What's up you guys sasha here, just a few days ago, uk pensions have had the biggest shake-up in decades, and i am super excited to tell you, not least because i was actually in the pre-launch trial program of this new pension. This is going to change pensions forever. For the first time, people have genuine full control over what happens with their pension as they approach retirement age. Free trade have just launched their self-invested personal pension, and it is groundbreaking.

It is really different and i am going to tell you all about it. Let me start with a little background when it comes to private pensions. For a long time, people nikkei have had pretty much no control over what happens with their pensions before they actually reach retirement age. At first, it didn't really matter because the people who were lucky enough to actually have a workplace pension would often be on a defined benefit scheme which would guarantee a certain level of income which was in some way related to the income.

They were earning from their jobs at the point when that person reaches retirement, so the people didn't really need to care about what happened with their investments because it didn't matter to them. The only people who should have cared at that point was the pension funds. Now, when those pension funds realized that those defined benefit schemes were completely unsustainable and it was next to impossible to guarantee the sort of incomes that people were being promised when they were entering those schemes, things changed and very very quickly. People went and began having considerably more likelihood that their work would be offering them a defined contribution scheme instead, which is a scheme where you go and put money into the pension, and then that money gets invested into funds and whatever money you have at the end Of it then buys you an annuity, and that annuity is what your annual pension would be, but the problem was that most of these pension funds would only let you invest your money into proprietary funds and specific investments that they chose and they will charge you relatively Hefty fees for the privilege and in the end, those funds in almost every case would underperform basic indices like just the s p.

500.. Then, in 1989 the uk inland revenue allowed sips self-invested personal pensions, which would give far more flexibility on investments, but it was not until the pension simplification law that these became mainstream. The problem was that these sips suffered from exactly the same issues as other types of pensions. They were either prohibitively expensive, with loads of different kinds of fees, from annual management fees, to specific fund fees to fire exchange fees to a bunch of other stuff, or these sips still didn't.

Allow you to invest in actual stocks and shares. You still had to invest in some other types of funds, instead of the ones that somebody else would offer you, but they were called self-investment as a result, these sips weren't particularly popular because there wasn't that much sense to actually go and move to one. Until now, as i mentioned earlier, free trade have just launched their self-invested personal pension, and this product sits alongside their other propositions, which is a general investment account and an isa account with this sip you're able to go and invest your pension fund into whatever you choose Into various kinds of stocks into various kinds of etfs commodities, you have a huge amount of control over exactly what happens with your money. The free trade zip cost a flat fee of 9.99 a month or seven pounds if you're already paying for the free trade plus account, which gives you some additional perks across all the different products that they offer.

But in exchange you don't have any annual management fees. Any fund fees or any other hidden fees that are buried deep in intense conditions. You have full control over your money and what exactly that money is invested in. The only thing you will have to pay is a foreign exchange fee which is levied on any purchase of shares or etfs or anything else that is denominated in a currency other than british pounds.

So, for example, if you're going to buy some u.s stocks and they are priced in dollars, you're going to have to pay 0.45 fee on top of the exchange rate at the point when you're making the purchase, you will also have to pay the same 0.45 fee When you're drawing the money down so in essence, if you ignore the growth of the stocks in between is something like a 0.9 fee for the privilege of being able to put money into something and then draw it back down. But that's it! That's the only fee. You have to pay other than the monthly fee that you have to pay to have the account, and, in my opinion, that 0.4570 is actually not bad at all, because for a pension you are likely to be investing over considerably longer time periods than you would with. Regular investment accounts or stocks and shares isis and as a result, that 0.45 fee essentially gets spread over a really long period of time, because you don't have all the other fund fees and annual management fees and things like that.

You're, essentially paying only a fraction of that per year that you hold these investments if you're investing those funds for long periods of time, the same companies, even if you're, making more frequent trades, even if you're selling companies and then buying some other companies, you will have To pay that fee, because each time you sell something in dollars, it has to be converted into pounds and even if you then go and buy something back in dollars, you're going to be losing that money again. But unless you trading frequently, which most people with their pension funds probably will not be doing, and even if you do want to occasionally go and sell some of your stocks and buy others and log into your pension once a month or once every other month. This is still going to be relatively cheap compared to anything else available out there before anyone pointed out in the comments below. I am aware that there are other providers that also offer sip accounts and in those sip accounts you can also go and buy stocks and shares.

