Online pension by Santander, providing up to £1,000 in cashback incentives
Santander, the multinational banking group, has entered the self-invested personal pension (Sipp) market with a new offering, providing customers greater control over their pension savings as they prepare for retirement. The Sipp allows savers to choose how much they want to pay into their pension and offers the option to monitor pension performance via a mobile or laptop.
One of the key features of Santander's Sipp is a limited-time cashback deal for new pension customers investing before 25 April next year. The cashback offer ranges from £50 for investments between £5,000 and £9,999, up to £1,000 for investments over £100,000. However, it is essential to consider the overall costs of the Sipp when making investment decisions.
The overall fees for the Santander Sipp primarily consist of platform management fees, fund charges, and optional advice fees. Platform management fees are tiered based on the amount invested, starting at 0.35% per year on balances up to £50,000, decreasing to 0.10% per year on balances above £500,000. These fees are charged twice a year on May 1 and November 1, prorated across the tiers if your investment falls between them.
Fund charges, which are ongoing fees charged by the fund managers, vary by fund but generally range from about 0.25% up to 1.49% annually. These fees cover the management of the underlying investments and are disclosed in each fund's Key Investor Information Document.
If you opt for investment advice, digital advice costs £20, while person-to-person advice starts from £500, these are one-off additional costs.
Santander's Sipp allows customers to choose from up to 850 funds to invest in, as well as four ready-made Santander investment funds. The fees for the four funds have not been disclosed.
Although Santander's cashback deal looks attractive, it is not the best deal seen elsewhere. For example, Moneyfarm and Nutmeg recently offered cashback of £3,000 on transfers of more than £300,000 (although the offer is now closed).
It is crucial to compare the costs of investment when opening a Sipp or moving an existing pension to a new provider, as the underlying fees can quickly wipe out any gains from cashback offers. Therefore, it is essential to carefully consider all the fees associated with the Santander Sipp before making a decision.
[1] Source: Santander Investment Hub website, accessed on 1st March 2023.
Business enthusiasts considering investing in the Santander Self-Invested Personal Pension (Sipp) market should be mindful of the various financial aspects involved. With the introduction of a limited-time cashback deal for new pension customers, investments ranging from £5,000 to £100,000 could receive cashback bonuses, impacting the overall personal-finance scenario. However, it's crucial to consider the total costs associated with the Sipp, including platform management fees, fund charges, and optional advice fees, before making a decision. These fees can significantly impact long-term pension growth, making it essential to compare various providers and their respective offerings, including industry competitors offering more extensive cashback deals.
