular funds. An ethical actively managed fund with an annual investment charge of 0.77%, and a passively managed fund with an annual investment charge of 0.22%.

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Statistics for older pensions like Satpal's:
Over 1.1 million stakeholder pensions were sold between April 2001 and September 2002 alone (source: ABI, reported in the Guardian). 

The benefit of fair flat fees with ii

  • A £922 saving in fees in year one, without allowing for investment returns.
  • Allowing for investment growth of 5% each year Satpal could potentially save £19,000 in total fees and add an extra £27,000 to the value of his plan over 15 years.

This case study is for illustration only, based on independent charge comparison research from financial services consultancy, the lang cat. Find out more

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Open a SIPP

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Act now and save an extra £60

Open a SIPP by 30 September 2020 and pay no SIPP fee until April 2021. This means your service plan fee covers you for all of your investment accounts. Following the offer period, the ii SIPP fee is only £10 a month more.  Terms apply

The ii SIPP is aimed at clients who have sufficient knowledge and experience of investing to make their own investment decisions and want to actively manage their investments. A SIPP is not suitable for every investor. Other types of pensions may be more appropriate. The value of investments made within a SIPP can fall as well as rise and you may end up with a fund at retirement that’s worth less than you invested. You can normally only access the money from age 55 (age 57 from 2028). Prior to making any decision about the suitability of a SIPP, or transferring any existing pension plan(s) into a SIPP we recommend that you seek the advice of a suitably qualified financial adviser. Please note the tax treatment of these products depends on the individual circumstances of each customer and may be subject to change in future.

£0 SIPP fee promotion terms and conditions¹

  1. No SIPP fee shall be charged to all new ii SIPP accounts until April 2021 (the “Offer”) that are opened from and including 3 March 2020 to and including 30 September 2020¹ (the “Offer Period”). This shall include instances where a participant has submitted a full and complete application for a new ii SIPP account during the Offer Period but the account is not yet opened, where such delay is not attributable to the acts or omissions of the participant.
  2. The Offer is open to new and existing customers.
  3. These terms and conditions should be read in conjunction with the ii SIPP Terms. In the event of a conflict between these terms and conditions and the ii SIPP Terms, these terms shall prevail.
  4. After the Offer has ended, the SIPP fee you will be required to pay will be as set out in our Rates and Charges.
  5. All other fees, for example a drawdown fee which is applied once you start to take retirement benefits, are not subject to this Offer and shall continue to apply notwithstanding.
  6. We reserve the right to alter, withdraw or amend this Offer and/or these terms and conditions at any time without prior notice.
  7. All participants to this Offer agree to be bound by these terms and conditions.
  8. Interactive Investor Services Limited (“IISL”) is the promoter of this offer. The registered office for IISL is Exchange Court, Duncombe Street, Leeds LS1 4AX.

¹ Updated 28 August 2020