Online D2C platform interactive investor has launched what it calls an ‘ultra low cost’ SIPP with a flat fee of £12.99 a month.
The fee does not include fund charges.
Pension Builder replaces a previous pension plan offering a wider range of services for £19.99 a month.
Interactive says the new 'Pension Builder' product is aimed at the 6.2m people in the UK who “want to build up their long-term wealth by focussing on their pension.”
Pension Builder offers free monthly investing and a wide choice of investments. The first six months will also be free of monthly charges.
The company says it will serve those who do not want an ISA, and do not trade regularly.
The firm, known for its low cost dealing services, claims that for investments of over £100,000 the Pension Builder beats low cost rival Vanguard.
The move is likely to spark further price competition in the D2C platform sector.
Richard Wilson, CEO of interactive investor, said: “At only £12.99 a month to run your pension, it breaks the mould completely. We’ve designed this product to make building your pension pot simple, straightforward, and ultimately - satisfying.”
The firm says the plan should appeal to the 8m adults in the UK unaware of the impact of pension admin costs and who struggle to work out the impact of percentage fees on long term returns.
Interactive Investor Pension Builder customers pay a flat £12.99 per month regardless of the size or composition of their investment. Interactive says that its new pension product should be cheaper than main rivals for investments above £104,000.
According to its research with CompareThe Platform assuming a pension portfolio split 50/50 between funds and equities in a £100,000 pension pot, Hargreaves Lansdown pension customers would pay £36.92 per month; £19.83 with Fidelity Personal Investing and £23.42 with AJ Bell YouInvest.
Key features of Pension Builder:
Same breadth and depth of choice as regular ii products – funds, investment trusts, ETFs, and direct equities (UK, US and international shares across 17 global exchanges)
Fee - £12.99 a month
Trading costs: £7.99 for UK shares and ETFs, funds, investment trusts and US shares. Other international shares £19.99. Dividend reinvestment 99p
Free monthly investing into funds, investment trusts, ETFs and popular UK shares
No free trading credit
App access
Easy to use select lists, model portfolios, quick start funds and more
Pension calculators
Customers can upgrade to also have an ISA, trading account, as many free Junior ISAs as they have children, and one free trade a month, for just £7 per month extra
Until ii launched Pension Builder, customers wanting just an ii pension would pay a £10 per month SIPP fee, and a £9.99 per month ii subscription fee which comes with a trading account, ISA and as many free JISAs as customers have children.
First 6 months subscriptions on Pension Builder will be free for all new customers
Becky O’Connor, head of pensions and savings, interactive investor, said: “Over the years, the amount saved could add thousands of pounds to retirement incomes.”