AJ Bell launches ‘ready-made pension’ to assist discover and merge previous pots

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AJ Bell has created a new ‘ready-made pension’ to help people find and merge their old pots into a single plan.

The new deal, costing 0.45 per cent a year, builds on AJ Bell’s pension finding tool launched last year, and will compete with many similar services promoted as an easy way to combine your retirement savings – from PensionBee, to Lloyds Bank, which launched one last month.

Savers often stack up a lot of retirement pots during their working lives. 

It is sometimes, but not always, beneficial to merge them with your current workplace pension scheme, or move them to a private pension provider. Fees on old and new schemes are one of the top items to check before deciding.

Merging pensions: Stacking up all your pots in one place is not always advisable because you might valuable benefits when you move them – find out what to check first below

What AJ Bell’s new ‘ready-made pension’ service offers

A pension finding and consolidation service is included in an all-in-one annual fee, which is 0.45 per cent, if you put your pots in one of AJ Bell’s three growth funds – cautious, balanced and adventurous.

A responsible investing fund costs 0.60 per cent a year. There are no additional charges for buying or selling investments.

After pots are moved to the firm’s ready-made pension, customers can access the account through the AJ Bell investing platform* on a browser or mobile app.

AJ Bell’s standard platform charges are a 0.25 per cent annual account fee on fund holdings, with a £1.50 charge for buying and selling funds and a £5 charge for buying and selling shares. 

It says: ‘The service finds pensions based on the name of the customer’s former employer or the name of the provider they opened the pension with, although not all pensions can be found and combined this way and some can’t be transferred without financial advice.

‘AJ Bell conducts the admin involved, making combining pensions hassle-free for customers. Customers can see how the search to find their pensions is progressing by logging in at any time.’

AJ Bell adds: ‘Combining pensions makes it easier for people to keep track of their retirement savings and plan for the future. In many cases customers will also be able to cut costs significantly, especially those with legacy pensions charging higher fees.

‘Charges can have a significant impact on long-term investment returns, meaning individuals could be left with a significantly higher pension pot at retirement by reducing fees.’

Lloyds Bank’s new app-based ready-made pensions, which is run with Scottish Widows and on offer to the group’s 21.5million banking customers, is the first time a big bank has launched a product of this kind.

It allows people to consolidate existing pension pots or create a new one through their Lloyds Banking app, and has an annual account fee of 0.3 per cent, or a minimum of £5 a month. Ongoing investment charges are 0.24 per cent and there is a transaction cost of 0.14 per cent.

PensionBee’s fees decrease the bigger your pot. Customers pay between 0.50 per cent and 0.95 per cent a year depending on the type of pension plan they opt for, but this halves on the portion of savings over £100,000.

If you are saving into a workplace pension with your employer – which also makes free contributions into your pot –  it is likely to have used its scale to negotiate low fees.

It is worth checking what it charges and considering whether it will be cheaper and more convenient to move your older pensions there.

That is assuming they don’t have benefits which mean it is better to leave them where they are – see below.