Pension Freedoms cost

1 June 2015

Pension Freedoms - Why are they costing so many people money? As exciting as pensions can be, we do live in very interesting times, especially in view of the Government's pension freedoms, launched in April. These 'freedoms' represented the biggest change in pension legislation in living memory, and gave people complete and unrestricted access to their pension pot at the age of 55. Two months down the line from their inception, are people enjoying these pension freedoms?

Some are. Whilst those people with some pension providers are enjoying their unrestricted access to their pension pot, others are finding that they don't have the freedoms that the Government originally promised. Many pension providers are still refusing to offer people the complete pension freedoms that were promised by the Chancellor George Osborne whilst others are finding their freedoms come at a price, with many being charged extortionate fees to just to dip into their pot.

The difference between providers' charges is astonishing:

Provider Annual management charge Annual cost of flexible drawdown Additional withdrawal costs
Aegon Up to 0.3% £75 0
AJ Bell Youinvest Maximum of £200 pa £60 without regular payments. £120 with regular payments £30 for one-off payments
Alliance Trust Savings £186 £300 initial fee followed by £90 pa £48 for additional withdrawals
Aviva 0.1%-0.4% 0 0
Barclays Stockbrokers £186 £90 initial fee followed by £120 pa 0
Bestinvest 0.3%+ 0 0
Charles Stanley Direct £120 £300 initial fee + £60 pa payroll fee £30 irregular payments.
Chelsea Financial Services 0.15% to 0.6% £120 initial fee + £144 pa 0
Fidelity Personal Investing 0.2% to 0.35% 0 0
Friends Life 0.45% on initial £50,000 0 4 free withdrawals followed by £20 fee for each
Halifax Share Dealing £90 - £180 dependent on size of pot £90 setup fee. £180 pa below 75 years of age, £300 if 75+. £90 if closing SIPP through flexible drawdown
Hargreaves Lansdown 0.1% to 0.45% 0 0
Interactive Investor £92 £204 0
iWeb £90 - £180 dependent on size of pot £90 setup fee. £180 pa below 75 years of age, £300 if 75+. £90 if closing SIPP through flexible drawdown
Legal & General 0.35% £50 initial fee 0
LV= £150 0 0
Prudential 0.75%-1.5% 0 0
Royal London 0.35%-0.9% £184 initial fee First free, then £184 per withdrawal
Scottish Widows 0.15%-0.7% 0.20% 0
Standard Life Variable 0.20% 0
TD Direct 0.60% £90 setup fee. £180 pa below 75 years of age, £300 if 75+. £90 if closing SIPP through flexible drawdown
The Share Centre £172.80 £270 initial fee £234 pa
Trustnet Direct £96+ 0.25% £300 initial fee + £150 pa 0
Zurich 0.22%-0.35% 0 0

Data from lovemoney.com. Correct as of 07 April 2015

It's vital that people understand these charges and take advice to ensure that they use a provider that allows them to take their full pension freedoms in a way that suits their lifestyle choice and needs.

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