Self-invested personal pension fees for most fund sizes have fallen by up to 11 per cent over the past three years.

Independent research company Defaqto says the combined average set-up and annual administration fees for a £50,000 investment have fallen from £675.41 to £600.11.

David Abbis, author of Defaqto's report, says it’s encouraging that competition for business has fed through to customers in the form of lower fees.

He adds: ‘The most obvious reason for this fall is increased competition and improved administration. There has been no similar price reduction for personal pensions. Demand remains strong for Sipps despite the economic climate.’

Increased competition is partly due to so-called ‘lower cost’ Sipps on the market which offer less facilities than most Sipps.

Mike Morrison, head of pensions development at Axa Winterthur Wealth Management, believes the drop in fees might be due to the fact less Sipps have been written.

He adds: ‘A number of factors influencing people’s long-term savings could affect demand for Sipps including: changes to the anti-forestalling rules last year, the FSA’s investigation in to pension switching and the ongoing issue of defining what a Sipp actually is.'

 

However Abbis warns that with rumours of the Financial Services Authority requiring Sipp providers to increase their cash provisions to meet future expenses, it is unlikely that any further significant reductions in annual fees will occur.

The average individual fund size in a Sipp is just under £200,000, according to Defaqto.