- One single annual fee as low as 0.45%, with no dealing charges
- Three growth funds for different risk appetites & a responsible investing option
- Hassle-free pension finding and consolidation service
AJ Bell today launches a new Ready-made pension that is low-cost, hassle-free and enables people to find old pension pots and automatically combine them into a single account.
The annual charge is just 0.45%, which covers both the AJ Bell platform service and fund charges for three AJ Bell growth funds, with no additional charges for buying or selling investments. The three growth funds cater for different investor requirements – cautious, balanced and adventurous – and there is also a responsible investing option which costs 0.60% per annum. The funds offer auto-investment making regular pension saving hassle free.
The new Ready-made pension also links to the pension finding tool launched by AJ Bell last year, allowing customers to track down their pensions and automatically combine them into a simple, low-cost pension account.
The service finds pensions based on the name of the customer’s former employer or the name of the provider they opened the pension with, although not all pensions can be found and combined this way and some can’t be transferred without financial advice. AJ Bell conducts the admin involved, making combining pensions hassle-free for customers. Customers can see how the search to find their pensions is progressing by logging in at any time.
The pension finding and consolidation service is included in the all-in-one fee, making it one of the cheapest pension finding and consolidation products available to UK savers.
Once their pension pots have been moved to the Ready-made pension, customers can access their account through the AJ Bell platform on a browser or mobile app.
Combining pensions makes it easier for people to keep track of their retirement savings and plan for the future. In many cases customers will also be able to cut costs significantly, especially those with legacy pensions charging higher fees (see example in table below).
AJ Bell managing director, Charlie Musson, says:
“Getting to grips with your pensions is something that a lot of people have on their ‘to do’ list, but never quite get round to. Whether it’s a crumpled-up pension statement stuffed in a drawer or a long-forgotten enrolment pack handed to you when starting work at a new company, the prospect of tracking down your pension accounts and getting them in one place feels like a dreary job.
“Our new Ready-made pension service takes away the hassle, automatically finding all your pensions and combining them into an easy, low-cost account.
“Combining pensions into a single Ready-made pension account will allow customers to see all their retirement savings in one place, with their money being managed by our expert investment team. This will massively simplify retirement saving for those customers, taking the hard work out of managing multiple pension accounts.”
Why charges matter
Charges can have a significant impact on long-term investment returns, meaning individuals could be left with a significantly higher pension pot at retirement by reducing fees.
While modern auto-enrolment schemes used for workplace pensions have a maximum charge cap of 0.75% per year, fees for older ‘legacy’ products can be significantly higher. An FCA paper published in 2019 indicated some older pension products charged as much as 2.4% per year, so it is important for people to pay close attention to costs.
For example, an individual combining three pension pots each worth £25,000 could retire in a decade more than £3,000 better off by switching from pensions charging between 1%-0.5% to AJ Bell’s Ready-made pension.
Source: AJ Bell. Assumes three pension pots worth £25,000 charging 1%, 0.75% and 0.5% respectively are consolidated into a single account charging 0.45%. Investment growth of 4% annually. After 5 years the consolidated pot has a value of £89,214.26, while the three separate pots would be worth £87,881.79, a difference of £1,332.47. After 10 yrs £106,122.46 vs. £102,987.02; 15 yrs £126,235.16 vs. £120,701.30; 20 yrs £150,159.68 vs. £141,477.48
