How to choose the best pension provider

When choosing a platform for your self-invested personal pension (Sipp), you’ll need to evaluate multiple features to find the right choice for your individual circumstances. To be in with the best chance of maximising returns you must factor in account fees, additional charges and the range of investment choices, while keeping in mind that you will be investing your money for a long period of time.

Latest changes 

Over the past 12 months, a handful of providers have made adjustments to their fees.

Last October, Interactive Investor revamped its pricing structure. Unlike most rivals, it continues to offer a flat fee structure, but the changes mean its Pension Essentials Plan now costs of £71.88 a year for those who invest up to £50,000 via its Sipp. Those investing more than £50,000 in its Sipp are now part of its Pension Builder plan, costing £155.88 a year, while those with more than £75,000 were moved onto its Investor + Sipp plan for £263.88 a year. The platform simultaneously cut its dealing charge for UK and US trades from £5.99 to £3.99.  

Elsewhere, Barclays Smart Investor introduced a single annual holdings fee, calculated at 0.25 per cent on investments up to £200,000 and 0.05 per cent on investments above this amount. Then, in April, AJ Bell overhauled its fees, reducing its dealing charge on shares, exchange traded funds (ETFs), investment trusts and bonds from £9.85 to £5. The platform also lowered its frequent trader dealing charge from £4.95 to £3.50.

Which platform suits you? 

How frequently you trade and what you invest in will be determining factors for how much your Sipp costs. Platforms such as Hargreaves Lansdown and AJ Bell cap the account fee for shares, investment trusts and ETFs – meaning they effectively charge a flat fee structure for many clients, in line with that offered by Interactive Investor across its platform. But they continue to charge percentage fees for holding funds, and as a result this can prove a far more expensive option. However, trading funds is typically cheaper, and in some cases (such as on Hargreaves) carries no charge at all. 

If you are approaching the point at which you want to draw down your pension, keep an eye out for charges in relation to this. Curtis Banks, Halifax and iWeb have some of the highest drawdown fees at £171, £180 and £180, respectively, but most platforms nowadays do not charge for this service. 

Meanwhile, Freetrade does not offer drawdown as an option, only allowing investors access via uncrystallised funds pension lump sums. If you wish to access your pension via a different method then you may need to transfer to a different provider. 

If you are considering transferring your Sipp, one thing to be mindful of is potential transfer fees, and whether any potential cost savings will be balanced out. While the number of platforms charging these fees is decreasing, Barnett Waddingham still charges £200 for cash transfers, Charles Stanley Direct charges £150 and Killik & Co charges £25. 

Another factor to be aware of is any extra charges and how these can add up cumulatively, depending on your circumstances. For example, Charles Stanley Direct charges a £120 admin fee, but this is waived if you invest more than £30,000 across the platform. 

Other factors

Alongside costs, there are several other factors that will influence your platform choice. One other consideration is whether you require a full-service Sipp or if a standard, lower-cost option will be sufficient. 

You will need a full-service Sipp if you wish to invest in non-standard assets such as commercial property. These are offered by providers such as Curtis Banks. But as costs are substantially higher for these wrappers, if you only plan to invest in conventional assets such funds, shares or bonds, a low-cost Sipp should meet your needs. 

Another factor to consider is the choice of investments available on the platform and whether there are any restrictions on what you can invest in. For example, Nutmeg’s private pension will construct your portfolio for you, primarily using an assortment of ETFs, while Vanguard only allows you to invest in its own funds. 

Such an approach may give peace of mind to newer investors looking to simplify the process, and most major platforms offer ready-made portfolios or funds shortlists for investors who wish to take a far less active role in selecting their investments. However, for more experienced investors it will likely be too restrictive. 

“Those who want to trade more actively [or choose their own asset allocation] will want to prioritise those platforms with broader access to multiple investment types,” says Holly Mackay​, founder and chief executive of Boring Money.

Your stage of life will also influence which platform is most suitable for your needs. If retirement is still a distant prospect, then factors such as ease of use, low accumulative costs and good customer service may carry greater weight. However, at this point of life the key consideration for investors is likely to remain the choice of investments offered by a platform. 

“At the beginning you’re going to be accumulating, so getting your choice of investments right is quite important as ideally what you’re trying to do is leave it alone for a long time,” says Rich Mayor, senior analyst at The Lang Cat. 

If you are approaching retirement age, the options relating to how you can access your pension and the support on offer become more important. Many platforms can fall down when it comes to pensions administration. While it can be hard to discern this ahead of time, the platforms' overall approach to customer service could well offer a clue to how comprehensive their pensions service will prove.

“For those within 10 years of retirement, this is when it starts to get complicated and so it becomes more important to have a platform which really understands pensions, as well as offering investment trading capabilities,” Mackay notes.

Ultimately, when choosing a platform you should consider your own investment needs: platforms have evolved to target specific niches and there is no one-size-fits-all solution.  

Mayor also recommends tailoring platform choice to your individual circumstances. “If having a big platform is important to you, you might want to go for Hargreaves Lansdown, Interactive Investor or AJ Bell. If you’re particularly cost conscious, you could go for Interactive Investor because its flat fee model is appealing and it’s useful for people with more modest pensions as they offer a cheaper version [for these customers],” he suggests. 

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