AJ Bell cuts fee on ready-made pension: how does it compare?

The company has reduced the annual charge for its ready-made personal pension, putting it among the lowest-cost options of its type.

?



AJ Bell has cut the charge on its ready-made personal pension, putting it among the least expensive managed personal pensions available.

From today (14 October), investors who prefer a hands-off approach will pay an annual fee of 0.35%, down from 0.45%.

The 0.35% fee covers both administration and investment costs, so investors pay nothing extra when they make transactions.

AJ Bell manages the investments on your behalf. That can suit people who have little time, are new to investing, or would rather not manage their own portfolio.

The ready-made pension helps savers find old pension pots and bring them together in one account.

Mahdi Shabir, lead insight analyst at Boring Money, a website that advises people on saving and investing, said: "AJ Bell's pricing change is compelling - and it shows how competition has intensified in the ready-made pension market.

"Moneybox and Hargreaves Lansdown have both cut their prices over the past 12 months. AJ Bell has now responded by reducing the fee for its ready-made pension from 0.45% all-in to 0.35%."

Is AJ Bells ready-made personal pension worth it?

After the fee change, AJ Bells' ready-made personal pension ranks among the cheapest managed pensions offered under a provider's own brand.

That advantage fades as the portfolio grows: larger balances face less competitive fees.

According to Boring Money's analysis, which includes platform and ongoing fund charges, portfolios worth 20,000 or less incur lower fees with it than with major providers offering similar products, including Aviva, Fidelity and Hargreaves Lansdown.

For a portfolio worth 50,000, Interactive Investor's (ii) managed pension costs less each year.

The picture changes at 300,000: AJ Bell's ready-made pension costs more than comparable products from Monzo and PensionBee.

Swipe horizontally to scroll. Source: Boring Money. The comparison covers the mainstream providers' most closely matched ready-made pension products, including platform fees and ongoing fund charges but excluding transaction costs. No regular savings plan is assumed.

Beyond the fees, AJ Bell's ready-made personal pension offers five growth funds, with the right choice depending on your risk profile.

Ii provides 10 investment portfolios, each designed for a different level of risk.

Should you consolidate your pension pots?

AJ Bell also includes a free pension-tracing service. Once you locate your old pots, you can combine them into a single pension with AJ Bell.

Combining your pension pots gives you a clearer view of your investments and may cut the fees you pay.

Shaun Yates, managing director of direct-to-consumer at AJ Bell, said: "Over a working life, many people build up several pension pots, and losing track of them can happen surprisingly easily.

"When accounts are scattered around, people often struggle to tell whether their savings are performing as well as they could."

Before bringing pensions together, check that consolidation will not mean giving up valuable benefits. A defined benefit (DB) scheme pension, for instance, is generally worth keeping.

Check for any exit fees that may apply if you withdraw from a pension pot.