Updated: January 16, 2023
Pension Drawdown Charges
Want to know how drawdown pension charges work? Here’s everything you need to understand, along with tips for reducing your fees and costs.
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Author: Tony Stevens - Finance Expert
Updated: October 22, 2019
Pension drawdown fees can seem confusing when you’re trying to compare plans and costs from different providers.
This guide covers all the details you need to know about what you’ll pay. We’ll explain the typical average pension drawdown charges, how to compare the best providers, and where to find the lowest prices.
Keep reading for all the info, or click on a link below to jump straight to a section…
The following topics are covered below...
Pension drawdown – charges, costs, and fees
The specific costs that will apply to your pension depend on a whole host of factors, and there are instances where you’ll be able to pay lower drawdown fees. But to give you an idea, here are some examples of pension drawdown charges:
|
Pension drawdown charge |
Fees and cost |
|
Set up |
Free – £180 (or a percentage cost based on pot size) |
|
Admin |
Free – £150 per year (or a percentage cost based on pot size) |
|
Withdrawal |
£50 – £150 per year (free with some providers and sometimes depends on the number of withdrawals) |
|
Exit or transfer |
Free – £2,000 (average cost depends on pension size) |
|
Investment funds |
0.1% to 1% (depending if passive/actively managed or multi-asset pension funds) |
|
Share dealing |
Free – £15 (for each buy/sell transaction) |
|
Financial advice |
0.5% to 3% (depends on the size and complexity of your pension and is sometimes a flat fee) |
In addition to those outlined in the table above, it should also be noted – whilst not a service charge as such – income tax may also be payable, depending on your tax band when drawing income from your pension fund.
You’ll come across plenty of variety with pension drawdown charges. And in most cases, you’ll need to dig beneath the surface to uncover all the true costs. But it’s worth finding the best pension arrangement for your specific circumstances because you will likely save thousands of pounds by dealing with the right drawdown provider.
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How an expert pensions advisor can help you save money
The fee structure and services offered by pension providers can look quite confusing at first glance, making it hard to compare pension drawdown charges. Also, some providers have low (or no) fees for certain aspects of pension administration and investment, which can make things cheaper for you.
We believe that the best way to compare pension drawdown plans and charges is with the guidance of an experienced (and independent) financial advisor. Assistance from an expert specialising in pensions is one of the only ways to get an accurate comparison that considers every available option, seeing how each one fits your individual finances and tax position.
If you want a free pension review with an expert advisor, just make an enquiry. We’ll put you in touch with a pensions specialist who can provide tailored advice on drawdown costs and set you up with the best possible arrangement for your needs.
Examples of provider charges and fees
The market can shift quickly and regularly, but to give you an idea of some typical pension drawdown charges from specific providers, here are some examples correct at the time of writing (December 2022):
|
Provider |
Drawdown pension charges |
|
Aviva |
No set-up, withdrawal, or trading charges. Fund management costs and platform fees range from 0% to 0.7%, depending on pension size. |
|
Fidelity |
Annual service fee of 0.25% (of total pot) plus an investor fee of £45 annually (if not being paid with another account). |
|
Legal and General |
An annual service charge of 0.25% (of your pension pot). Fund management charges vary between 0.14% to 0.31% based on investment choice. |
|
Prudential |
Part of M&G, the ‘Prudential Retirement Account’, has an annual product charge ranging from 0.1% to 0.3% each year. Fund charges and advisor costs can vary depending on your specific arrangement. |
|
Royal London |
Royal London flexible access drawdown pension charges depend on each individual set-up, but you need at least £15,000 in your core investments. |
|
Scottish Widows |
An annual service charge of 0.1% to 0.9% (based on pot size). Investment management fees vary depending on the pension holdings but can range from 0.88% to 2.2%. There are also additional advice costs that apply. |
|
Standard Life |
There is a fund management charge (FMC) that depends on your investment choices, plus an extra additional expenses (AE) charge, leaving you with the total annual fund charge (TAFC). There are also additional fund transaction costs to take note of. |
|
Vanguard |
No set-up, exit, or transfer fees. Also, it comes with no annual drawdown charges but has a flat platform fee of 0.15% (based on pension size, capped at £375). Investment fees do apply, and choice is limited to Vanguard products. |
As you can see, pension drawdown charges can be pretty confusing. Some drawdown pension providers are cheap in certain areas and expensive in others. And to make things harder to decipher – many have different names for each type of charge and cost. The right provider for you will depend on your personal finances.
We believe the only way to truly compare your options is with the guidance of an independent pensions expert. A skilled advisor can look at the whole market and match you with the best provider offering the lowest fees and charges for your particular pension needs.
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Speak to a pension drawdown specialist
Pension charges and fees can be a confusing landscape to navigate. Also, it’s an area that changes on a regular basis, making it hard to keep track of all the current costs. Advice from an independent pensions expert is the best way to get set up with the cheapest drawdown retirement plan that suits your situation.
We offer a free advisor-matching service. This means we’ll quickly assess your needs and pair you up with a pension drawdown specialist.
Just call 0808 189 0463 or make an enquiry. We’ll arrange a free, no obligation chat between you and an experienced advisor who will get you set up with the cheapest drawdown pension plan available.
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FAQs
It depends on your provider. Some pension providers charge nothing, but others have various fee structures in place for accessing your pot and taking income (or making any withdrawals from an uncrystallised or crystallised pension).
Ask a quick question
We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions Ask us a question and we'll get the best expert to help.
Tony Stevens
Finance Expert
About the author
Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.
Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.
