Drawdown Pension Providers Guide
You’ve decided you want the freedom of a flexible income in retirement, as well as the option of keeping part of your pension pot invested. A drawdown facility can offer you all of these benefits and more, but how can you be sure of picking the best drawdown pension provider for your needs?
In this article, we’ll provide a crash course in what to look for when choosing the right provider, as well as a summary of what the best pension drawdown companies have to offer in terms of features and benefits.
Bear in mind that these products evolve all the time, and to get an up-to-the-minute overview of what’s available, it’s always best to speak to an independent pensions expert.
In the meantime, this guide should help you to narrow down your search.
Click the sections below for more information on each topic:
- What should I look for in a drawdown provider?
- How do I compare drawdown pension providers?
- Which pension drawdown providers are there in the UK?
- What are the benefits of using an independent pensions advisor?
- Speak to an expert on pension drawdown providers
Want to know which pension drawdown provider would be best for you and your circumstances? Most of the pension providers we mention in this article require that you take independent financial advice ahead of taking responsibility for your pension.
The experts we work with are all independent financial advisors who can answer your questions and ensure you’re getting the advice you need. Make an enquiry and we’ll match you with an expert shortly.
What should I look for in a pension drawdown provider?
All pension drawdown providers (also known as income drawdown providers) allow you to take as much or as little from your pension pot as income, and to keep the remaining funds invested until you choose to withdraw them. By definition, these are flexible plans, but they can differ in details such as how often and how much you can withdraw.
These details could mean the difference between a plan that fits well with your lifestyle or one that disappoints and fails to meet your needs, so it’s important to have a good idea of what’s available while knowing that some features may not be offered by every pension drawdown company.
How do I compare drawdown pension providers?
Experts recommend you bear a few things in mind when comparing income drawdown providers.
- Minimum pension fund, i.e. how much you need to have in your pension pot. Many providers don’t specify a minimum amount, but some only accept pension transfers above a certain amount, sometimes £20,000 or more.
- How often you can take payments. Most plans allow you to set up monthly, quarterly or annual payments. Check the provider’s T&Cs for how often you can change the payment plan and whether you’ll be charged.
- How much you can withdraw. Some drawdown pension plans are capped, meaning that you cannot exceed a certain amount of income each year. Others allow you to take unlimited amounts. Don’t forget, only the first 25% you take from your pension pot is tax-free.
- Fees. Different providers can have very different fee structures: most have a ‘platform fee’ that can vary according to the amount in your plan. Some have additional ‘drawdown fees’, and there may be set-up fees, too.
- Where you can transfer from. As with any type of pensions transfer, you will need to find a drawdown provider that accepts transfers from the type of pension scheme you’re enrolled in (e.g. defined benefit, final salary or defined contribution).
By speaking with an expert first, you could save yourself time and money thanks to their whole-of-market access, meaning that they can compare drawdown pension providers for you.
Which pension drawdown providers are there in the UK?
In this section we’ve listed some of the top drawdown pension providers in the UK based on their offerings at the time of writing. This is intended as a snapshot of what’s available now, but there are new products and offers being brought to market all the time, so we recommend speaking to an independent pensions advisor before you settle on any provider.
The pensions experts we work with have an overview of the complete market and great relationships with the best performing drawdown pension providers, including some that don’t deal directly with the public.
By working with one of these experienced advisors, you can be sure of which companies provide the best income drawdown options, so you won’t miss out on any of the best deals.
Aviva pension drawdown plans don’t incur an annual drawdown charge, there’s no minimum pension fund required, and transfers are accepted from final salary and other defined benefit plans, as well as from defined contribution schemes. There are no fees for set-up or withdrawals.
New customers are required to take advice before transferring into an Aviva income drawdown plan, which is offered by Aviva. You can use the Aviva pension drawdown calculator for an idea of your annual income, though an independent advisor will be able to see if Aviva provides the best income for you.
Make an enquiry to get started.
Hargreaves Lansdown offers drawdown pensions plans and accepts transfers in from defined contribution and capped drawdown pensions. With a Hargreaves Lansdown drawdown pension you can take payments monthly, half-yearly, quarterly or annually.
However, you will need a minimum of £1,333 (or £1,000 after taking a tax-free lump sum) in your pension pot to be eligible for Hargreaves Lansdown income drawdown. The Hargreaves Lansdown drawdown pension calculator is free to use on the company’s site, along with a number of other online tools.
Legal & General
Legal and general’s flexible income drawdown plan gives you the choice of taking regular income payments and up to two ‘ad hoc’ payments of £1,200 or more within a 12 month period. However, you need to have a pension pot of at least £50,000 to be eligible for this plan.
Please note, Legal & General is proposing to transfer much of its pensions business to ReAssure.
Fidelity offers drawdown plans with its Fidelity SIPP as the pension account where your remaining funds will be invested. As this is a self-invested personal pension (SIPP), you will continue to have control over which funds you choose to invest in.
You’ll need at least £50,000 (or £37,500 if you’ve taken a tax-free lump sum) to qualify for this plan. Fidelity drawdown pension charges are charged as a percentage of the amount held in your pension pot.
Transfers from final salary, defined contribution and capped drawdown plans are allowed.
