AJ Bell cuts fee for Ready-made pension: how we compare to others

AJ Bell has just cut the cost of its Ready-made pension from 0.45% to 0.35% per year for any current and new customers. The annual fee covers all your charges, and there's no dealing cost.

For example, a £1,000 investment would have a fee of £3.50. The reduction means that the AJ Bell Ready-made pension is now one of the most affordable options among UK providers, according to research group Boring Money.

What is a Ready-made pension?

A Ready-made pension is an all-in-one investment option. Instead of picking individual funds, stocks or bonds, you put your money in a ‘ready-made’ fund that gives you a diversified portfolio based on the risk level you’re comfortable with.

For AJ Bell’s Ready-made pension, the range of five funds on offer is managed by our in-house Investments team. Depending on the risk level you choose, you’ll have a portfolio that has a mix of bonds and stocks to suit your goals for returns, while aiming to minimise the bumps along the way.

For example, a cautious investor looking to minimise any bumps in the investment journey, would have a fund that is mostly made up of different types of bonds and a smaller allocation of stocks. An adventurous investor, whose aim is larger returns and is comfortable with more volatility, would have a much larger holding in stocks, and a smaller weighting towards bonds.

AJ Bell’s Investment team choose the investments inside these funds by looking across different regions and sectors, as well as choosing investments that are cost effective to keep the price low. They constantly monitor the performance and adjust when needed, to ensure your money stays diversified and working towards your investment goals.

How does the cost of AJ Bell’s Ready-made pension compare to other providers?

The reduction of AJ Bell’s Ready-made pension fee to 0.35% makes it the most affordable option for someone investing £20,000 or less in a ready-made investment product, according to analysis by Boring Money.

This is a single fee that includes the investment cost and the cost to use the platform. There are no charges for putting more money into your pension or taking it out.

For example, someone investing £20,000 into a Ready-made pension would pay £70 per year at AJ Bell (£20,000 x 0.35%). This makes the account more affordable than its competitors at this price point. The same £20,000 investment would cost £90 a year through Hargreaves Lansdown’s ready-made pension, £80 through Lloyds ready-made pension, and £114 with Vanguard’s Managed SIPP.

AJ Bell D2C managing director, Shaun Yates, said: “Keeping charges low is crucial for retirement savers because every pound saved in fees remains invested for the future. AJ Bell’s reduction in Ready-made pension fees demonstrates our long-term commitment to reducing costs as we grow and helping customers get more from their retirement savings.”

AJ Bell continues to offer a competitive rate for those investing £50,000 or more, keeping with the same 0.35% per year fee structure. Interactive Investor offers a lower fee for those investing £50,000, at £141.88 each year with its managed pension balanced index portfolio, compared to AJ Bell’s £175. While AJ Bell offers a percentage fee structure, Interactive Investor has a flat fee for using the platform in addition to a managed portfolio fee. This means it can be the more affordable option, but only once your investments pass a certain amount.

Those with larger pot values can still find good value with us. Charges on a £100,000 Ready-made pension at AJ Bell are £350, half of what you would pay with Aviva. Hargreaves Lansdown’s charges are £450 for a £100,000 ready-made pension. Interactive Investor is less at £319.88 for the same size of investment.

Any other perks?

There are over 3 million lost pension pots in the UK. If you think you may have a few more pensions from old jobs, but can’t find the information, AJ Bell has a pension finder tool to help locate them.

We’ll ask for information like the names of your old employers and the dates when you worked for them. This system works for any employment after 1990, subject to working in a job for over three months (or two years if before 2000) when you were over the age of 22 years old. We won’t be able to find any pensions from the public sector, or for your current employer.