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Flexible Pension Drawdown Choice Widens

Personal_Finance / Pensions & Retirement Feb 20, 2012 - 07:20 AM GMT

By: MoneyFacts

Personal_Finance

Best Financial Markets Analysis ArticleLess 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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