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This is Money can exclusively report that Hargreaves Lansdown has eliminated both account and fund management fees for their ready-made pension for a full year.

This fee reduction offers an unusual opportunity for individuals in the UK to bring their management costs down to zero.

While there are several platforms that waive account fees, finding ways to eliminate ongoing fund management fees is more challenging. These fees are typically charged by fund managers for managing investments.

Normally, investing in the platform’s ready-made pension incurs a 0.45% annual fee, consisting of a 0.15% account charge and a 0.3% management fee.

Hargreaves Lansdown made controversial changes to its fees earlier this year

Hargreaves Lansdown’s ready-made pension option is part of their self-invested personal pension (Sipp) offerings.

To qualify, you need to open a new Sipp with the provider and invest in a ready-made pension by 1 July. The minimum amount needed is £25 a month or a £100 lump sum. Hargreaves Lansdown applies the offer automatically.

If you choose to invest in other stocks and shares or funds within the Sipp, Hargreaves Lansdown charges you as normal – 0.35 per cent in account fees. There may also be underlying costs for the investments you pick.

> Find out more at Hargreaves Lansdown* 

How does Hargreaves Lansdown’s ready-made pension stack up?

By slashing account and management fees on its ready-made pension to zero for a year, the platform says it wants to help Britons overcome putting off investing for retirement.

Ready-made options are attractive for novice investors and those who’d prefer someone else to manage their investments, but they can be expensive.

The plan is made of two funds – one adventurous and one cautious. It’s set so that younger investors will own more risky investments that have higher growth potential, but as they approach retirement the investments start to get less risky to protect wealth.

Hargreaves Lansdown won’t charge account fees in the plan until 30 April 2027. The fund management charge will be levied as normal but customers will get a rebate at the start of May 2027 that covers these costs.

Hargreaves Lansdown is making its ready-made pension free for a year

Hargreaves Lansdown cut account charges within its ready-made pension from 0.45 per cent to 0.15 per cent in March, which was a positive move – especially alongside other controversial fee changes.

A regular all-in charge of 0.45 per cent – including 0.3 per cent management fees – makes it the same cost as AJ Bell’s ready-made pension.

Interactive Investor charges a flat fee of £5.99 a month for portfolios of up to £100,000 and £14.99 a month above that – alongside ongoing charges of between 0.14 per cent and 0.22 per cent for its managed pension.

The deal is attractive, however it’s still important that you don’t choose a platform based on an incentive alone. Make sure that it’s the right one for you by comparing fees more generally, the availability of customer service, and other factors. 

You can read more about choosing the right provider for you in our guides to the best investment platforms and the best Sipps. 

If you’re considering a managed option because you’re not sure where to start with investing, we also have a guide to investing for beginners that can help you get going. 

The deal removes costs that are otherwise less visible

When you invest in a fund – whether it’s actively or passively managed – there’s usually an ongoing management charge.

This is separate from the platform’s account fee. It’s charged by the investment manager to cover the costs of looking after the fund.

For example if you invest in a Vanguard fund through Trading 212, you don’t pay account fees to Trading 212. However, Vanguard takes a cut of the fund’s value, and the cost to you is expressed as the annual ongoing charges figure (OCF).

There are a few ways to get a better deal on OCFs. For one, larger investment platforms – including Hargreaves Lansdown – negotiate reduced OCFs with fund managers.

You can also simply compare the OCFs of similar funds and choose the cheapest one.

Otherwise you can choose an option that cuts management fees altogether, such as this incentive from Hargreaves Lansdown – although deals like this are rare, plus it only lasts a year.

I review investment platforms regularly and last year I tested Prosper*, which refunds the ongoing charges of 30 funds.

It also refunds transaction fees on these funds. This is a cost that Hargreaves Lansdown still levies under its ready-made pension deal, typically to the tune of between 0.01 per cent and 0.10 per cent a year according to the platform.

Prosper can refund fees within both a stocks and shares Isa and a Sipp, so if you’re keen to keep costs at a minimum over the long-term – and you don’t mind a less well-known name – it’s worth considering. Read more in my Prosper review.

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