Prudential offers flexible income plans with no minimum pension fund requirements. Payments can be taken monthly, quarterly, half-yearly or annually, and pension transfers are accepted from a wide range of schemes, including final salary/defined benefit, as long as you take professional advice.
Prudential income drawdown charges are structured in such a way that the more you have in your pension fund, the lower the percentage you’ll be charged in fees. Members and non-members can access the Prudential pension income drawdown calculator on the provider’s site.
Standard Life offers drawdown plans for new and existing customers with a minimum pension pot of £10,000 or £7,500 if you’ve already taken a tax-free lump sum.
There are flexible plans for SIPP customers, too. Transfers from various types of pension plans are allowed, including those from final salary schemes provided that you take financial advice.
The Standard Life pension drawdown plan can also be converted to an annuity to provide a guaranteed income for life if you choose to fix it later on.
Tools including the Standard Life income drawdown calculator are available free online, though to see which provider will give you the best income rate, speak with an advisor.
Halifax drawdown pension plans are available to new and existing customers with a minimum of £1,000 in their pension fund. There is an annual drawdown fee, and transfers are permitted from defined contribution and capped drawdown pensions.
Halifax does not accept transfers from final salary pensions.
Zurich drawdown pension plans are available with no set-up fees, minimum amount or annual drawdown fee, however they recommend starting with a minimum of £50,000 and charge an annual management fee that is detailed in the policy terms and conditions.
Zurich also offers flexible income plans for SIPP customers, though the fee structure is different in this case. Transfers from final salary/defined benefit plans are allowed if appropriate financial advice is taken.
We work with independent financial advisors who are expert at pensions arrangements. Make an enquiry and we’ll match you with an advisor who will be happy to answer all your questions and ensure you get the right advice for all your retirement planning needs.
Aegon pension income drawdown plans are available with no minimum amount, and transfers are permitted from final salary and other defined benefit schemes as well as defined contribution schemes (provided that you take independent financial advice first). There is an annual drawdown charge of £75.
Scottish Widows income drawdown plans allow customers to take sums from their pension pot either as lump sums, a flexible income or a combination of both.
There are options to take the 25% as an initial cash-free lump sum and pay tax on the remaining ‘income’, or to set up ‘partial pension encashment’ where you leave more of your money invested but pay 25% in tax for every withdrawal you make.
They specify a minimum of £30,000 (or £22,500 if you’ve taken a tax-free lump sum). Final salary/defined benefit schemes are allowed, provided you take independent financial advice.
Liverpool Victoria (LV)
All new customers will be required to take financial advice when moving to a Liverpool Victoria pension drawdown plan, however, transfers from a wide range of scheme types including final salary pensions is allowed.
While LV does not charge an annual drawdown fee, there is a platform fee that is tiered according to the amount invested.
Old Mutual’s pension drawdown plan is available with a minimum pension fund of £1,000.
Payments can only be taken on a monthly basis at present, but transfers from a wide range of scheme types are accepted, including final salary and other defined benefit schemes as long as you seek independent financial advice.
The Royal London income drawdown plan is available for those with a fund of £15,000 or more, with an initial setup charge. Royal London accepts transfers from various scheme types, including final salary/defined benefit schemes provided you take independent financial advice.
For more information on how this plan works including details of Royal London pension drawdown charges, make an enquiry for a free, no-obligation chat with one of the expert advisors we work with.
Nest is the government auto-enrolment workplace pension scheme. It doesn’t currently offer any pension drawdown products. However, you can transfer savings from your Nest pension to a provider that does offer drawdown, such as many of those mentioned in this section.
One of the expert advisors we work with will be happy to help. Make an enquiry to get started.
Virgin Money does not currently offer a drawdown plan, and the only way to access your savings directly is to take your whole fund as a lump sum with 25% tax-free.
Alternatively, you can transfer your Virgin Money pension to another provider whose plans have a drawdown facility, such as many of those mentioned in this section.
Other pension providers with drawdown facilities
The summary above is just a selection of providers offering income drawdown products, and there are many more that our brokers can help you connect with.
Here is a further, but by no means exhaustive, list of pension companies that allow pension drawdown:
- Alliance Trust Savings
- A J Bell
- Close Brothers
- Charles Stanley
- James Hay
- Friends Life (now part of Aviva)
How an independent pensions advisor can help you find the right drawdown provider
When you approach specific pension providers – whether you’re just wanting to get some more information, or if you’re looking to make a purchase – all the advice you receive will be biased towards that company.
Because they don’t have ‘whole-of-market’ access, you could be missing out on a product that’s not only the best value but also best for your circumstances and preferences.
The experts we work with are independent financial advisors with access to the entire market and they are in a unique position to help you because:
- They are independent from any company so they will only recommend the providers that best suit your circumstances.
- Have access to products that may not even be available to the public.
- Talk with you to establish your financial goals.
- Consider your personal factors and outline any potential issues.
- Find the best deals based on your circumstances.
All advice is free and there’s no obligation to invest.
Speak to an expert about pension drawdown providers
Ready to take the next step towards setting up your perfect pension retirement income plan?
The experts we work with are ideally placed to find the best pension drawdown providers for your individual needs and circumstances, offering the right advice, tailored to your specific needs, every step of the way.
Make an enquiry and we’ll match you with an independent expert to discuss your options.