Is it time you ditched your pricey pension plan for a DIY investing platform that may save you thousands over the years?

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Investors are using the lockdown to haul their pension savings out of expensive old-style plans – and move the money to low-cost fund supermarkets instead. 

Interactive Investor, the low-cost provider, says four of the top five most common transfers into its pension account this year have been from insurance company brands that are typically more expensive. 

It says investors have moved money out of Aviva, Scottish Widows, Standard Life and Aegon pensions into its self-invested personal pension (Sipp) plan, where you are in full control of how your savings are invested and can select from thousands of funds and shares. 

© Provided by This Is Money Spring clean: Investors are using the lockdown to haul their pension savings out of expensive old-style plans ¿ and move the money to low-cost fund supermarkets instead

The only more common ‘transfer in’ was from major rival Hargreaves Lansdown, which is the most popular fund supermarket for pensions and Isa savers but not always the cheapest. 

Other popular low-cost pension providers that accept money from old plans include AJ Bell and Fidelity International. 

Richard Wilson, chief executive of Interactive Investor, says a lot of the pension money flowing into low-cost fund supermarket-style plans is coming from old workplace schemes that customers set up years ago and had only just got around to sorting out. 

‘Many of the major pension and life companies hope their customers won’t notice they are being quietly ripped off, and best of all, when they change jobs they will leave their pension behind and forget about it,’ he says. 

The stock market gyrations caused by coronavirus panic and lockdown have created a wave of interest in investing, with reports of many more accounts being opened with big brokers. 

Sipps enable investors to pick and choose from a variety of different investment funds, shares and other assets – all of which are put in a tax-free pension wrapper. 

© Provided by This Is Money

This do-it-yourself approach of planning for retirement has become increasingly popular in recent times – helped by improved technology enabling investors to trade easily online using websites that show what your pension pot is doing. 

It has also been given a boost by the pension freedoms that allow you to control your savings pot all the way through retirement, taking out money as you please. 

Holly MacKay, founder of website Boring Money, says: ‘A pension can be a murky thing – and increased expectations in clarity and information on what is inside a retirement pot has helped to fuel the growing interest in Sipps. 

As part of this new approach investors are also looking under the bonnet at all the different charges levied.’ 

Many older-style plans come with high charges attached that now look out of date. They also typically have old-fashioned technology that makes it difficult to keep track of performance.  

© Provided by Daily Mail Sipps enable investors to pick and choose from a variety of different investment funds, shares and other assets ¿ all of which are put in a tax-free pension wrapper

If you want to switch to a cheaper deal, be careful how you choose which provider to go with. Financial consultancy firm The Lang Cat points out comparisons are not always easy because it depends on how much you have in the pension pot as well as how you want to manage your money – for example, the number of trades you make each month. 

There are also set-up costs and ongoing fees to consider when you start drawing on the pension. For example, Interactive Investor charges a £10-a-month ‘drawdown fee’ to dip into your pension but Hargreaves Lansdown does not. So do your research thoroughly. 

Consolidating lots of different pots into one single self-invested personal pension is another major appeal of the Sipp concept – making your retirement nest egg easier to monitor and manage. 

Those with a niggling feeling that they might have some money tucked away in a long-lost pension plan that could be put into a Sipp might go in search of it at findpensioncontacts.service.gov.uk.