Interactive Investor (known as ii) has introduced a new Self Invested Personal Pension (SIPP) plan priced at just £5.99 per month, aimed at new pension savers and those with smaller pension pots. Investors with pension pots worth less than £50,000 can access Interactive Investor's new 'Pension Essential' plan and pay just £5.99 per month which is £7 less than the standard 'Pension Builder' plan, priced at £12.99 per month. In this article, we explain how the new Pensions Essential plan works, who it might be good for and how it compares to other products on the market.
What is the Interactive Investor 'Pension Essentials' plan?
Pension Essentials is the name of Interactive Investor's latest SIPP plan. The plan works in exactly the same way as its existing 'Pension Builder' plan, however, it comes with a lower fee, making it good for those who are just starting out as well as those with smaller pension pots. The plan costs £5.99 per month and is available to those with a pension worth less than £50,000. Existing customers with a pension worth less than £50,000 will automatically be moved onto the new Pension Essentials plan. Once a customer's pension pot exceeds £50,000, they will move to the standard Pension Builder plan, charged at £12.99 per month.
Why has the Pension Essentials plan been launched?
Interactive Investor offers a range of plans, charging a flat monthly fee for its services, rather than a percentage of the amount invested like most other investment platforms. Charging a flat monthly fee ensures investors know exactly how much they are being charged each month and for many investors, it can work out significantly cheaper to invest this way.
Interactive Investor has a history of launching innovative plans aimed at attracting new customers. It recently launched its 'Investor Essentials' plan, giving investors access to its Stocks and Shares ISA and Trading account for just £4.99 per month. Much like the Pension Essentials plan, once investors build an investment portfolio of £50,000 or more they are then moved onto the standard 'Investor' plan priced at £11.99 per month. Interestingly, existing 'Investor Essentials' plan holders can now add a SIPP for just £5 per month.
It is worth noting, however, that Investors choosing to add a SIPP to their Investor Essentials plan can only invest up to £75,000 across all accounts (rather than £100,000 as one might expect) before being moved onto the Investor + SIPP plan at £21.99 per month.
As Interactive Investor launches more plans, the options for upgrading and adding additional products become more complex so you should read our full independent Interactive Investor review for a full breakdown of the options and fees.
How does the cost of Interactive Investor Pensions Essentials compare?
We've looked at the cost of investing in Interactive Investor's 'Pensions Essentials' SIPP plan and compared it with a number of other SIPP providers including Hargreaves Lansdown, Fidelity, AJ Bell and iWeb.
Interactive Investor Pensions Essentials vs Hargreaves Lansdown vs Fidelity vs AJ Bell vs Vanguard vs iWeb
The table below reflects the total annual cost (excluding fund charges) of investing in a SIPP with each provider, for five different pension pot sizes. The table does not take into account any fund switches or trades.
| Pension Pot Size | Interactive Investor 'Pensions Essentials' plan
(Annual Cost) |
Hargreaves Lansdown
(Annual Cost) |
Fidelity
(Annual Cost) |
AJ Bell
(Annual Cost) |
Vanguard
(Annual Cost) |
iWeb ¹
(Annual Cost) |
| £10,000 | £71.88 | £45.00 | £90.00 | £25.00 | £15.00 | £90 |
| £20,000 | £71.88 | £90.00 | £90.00 | £50.00 | £30.00 | £90 |
| £30,000 | £71.88 | £135.00 | £105.00 | £75.00 | £45.00 | £90 |
| £40,000 | £71.88 | £180.00 | £140.00 | £100.00 | £60.00 | £90 |
| £49,999 | £71.88 | £225.00 | £175.00 | £125.00 | £75.00 | £90 |
¹ iWeb also charges a one-off £100 account opening fee which we have not included in our cost comparison
Which SIPP is best for you?
The Pension Essentials plan from Interactive Investor offers good value for those with smaller pension pots and also those looking to start investing in a SIPP for the first time. There is no denying that you can get a cheaper SIPP by opting for a platform that charges a percentage fee when you start out, however, fees quickly add up as your pension pot grows and it is not long before it is likely to become a more expensive way of investing. Prior to the arrival of Pensions Essentials, investors looking for a flat fee subscription model for their SIPP would probably have found iWeb to be the cheapest option. iWeb is a low-cost platform that charges just £22.50 per quarter for pension pots under £50,000 and £45.00 per quarter for bigger pension pots.
Those choosing Interactive Investor's Pension Essentials plan instead will now pay around £20 per year less when compared to iWeb and that saving increases to around £25 per year for pension pots worth more than £50,000. Additionally, trading costs are slightly cheaper with Interactive Investor, costing £3.99 per trade compared to £5 with iWeb.
Take a look at our article 'The best and cheapest SIPPs' for further information on the Best SIPPs in the UK to help you decide on the best SIPP for you.
