21 Nov 2024

Flexible drawdown choice widens

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

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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