Flexible Pension Drawdown Choice Widens
Personal_Finance / Pensions & Retirement Feb 20, 2012 - 07:20 AM GMTBy: MoneyFacts
Less than a year after its introduction, flexible drawdown is available on around three quarters of SIPP plans, research by Investment Life & Pensions Moneyfacts has revealed.
When the April 2011 start date for the facility was confirmed, providers wanting to offer the option at the earliest opportunity had just four months in which to prepare, leading to predictions that only the more fleet of foot specialist SIPP providers might be able to prepare in time.
With the survey suggesting this has proved to be the case, Richard Eagling, Editor of Investment Life & Pensions Moneyfacts, said: "Ten months on from the start of the regime and the larger life companies remain conspicuous by their absence from the list of those that have the flexible drawdown option in place."
With AEGON and Standard Life amongst these firms, and yet also being amongst the five major SIPP providers said to account for around 75% of the market, it seems there might be a considerable number of SIPP holders who will have to consider transferring their pension funds if they want an alternative to capped drawdown.
Table 1 below shows the SIPP providers offering flexible drawdown and the relevant charges. The majority of providers levy a fixed fee of between £75 and £500 in order to get the facility up and running, with further charges typically being made in relation to taking payments or for switching from capped drawdown to flexible drawdown. Some also charge a fee for withdrawing the fund in its entirety and closing the SIPP, hinting that providers had genuine concerns over the number of clients that might take such action, and had wanted to discourage them otherwise.
SIPP fees forced higher
The research also suggests that the financial pressures that some SIPP providers have been feeling are taking their toll. The survey found that over the past 12 months, the average set-up fee attached to SIPPs has increased to £236, up by 1.7% from the 2011 survey. At the same time, annual fees have seen a greater rise of 3.2%, climbing to an average of £410, compared with £397 a year ago.
Richard Eagling said: “For SIPP providers who will know the importance of pricing keenly in relation to their competitors, the decision to raise charges is unlikely to have been taken lightly. It does appear, however, that the nightmare scenario of falling revenues and rising costs has forced the hands of many.”
Table 1: SIPP providers offering flexible drawdown and the relevant charges
Source: Investment Life & Pensions Moneyfacts
Provider |
Fees chargeable on flexible drawdown |
A J Bell (Platinum SIPP) |
Registration/set-up £75; closing through flexible drawdown £75 |
Alliance Trust Savings (Full SIPP) |
Registration/set-up £250; annual drawdown fee £150 |
Alliance Trust Savings (Select SIPP) |
Registration/set-up £250; annual drawdown fee £75 |
Barnett Waddingham |
Registration/set-up £350 (includes payment and closure) |
Carey Pensions UK LLP |
£500 |
Central Tax & Trustee Planning |
£500 per annum |
Charles Stanley & Co Ltd |
Registration/set-up £150; payroll £50 per annum |
City Trustees Ltd |
Time cost |
Corporate & Professional Pensions Ltd |
Income £60 per annum |
Curtis Banks plc |
Registration/set-up £120; payment £125 per annum; review £100 |
D A Phillips & Co Ltd |
Registration/set-up Nil; income payment £108; closure through flexible drawdown £105 |
Dentons Pension Mgmt Ltd |
From £330; switching from capped to flexible £75 |
EBS Management plc |
Registration/set-up £150 |
Hargreaves Lansdown |
Registration/set-up £295 |
Hornbuckle Mitchell Trustees Ltd |
Registration/set-up £95; annual fee £145 per annum; full withdrawal/closure £145 |
HSBC Trust Company (UK) Ltd |
Registration/set-up £300 |
I.P.M. SIPP Administration Ltd |
£150 per election |
James Hay Partnership |
No additional charges to those applied for benefit purposes (calculation £100 per tranche; review £100) |
Killik & Co |
Registration/set-up £200 |
London & Colonial |
Registration/set-up £120 per tranche; taking income £120 per annum |
LV= |
0.2% per annum service charge on first £700K of plan |
Mattioli Woods |
Time cost |
M C Trustees Ltd |
Registration/set-up £250; administration fee £614 pa; pension set-up £221; payment £165 pa |
Michael J Field Consulting Actuaries |
No standard fees - initial and annual fees depend on expected work in setting up and running scheme |
Pilling & Co / SIPP Centre |
Registration/set-up £75; income £150 per annum if age 55-74, £250 per annum if age 75+ |
Pointon York SIPP Solutions |
Registration/set-up £225; regular payments set-up £100; income payments £195 per annum |
Premier Pension Services |
£500 |
Rathbones |
£150 per annum |
Redmayne-Bentley |
Registration/set-up £75; closure through flexible drawdown £75 |
Redswan Pensions |
Time cost |
Rowanmoor Pensions |
£60 plus £125 pa pension PAYE payment; £60 for each pension commencement lump sum payment |
Sippcentre |
Registration/set-up £75 |
SIT Savings Ltd |
Registration/set-up £75; closing through flexible drawdown £75 |
Skandia |
Registration/set-up £75 |
Suffolk Life |
Registration/set-up £155; payment £155 pa, switching from capped to flexible £155, payment of whole fund as pension income £300 |
Talbot & Muir SIPP LLP |
Registration/set-up £125; maintenance £150 pa; additional tranche £75; exhausting fund £125 |
Westerby Trustee Services (Full SIPP) |
Registration/set-up £125; income payments £125 per annum |
Westerby Trustee Services (Solo SIPP) |
Registration/set-up £125; income payments £125 per annum; additional fee of £265 if whole fund taken during first policy year |
Xafinity |
Registration/set-up £120; automated regular payments £11; non-standard/non-automated payment £53 |
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