It is a similar story for providers’ assets under management. Total stated assets of £64bn do not include some of the larger firms that declined to disclose numbers, such as Aegon, Prudential and Zurich. Add these in and it is possible that the industry sits closer to the £100bn mark in reality. As recently as 2014, the figure sat at just £14bn. The growth is an indication of just how significant pension reforms have proved to be for the drawdown industry.
Table 2 shows the charging structures for drawdown in all its variants. In the vast majority of cases, fees remain the same as 2016 despite the significant increase in assets and customer numbers at most firms.
The minority that have made changes have raised fees, although typically only in line with inflation. A more significant change has been made by Scottish Widows – the firm’s annual charges have risen from between 0.05 and 0.2 per cent to between 0.15 and 0.9 per cent depending on pot size.
One final trend observable over the years has been the gradual shift towards annual charges instead of a variety of one-off fees, but as Table 2 illustrates, most providers still charge these latter payments in some form.
Diligence or depletion?
Table 3 is a valuable insight into exactly how much clients tend to draw down from their pots. As with last year’s survey, the table includes figures for advised and non-advised clients where disclosed by providers.
The most obvious shift compared with 2016 is the significant rise in the proportion of clients drawing none of their pot. The increase is broadly consistent across advised and non-advised clients, although a handful of firms have seen the figure fall for non-advised clients: InvestAcc, Rowanmoor and Suffolk Life reported 41, 84 and 62 per cent of clients, respectively, taking no income in 2016. This year, those numbers have dipped to 35, 73 and 49 per cent.
However, these are isolated cases and do not distract from the overall increase in clients opting not to draw down any of their income. The average figure has risen from 52 per cent one year ago to 63 per cent this year, although the list of participating providers differs slightly.
“With most clients choosing to take lump sums rather than regular income, it is clear that a drawdown product is increasingly viewed as a form of savings account that can be accessed when needed or passed on to future generations, rather than as a traditional pension that pays a monthly income,” says Lee Halpin, technical manager at @Sipp.
