There are plenty of low-cost pensions on offer from a variety of providers. Some types of personal pensions, such as stakeholders, tend to be cheap, with charges of around 0.6% or less a year in total, but investment options are typically limited.
‘Robo-advice’ platforms can help you choose a pension plan based on your responses to certain questions about your investment timeframe and approach to risk. You can find out more about how these services work in our guide What is robo-advice?
If you’re comfortable choosing where your retirement savings are invested yourself, self-invested personal pensions (SIPPs) usually offer the widest range of investment options, and these days, annual platform fees of below 0.5%, or a single, low flat fee, are common. Find out more about some of the options and their charges in our article Everything you need to know about SIPPs.
If you’re paying into a workplace pension, your employer will have control of which provider it uses, but you can ensure you choose the cheapest fund options within your plan if you wish, by switching your investment choice.
As an example, the government-backed workplace pension scheme National Employment Savings Trust (Nest) has an annual management charge of 0.3%, and you also pay 1.8% on the value of each contribution. So, this amounts to £1.80 on each £100 paid into your pension. Nest states that it keeps costs low by focusing on passive investments, so the underlying funds aren’t actively managed.