Updated: January 16, 2023
Pension Drawdown Providers
Learn which pension providers offer drawdown and how to choose the right one for you
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Pension drawdown is an increasingly popular choice for people taking a retirement income. According to data from the Financial Conduct Authority, more than 200,000 pensions were accessed through income drawdown for the first time in the 2021/22 tax year, up from 166,000 the previous year.
Still, not all pension providers offer drawdown. Even if your provider does, it’s worth shopping around to see what your options are and which is best for you. The decision can be difficult, especially if you don’t consider yourself a pensions expert, but we’ll explain how to go about it.
Which pension providers offer drawdown?
The pension drawdown market is enormous, with dozens of options to consider.
This can be overwhelming and cause decision fatigue, so we’ve limited our selection to 10 and summarised them below for easy comparison:
| Provider | Description | Service fee |
| AJ Bell | This award-winning provider was chosen by Which? as a recommended SIPP for 2020. You can invest in a range of ready-made portfolios or create your own, with a choice of over 2,000 funds, as well as shares and trusts. | Up to 0.25% annual fee |
| Aviva | This well-known provider has excellent ratings for customer service and experience. You can manage your account online and invest in either ready-made funds or self-selected. | Up to 0.4% annual charge |
| Close Brothers | This long-established provider has been awarded five stars by Times Money Mentor. Close Brothers offers a wide range of investments, online trading and account management, and a mobile app. | Tiered annual fee beginning at 0.25% |
| Fidelity | This reliable provider was Which? recommended in 2021 and 2022. You’ll have a wide choice of investments with online guidance. If you’re transferring in a pension, the minimum value is £50,000. | Up to 0.35% annual fee |
| Hargreaves Lansdown | This popular provider won Best Buy Pension 2022 at the Boring Money Awards. You’ll have help choosing investments with expert insights, and be able to access your account through the website or mobile app. | Up to 0.45% annual fee |
| Interactive Investor | This primarily online provider charges a flat fee instead of a percentage of your pension pot, making it ideal for people with larger pots. You can set up regular withdrawals and make one-off withdrawals. | £12.99 a month (£10 for existing customers) |
| PensionBee | This newer provider makes it easy to consolidate your pensions and manage them online, although you’ll also have access to a dedicated staff member over the phone. | Annual fee of between 0.5% and 0.95% |
| Royal London | This Defaqto 5-star rated provider is only accessible through a professional advisor. You can choose from 160 funds or select a ready-made portfolio. | Information not available |
| Standard Life | This well-regarded provider offers different investment options to advised and non-advised customers. Level 1, the most basic, includes 300 fund options. | Annual fee of between 0.4% and 0.6% |
| Vanguard | This low-cost provider has been awarded five stars by Times Money Mentor. You can invest in a choice of over 75 Vanguard funds. | 0.15% annual fee, capped at £375 |
The above is intended to offer a snapshot of the options available right now (December 2022), but bear in mind that all fees and product details are subject to change and approaching a pension provider directly is not recommended.
Using an independent pensions provider is a better alternative as this will grant you access to a much wide range of providers and increase your chances of choosing the right product.
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Who are the best drawdown providers?
It depends on what your requirements are. For example, the best drawdown pension from a cost perspective is unlikely to be the best investment choice. The best for ready-made portfolios may not be the best for tailored portfolios. The best for trading could be different to the best for customer service.
The providers we’ve listed in the table above are some of the most popular choices and are also commonly listed by authoritative sources. For a bespoke recommendation, you’ll need to speak to an independent financial advisor.
How to choose the right one
Your choice of provider is important and it’s wise to approach this with caution. You can feel confident you’ve picked the right one if you follow these steps:
Confirm that drawdown is right for you
The decision to enter drawdown isn’t necessarily permanent. You can start taking a flexible income now and then change your mind later, either pausing withdrawals, buying an annuity, or withdrawing your whole pension. However, as your pension value will fluctuate while you’re in drawdown, you might not have the same amount in it as you do now.
Plus, there are certain circumstances in which entering drawdown can result in permanently losing pension benefits. For example, if your pension offers a guaranteed income but you decide to transfer it to a drawdown provider, you could lose that guaranteed income. So, don’t rush into picking a provider, and ask for advice if you’re not sure.
