LV has lifted the restrictions on its flexi-access drawdown product so customers can use flexi-access drawdown even if the value of their pension pot is less than £30,000.
John Perks, managing director of LV Retirement Solutions, explained that minimum pot restrictions on the flexi-access drawdown solution originally reflected how they thought customers with small pots would act.
Mr Perks said the company was seeking to ensure that the full range of freedoms were open to all customers, amid criticism of unnecessary delays and restrictions being applied by some providers.
Therea may be concern, however, that drawdown is not suitable for small-pot savers, with the £30,000 minimum set by most firms in the wake of retirement freedoms, taking up where trivial commutation ends, lower than a minimum pot of £50,000 previously intimated by the regulator.
Mr Perks said: “We have removed these restrictions to ensure that all of our customers are able to take advantage of the pension freedoms, however they wish to use them.
“Typically customers with small pension pots request to take their money as a lump sum, but having the choice of flexi access drawdown means they will now have the option to take their money in a tax efficient way.”
The move follows Friends Life attracting criticism when it wrote to 1,300 customers who had requested partial pension withdrawals to tell them that the promised roll-out of a flexi-access drawdown option is no longer going to be take place due to the complexity of its back book.
The various pension providers have scrambled to update systems and pricing structures to accommodate the flexi-access option as part of the 6 April pension freedoms, with varying degrees of success.
Last August, Zurich and Axa Wealth’s Elevate platform both confirmed they would be ready for the reforms, while it took others until earlier this year to sort out their propositions.
In February, Old Mutual Wealth said it would launch a new flexi-access drawdown facility and ad hoc lump sum access via its Collective Retirement Account, while Sanlam said its flexi-access facility would be provided free of charge.
In early March, Standard Life stated it would remove charges on its flexible drawdown product via its wrap, allowing advisers to efficiently access the full flexibilities through either wrap or their stand-alone self-invested personal pension.
peter.walker@ft.com
