The pricing scuffle continues this week, with Ascentric announcing a reduction in its fees for administering its in-house Sipps. This is the third adviser platform pricing change since the Budget on 19 March and demonstrates how platforms are upping the ante to win pension and drawdown business.
From June Ascentric will be removing its Sipp set-up fees and charges for transferring in. From the end of the year the annual charge of £150 will also reduce to £100. These changes will only affect its in-house Sipps, which are currently held by around 12,000 customers.
With more client assets expected to remain on-platform for longer since the Budget’s reforms to pensions and drawdown, removing the set-up and transfer in charges for Sipps makes sense, as platforms try to encourage clients to consolidate assets.
The average balance for Ascentric users is higher than most platforms, at £130,000, and it would be expected that balances for Sipp clients would be higher.
In proportionate terms, reducing any flat fee element has a greater impact on smaller portfolios: Ascentric’s reduction of the annual charge by £50 will effectively knock 10bps off a £50,000 portfolio and 5bps off a £100,000 portfolio.
The below graph shows example platform charges for a range of different client portfolios:
Reducing the flat annual charge will be particularly beneficial to Ascentric clients with smaller funds. However, in comparison to similar platforms in terms of cost, Ascentric is now better-placed for client portfolios with over £150k, where the low ad valorem fee compensates for the fixed fee element of its pricing structure.
Back in 2011 we asked advisers whether Sipps would replace personal pensions as the pension vehicle of the future. The proportions for and against were split fifty-fifty, with sceptics citing the additional cost and the suitability for less complex clients.
We’ve certainly seen costs come down since then – with announcements from Ascentric and Cofunds as recent examples. We’ve also seen providers offer more straightforward solutions, such as Aviva’s Core and Choice pension options and the FundsNetwork Pension.
Holly Mackay is managing director at The Platforum