Self-invested personal pension (Sipp) savers who invest in funds with high fees will pocket up to 0.5 per cent of their pot value as a result of new 'loyalty' bonuses from Hargreaves Lansdown.
The platform has followed the lead of its competitors and pledged to automatically boost savers' pots by a total of £6m a year, through rebates on around 1,100 funds in 87 different sectors, starting from January 2013.
But the offer is limited to funds that Hargreaves Lansdown believes pay large enough listing premiums to allow it to pass on a slice of its profit to its 120,000 savers.
Savers invested in tracker funds and other funds with low fees such as the SWIP FTSE All-Share index fund, cannot expect a rebate. This is because Hargreaves says it cannot 'squeeze' a loyalty rebate out of a fee as low as 0.11 per cent, for example.
Laith Khalaf, pensions investment manager, said Hargreaves Lansdown has no prescriptive formula for deciding which funds will qualify and which won't, although funds with high fees are far more likely to carry the bonus.
The deal means a saver with a £50,000 Sipp could gain an extra £1,650 over 10 years, while a £200,000 Sipp could be bolstered with £6,603 from the bonuses over 10 years.
Hargreaves' new loyalty rewards will rival those enjoyed by some Sippdeal and Bestinvest customers, who already receive bonuses of up to 0.5 per cent on a selection of funds. Fidelity also currently offers rebates on its Sipp funds, while Alliance Trust Savings gives direct customers 100 per cent of the manager's rebate.
Alex Davies, pensions managing director, said: "Hargreaves Lansdown already provides over £200m a year in discounts and rebates to clients. Technology improvements and greater economies of scale mean we can now bring our Sipp discounts up to the same level as our individual savings account (Isa). In doing so we expect to boost our clients' pensions by £6m in the next year alone."
You can find out whether the funds in your Sipp qualify for a loyalty bonus using a specially created calculator at: www.hl.co.uk/funds/transferring-your-existing-investments/loyalty-bonus-calculator, or you can call the Sipp and pensions helpdesk on 0117 980 9926 for more information.
How much you could gain from Hargreaves Lansdown's 'loyalty' bonus
| SIPP VALUE | HOW MUCH COULD THE LOYALTY BONUS EFFECTIVELY ADD IN 10 YEARS? |
|---|---|
| £20,000 | £660 |
| £50,000 | £1,650 |
| £200,000 | £6,603 |
Source: Hargreaves Lansdown