I do know that, but those accounts can be incredibly expensive. We're talking about trade fees of 995 or 11.95 per single trade, plus, on top of that, you still have to pay the foreign exchange fee, even though you're paying the transaction fee and that foreign exchange fee is more than double what free trade charges at one percent. Over the actual exchange rate, so you're going to be done there as well, but not only that not only paying per transaction, no matter how small you're still going to have to pay that 12 pounds or whatever it is fee. No matter that you're paying the one percent foreign exchange fee, you also have to pay an annual management fee which is going to be 0.25 or 0.45, depending on which provider you're using, which is for the privilege of you being able to go and invest and pay.

The other fees as well, even if you're, managing your pension funds relatively passively and only somewhat rarely actually changing your investments and sending stocks. These can become incredibly expensive, especially as your portfolio grows. Now, just before you rush to the description to find the link, so you can click it and set up your sip, but also maybe set up a general investment account, because if you do that through the link, you'll get a free share worth up to 200 pounds Before you go and help yourself to one of those, you need to know a few other things. First off, it's really important to recognize.

This is a form of a pension, and that means whatever money you put into it will be locked away, will have no way to access it. Until you come to the point of retirement, there are tax benefits, so whenever you're putting money in there will be money added by the government and if you're a higher earner, you will be able to get even more money back through filling in a self-assessment form. But it's really critical to understand that the money put in you won't be able to access until the age of 55 or the age of 57 from 2028 or whatever age is going to be after that, because this pension age will be always set at 10 years. Below the formal state retirement age, so as that grows, this age will grow as well, and so before you know it, you may have to wait until you're pretty much 60 before you can actually get your money.

So if you're relatively young, this is somewhat important because that money may be tied up for several decades. Also, remember that, although you can withdraw 25 of your pension fund without having to pay any tax whatsoever, the remaining 75, you have to go and draw down and pay tax on it, and you will pay regular income tax on it. There are some cases in some cases where an isa account of stocks and shares isa might actually go and yield better results. You don't get the initial tax bump up front, but you can go and withdraw whatever proceeds you have at the end without having to pay any kind of tax whatsoever, which is better, it is impossible to say out right.

There are so many different factors. How close are you to your pension age? What else are you doing with your money? It is impossible to say, but both are actually pretty good in their own right. But you need to make your own decision as to which one is better for you, as with the other free trade products, because this app is so new and because they are so early on in their journey of making. It look and feel and work as well as it should.

There are still a few glitches and there's still a few gremlins and there's still a few things that i don't particularly like about it. Even though i'm a huge fan of the platform - and i personally use it, for example, they do say that they offer fractional shares, but they only offer fractional shares on some really popular us-based stocks. From what i'm seeing when i go and try to buy anything else. On fractional stocks, including popular uk companies or big big etf, for example, the vusa etf, which mimics the s p 500, but based on the london stock exchange, you can't buy those in fractional shares.

So although they say they do it for a lot of things that you want to buy, you can't go and use fractional shares. Yet also, there are issues in how you go about buying and selling shares and that you buy in pounds and you can't buy in a number of shares. But when you sell it's the other way around, which is a bit confusing. Also, whenever you go and look at the companies, there is no information provided to you in terms of their performance, balance, sheets, p, l or anything like that.

You have to go and do all your research elsewhere. So, there's definitely still quite a few things that need to be improved with this app. Even the share prices that you see don't get updated, live they're, not very, very quick, and that means that sometimes, when you're gon na be buying a share, it won't actually go through at the price. You see because there's somewhat of a lag.

But, having said all that this is a massive game changer, this, i think, is going to transform pensions because people will be able to have full control over their pension funds and they'll be able to choose their appropriate level of risk. What things they want to invest their money in and how they want to manage it over time sure this won't be right for everyone. Some people just don't want to have the responsibility of managing their own money. Some people just want somebody else to do it for them and they're happy to take a much lower rate of return in exchange for that they're happy to pay fees, they're happy to not earn the sort of levels that the general market is earning.

They're happy to be on the conservative side and that's okay, that's up to them, but for those people who do want to have a more active partaking in their pension fund for those who do want to understand exactly what's happening with their money, why it's growing? Why? It's not growing, what's happening with it, make some decisions that they can then live with down the line for those people. This is gon na change everything and although there are some gremlins, although there's some issues, i am generally a big fan of free trade. They've done some amazing stuff. Over the last few weeks, that's going to be coming out in a separate video shortly, where i'm going to tell you exactly what those things are, but anyway, i think that they're going to be fixing him.

I think that these things are going to be overcome and once they're overcome this is going to be great because they are the market leader. They are the first ones in the uk to offer this kind of product in this kind of way, and i think a lot of people are going to be interested. I'm interested, i am literally in the process of transferring some of my pensions to it, and so far i am really excited for where this might go. I hope you guys found this useful if you have please go and smash the like button for the youtube algorithm.

Thank you so much for watching. I really really appreciate it and i'll see you guys in the next video you.