An FTAdviser investigation has revealed wide variance in charges for new pension propositions from 6 April, with costs for taking irregular or full lump sum withdrawals and disparity between larger firms and smaller self-invested providers standing out as key areas of differentiation.
In recent weeks, many have been unveiling their new retirement propositions for customers looking to take advantage of the at-retirement reforms. However, some have not been so forthcoming on what charges clients will pay.
FTAdviser contacted providers across the market that have announced their post-April proposition and received detailed responses from 21, including platforms, life offices and self-invested personal pension operators.
AJ Bell, Dentons and Rowanmoor were not able to respond at the time of writing.
Martin Tilley, director of technical services at Dentons, said: “We are currently confirming the requirements of the FCA in connection with information and illustration requirements for clients post-April 2015 using flexi-access.
“We still need to know exactly what the regulator is looking for and thus what the Sipp operator is on hook to provide; we cannot therefore confirm our finalised charges yet.”
It is clear that different providers are taking divergent strategies with the new ad-hoc lump sum option, as well as taking the whole fund.
Sipp providers are levying the most for ad-hoc payments, with Barnett Waddingham and Talbot and Muir charging £200 per withdrawal and Hornbuckle charging an annual admin fee £175 and £50 per payment.
Among the larger life office providers, some esoteric examples include Royal London, which follows most peers in offering a free first payment but “reserves the right” to charges a one-off £184 if more than one is taken in a given year. Old Mutual is offering ad hoc lump sums through drawdown.
There are also wide charging discrepancies for those who wish to take the whole fund.
Liberty and Hargreaves Lansdown are seeking to discourage ‘quick flip’ withdrawals with high up front charges for funds recently set up. Hornbuckle is levying a £250 closure fee “until further notice”. Many others charge nothing, while Suffolk Life has the highest standard charge of £300.
Full charges for all respondents, including ongoing product admin fees, charges for full withdrawal, flexi-access drawdown and uncrystallised lump sums, are detailed below.
| Firm and plan | Product charge | Full withdrawal | FAD | UFPLS |
| Aegon Arc | Tiered. From 0.6% below £30k, to 0.45% up to £250k. No charge thereafter. Variable AMCs on investments. | £0 | £75 | £0 |
| Aegon One Retirement | Tiered. 0.3% on first £250k, no charge thereafter. Variable AMCs on investments. | £0 | £75 | £0 |
| Aviva (‘core’) | Tiered. From 0.35% up to £30k, to 0.1% if over £400,000. | £0 | £0 | £0 |
| Aviva (‘choice’) | Tiered. From 0.4% up to £30k, to 0.15% if over £400,000. | £0 | £0 | £0 |
| Aviva (‘flex’) | £250 annual fee plus tiered charges as per ‘choice’ option. | £0 | £0 | £0 |
| Alliance Trust Savings | From January 2016: £186, or £276 if in drawdown. | If via UFPLS £0. If via drawdown £40 plus VAT. | Annual fee of £276 from January 2016. | £40 plus VAT per withdrawal. |
| Barnett Waddingham | £250 plus VAT | £0 | £200 to set up. £75 for annual or ad-hoc payments. £156 for regular payments. | £200 per withdrawal. |
| Fundsnetwork | Service fee 0.25%, investor fee £45 | Currently under review. | £0 | £0 |
| Hargreaves Lansdown | 0.45% of funds under adminstration | £295 plus VAT if taken within 12 months. | £0 | £0 |
| Hornbuckle (single) | £250 | Arrangement closure fee of £250. | Annual admin fee of £175 plus £50 per payment. | Annual admin fee £175 and £50 per payment. |
| Hornbuckle (full) | £525 | Arrangement closure fee of £250. | Annual admin fee of £175 plus £50 per payment. | Annual admin fee £175 and £50 per payment. |
| James Hay iSipp | £195 if assets below £195k, no charge thereafter. Investment charges c.0.18% on ‘typical’ £200k. | £150 | £150 annual fee, plus set-up charge of £100 per tranche of benefits. | £100 per withdrawal. |
| Liberty | £150 | £300 if Sipp is closed in year 1, £200 in year two and £100 thereafter. | £100 per annum. | £25 per withdrawal, up to £100 cap. |
| LV Personal Pension | Tiered. From 0.25% to 0.1% if over £1m. | £0 | £175 one-off set up charge. | £0 |
| LV Sipp | Tiered. 0.55% on first £75,000 and 0.1% over £1m. | £0 | £0 | £0 |
| Old Mutual | Tiered from 0.15% to 0.5%. | £0 | £0 | Offered as partial crystallisation drawdown. |
| Metlife (unit-linked guarantee) | Tiered, starting from 1.99% a year. | £0 | £0 | £0 |
| Novia | Tiered from 0.5% to 0.15%. | £0 | £75 per annum | £0 |
| Prudential | Variable AMCs charged on underlying funds. | £0 | £0 | £0 |
| Royal London | Tiered from 0.9% to 0.35%. | £0 | One-off set-up fee £184. | First payment in a year free. Firm ‘reserves the right’ to apply a one-off £184 if two or more payments taken in a year. |
| Scottish Widows retirement account | Tiered. From 0.7% to 0.15% to depending on pension fund size. | £0 | Additional charge of 0.2% to 0.05% on amount held in drawdown. | 0% (Minimum of £5,000 per withdrawal.) |
| Standard Life (Active Money Personal Pension) | £0 | £0 | From 0.51%. | From 0.51%. |
| Suffolk Life | Tiered. From £255 to £515 per annum, depending on assets. | £300 | One-off £155 set up plus £155 per annum when income taken. | £155 per withdrawal. |
| Talbot and Muir (Simple account) | £250 + VAT. | £125 | Crystallising fee £125, annual fee £150. Additional tranche £75. | £200 per withdrawal plus VAT. |
| Talbot and Muir (Elite account) | £420 + VAT. | £125 | Crystallising fee £125, annual fee £150. Additional tranche £75. | £200 per withdrawal plus VAT. |
| Talbot and Muir (Multiple accounts and property) | £470 + VAT | £125 | Crystallising fee £125, annual fee £150. Additional tranche £75. | £200 per withdrawal plus VAT. |
| Transact | Tiered. Average 0.3% plus £80 wrapper fee | £0 | £0 | £0 |
| Zurich | Tiered. From 0.35% to 0.22%. (For retirement account, additional £75 annual fee.) | £0 | £0 | £0 |
donia.o’loughlin@ft.com