Consider your requirements
The right drawdown provider for you depends on what you need from it.
Ask yourself these questions:
- How much do you have to invest? Some providers will only accept transfers of pension above a minimum value.
- How do you want to receive an income? Most providers will allow you to set up monthly, quarterly, or annual payments. Not all allow one-off payments.
- How much control do you need? Some providers specialise in personalised pensions where you can choose your own investments, while others will recommend one of several ready-made portfolios.
- How much help do you need? Some providers offer online guidance from experts while others leave you to make your own decisions.
- How often will you update your portfolio? Some providers charge more than others for buying and selling investments.
- How important is cost? If you’re willing to compromise on certain features, you could save money on your annual fee.
- What is your attitude to risk? Some providers are more risk averse than others when it comes to how they invest your funds.
Speak to an expert pension advisor
If you know what you’re looking for, a specialist pension advisor with whole-of-market access can tell you which provider is the best fit for your needs. Or, if you’re not yet sure what you’re looking for, they’ll help you figure that out.
It’s much easier to work with an advisor than to investigate every option yourself and try to compare offerings that are very different. You’ll have the certainty that you’re not making a mistake or paying more than you need to. If you’d like to speak to an advisor today, get in touch.
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Which provider is the cheapest?
It’s difficult to say which is the cheapest drawdown provider. This is partly because different providers have different ways of charging their service fee and all fees and product details are subject to change.
Here are some examples at the time of writing (December 2022)…
- Some, such as Interactive Investor, charge a flat fee (e.g. £10 or £12.99 a month)
- Others, such as Vanguard, charge a fixed percentage of your total portfolio size (e.g. 0.15%)
- Others, such as Pension Bee, charge different percentages for different plans (e.g. 0.5% for a tracker plan or 0.7% for a tailored plan)
- Others, such as Close Brothers, charge a lower percentage on the portion of your portfolio over a certain value (e.g. 0.25% on the first £500,000 and 0.2% on the next £500,000)
- Others, such as Fidelity, charge a lower percentage on your entire portfolio if it’s over a certain value (e.g. 0.35% on portfolios under £250,000 or 0.2% on portfolios over £250,000)
So, the cheapest for you will partially depend on your portfolio size. It will also partially depend on how you choose to invest and how frequently you will be trading.
For example:
- Interactive Investor charges around £5.99 to buy or sell shares and funds
- AJ Bell charges around £1.50 to buy or sell funds, and up to £9.95 for shares
- Hargreaves Lansdown has no charge to buy or sell funds but up to £11.99 for shares
Finally, it will depend on what other fees a provider charges.
These could include:
- Set-up fees
- Transfer fees
- Platform fees
- Withdrawal fees
You should also note that the cheapest pension drawdown providers may not offer all of the services you want. Vanguard charges the lowest annual service fee (0.15% capped at £375), but only offers access to around 75 Vanguard funds, while other providers offer access to thousands of different investments.
What to do if your current provider doesn’t offer drawdown
This is a common problem. One of the providers that don’t offer drawdown is NEST (the National Employment Savings Trust), with whom around 1 in 3 working-age people have a pension. Zurich is another that doesn’t offer pension drawdown.
Pension providers will usually allow you to transfer your pension pot to a drawdown provider if you want. Transferring is easy – the harder part is deciding to enter drawdown and choosing the right provider. Read more about transferring a NEST pension.
Get matched with a pension drawdown specialist
Pensions are complex and whatever questions, doubts, or fears you have are completely normal. It can be overwhelming, so some people avoid the issue and put it to the back of their mind. A better approach is to reach out to an expert as soon as possible, who can help you make sense of it all.
We work with numerous independent experts who specialise in drawdown and can explain, discuss, and refine your options. You can schedule a free, no-obligation call today to find out more. Simply fill out this form and we’ll do the rest.
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FAQs
Some of the most popular SIPP providers for drawdown are AJ Bell, Aviva, Interactive Investor, PensionBee, and Vanguard.
These each have different advantages, such as cost, customer experience, investment choice, or ease of trading. The best for you might be one of these or another provider.
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.
Richard Angliss
Finance Expert
About the author
Richard Angliss has made a career in financial services which stretches over 40 years.
His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.
For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.
At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.
With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them. Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.
He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.
