AJ Bell cuts fee on ready-made pension – how does it compare to the rest of the market?

AJ Bell has slashed the fee on its ready-made personal pension, making it one of the cheapest fee-wise on the managed personal pension market.

The investment platform has today (14 October) reduced its annual charge from 0.45% to 0.35% for investors taking a hands-off approach.

The 0.35% fee is all-in, covering administration and investment charges, with investors facing no additional charges on transactions.

AJ Bell launched the ready-made personal pension in 2024, and now offers investors the choice of five growth funds based on their risk appetite.

AJ Bell manages the investments for you which can be helpful for those who are time poor or new to investing and don’t want the responsibility of managing their investments.

The ready-made pension also lets savers track down old pension pots and consolidate them into a single account.

Mahdi Shabir, lead insight analyst at Boring Money, a website providing advice on saving and investing, said: “AJ Bell’s pricing change is both compelling and illustrative of the increased competition in the ready-made pension market.

“Following price reductions from both Moneybox and Hargreaves Lansdown in the past 12 months, AJ Bell has thrown down the gauntlet by reducing fees from 0.45% all-in to 0.35% for its ready-made pension.”

Is AJ Bell’s ready-made personal pension worth it?

Following the fee change, AJ Bell’s ready-made personal pension is now one of the cheapest own-brand managed pensions on the market.

However, the higher the value of the portfolio, the less competitive it becomes fee-wise.

For portfolios worth £20,000 or less, its fees are the lowest out of the major providers offering similar products, including Aviva, Fidelity and Hargreaves Lansdown, according to analysis by Boring Money factoring in platform and ongoing fund charge fees.

However, based on a portfolio of £50,000, interactive investor’s (ii) managed pension is cheaper on an annual basis.

Based on a portfolio size of £300,000, AJ Bell’s ready-made pension is more expensive than similar products from Monzo and PensionBee.

Source: Boring Money, looking at the most aligned ready-made pension product offered by mainstream providers, factoring in platform fees and ongoing fund charge fees, excluding transaction costs. **no regular savings plan assumed

Beyond fees, AJ Bell’s ready-made personal pension comes with five growth funds to choose from depending on your risk profile.

However, ii has 10 different investment portfolios to choose from depending on what level of risk you’re willing to take.

Should you consolidate your pension pots?

AJ Bell’s ready-made personal pension also comes with a free pension-tracing service included. You can then consolidate these pots into one with AJ Bell.

Consolidating pension pots can make it easier to track investments and see whether they are performing well, as well as reduce what you’re paying in fees.

Shaun Yates, direct to consumer managing director at AJ Bell, said: “Many people have accumulated several pension pots over the course of their career and it can be surprisingly easy to lose track of them.

“Keeping on top of multiple accounts often leaves people unsure whether their savings are working as hard as they could be.”

It’s worth double-checking you won’t lose out on valuable benefits that come with a pension before consolidating it. For example, it’s generally not worth giving up a defined benefit (DB) scheme pension.

Check for any exit fees which may be incurred from ditching a pension pot as well.