Originally published at: The impact of SIPP fees over time – InvestEngine Insights
There is no better time than the end of the tax year to review your pension plan.
In this blog, we’ll help you decide if you’re getting your money’s worth with your current provider and find out if low cost investing with InvestEngine’s fee-free SIPP is for you.
Capital at risk
In our recent research, we have found that nearly three million workers are at risk of losing out by putting more of their earnings into their workplace pensions. You’re receiving no additional employer contributions, but still paying high fees that are eroding the values of your retirement funds.
But what is a SIPP? A self invested personal pension plan allows you to put away more money for your retirement in a tax efficient way. With more flexibility, you can choose how your money is invested based on what’s important to you. What’s more, your contributions to a SIPP are eligible for tax relief of 20%, which you must remember to claim back.
Why do costs matter? Many platforms charge fees such as expense ratios, account management fees, trading fees, performance fees and other hidden costs – meaning you’ll see less returns than you had expected to. To put it simply, the lower the costs the more money stays in your pension pot.
InvestEngine charges no fees on the money you have invested into your SIPP, helping you keep more money for your retirement and greater control over what you invest in.
Use our handy calculator to see how choosing low cost investing would make a big difference over time. For example, imagine you’re saving £400 per month into your workplace pension scheme. You’ve started with a £10,000 lump sum and you’re paying a 0.75% annual fee, and you’re getting an annual return of 8%. Over 40 years, you would pay over £112,000 in fees. With an InvestEngine SIPP, that £112,000 would remain yours.
So what should you do now? Before the end of the tax year on 5 April, read up on the fees you’re paying for your current workplace or private pension.
If you’re paying more than you need to be, you might want to consider switching to an InvestEngine fee-free SIPP. Of course, everyone’s circumstances are different and, if in doubt, you may wish to consult a professional adviser for guidance.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.