Pension UK: Are YOU eligible for Britain’s cheapest pension plan?

Vanguard has today (Wednesday, February 19) launched its Personal Pension which has been dubbed the cheapest pension plan in Britain. The new self-invested personal pension (SIPP) is designed to cut the “cost and complexity” of saving for retirement.

Sean Hagerty, head of Vanguard’s Europe division, said: “We are very excited to launch the Vanguard Personal Pension, a pension designed to reduce the cost and complexity of saving for retirement.

“An individual’s savings often represent a lifetime’s effort, yet many investors and retirees lose out on their own hard work to high fees and charges.

“Fees can have a sizeable impact on investment returns, and consequently on the quality of life in retirement.

“At Vanguard, we aim to offer investors the clarity, peace of mind and value for money they deserve, through a service that is simple, effective, transparent and fairly priced.”

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The low cost pension has been praised for its benefits to savers.

Head of Platforum Jeremy Fawcett said: “Pension investing is a long-term activity and when fees are low, outcomes are significantly improved.”

But are YOU eligible for Britain’s cheapest pension plan?

For now, Vanguard’s Sipp is only available to those paying into a pension.

To apply for a Vanguard Personal Pension you must be at least 18-years-old.

For tax purposes, you must also be a UK resident and have proof of identity.

Eligibility to invest in a Vanguard Personal Pension will depend on individual circumstances.

Savers who want to receive payouts through their pension under drawdown will not be able to do so until the 2020/21 tax year.

Pension drawdown is when you use your pension pot to provide you with a regular retirement income by reinvesting it in funds specifically designed and managed for this purpose

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The Sipp will charge an annual account fee of 0.15 percent – but this is capped at £375.

The fee will apply across all a person’s holdings on the Vanguard Investor platform.

According to Platform data and analysis as of November 2019, Vanguard’s SIPP is the lowest-cost self-invested personal pension on the market for the average British pension holder who has not yet drawn on their pension.

The minimum investment is £100 a month, before tax relief, or a lump sum of at least £500.

What is a Sipp?

Self-invested personal pensions (Sipps) are often used by self-employed people who want to save for retirement.

They are also used by workers who have maxed out their workplace pension and want to put extra savings into another pension.

Sipps are a government-approved personal pension scheme which enables individuals to make their own investment decisions from the full range of investments approved by HM Revenue and Customs (HMRC).

Sipps are also known as tax wrappers – meaning they allow tax rebates in exchange for limits on accessibility.

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