Six months have passed since the biggest pensions shake-up in decades and DIY platforms have been overhauling their pricing structures. But even though prices might be lower, the charging landscape only looks more confusing.
The overhaul of pensions regulation earlier this year has meant that thousands of retirees previously unable to make use of flexible income drawdown can now take as much as they want from their pots. The changes have resulted in a brand new menu of options open to pensioners, meaning platforms have had to redesign and re-cost their services.
In the run-up to April only a handful of platforms offering self-invested personal pensions (Sipps) had devised their new cost structures but now several more have cut the cost of going into income drawdown. Providers such as Trustnet Direct have cut the costs of their annual fees while others have chosen to abolish set-up fees instead.
Alliance Trust Savings, Hargreaves Lansdown and Tilney Bestinvest were first to offer new pricing models earlier this year. Tilney Bestinvest announced in March it would drop its annual charge of £100 for those in income drawdown for portfolios worth £100,000 or more. However, it does charge a £150 set-up fee.
Hargreaves Lansdown scrapped drawdown fees completely, meaning investors only paid a platform charge of 0.45 per cent a year. Meanwhile, Alliance Trust Savings scrapped all set-up charges on drawdown (previously £250), introduced an annual flat fee of £276 for all forms of drawdown customers, and rolled together its Sipp administration and annual drawdown charges.
Now Interactive Investor, AJ Bell Youinvest, Charles Stanley Direct and Trustnet Direct have all tweaked their costs, too. AJ Bell used to charge £150+VAT in set-up charges on drawdown. Now the platform charges two annual Sipp fees (an administration charge and platform charge) and an annual fee of £100 for regular income payments.
Interactive Investor also scrapped its set-up fee. It previously charged £260+VAT to those taking flexible drawdown but now just charges annual income drawdown fees.
But the charging landscape still looks perplexing. Comparing like for like when it comes to platform costs is almost impossible, as each uses a different business model and charges in a different way depending on the investments you hold and the way you hold them. You also face paying a range of fees because platforms charge you both for the administration and management of your Sipp, and then for going into income drawdown.
The picture is even more complicated when existing clients on old forms of income drawdown are taken into account. If you want to keep your pension fund invested and take an income from it there are two main routes open to you, and there will be several specific charges relating to you. You will either opt to go into flexible drawdown or go down the Uncrystallised Funds Pension Lump Sum (Ufplus) route - where where you take lump sums out but leave the rest invested.
But a quick scan of a platform's charge sheet will likely still reveal the cost to existing clients using the old capped drawdown model no longer available.
For example, TD Direct charges £150 per year+VAT to investors in capped drawdown (and £250+VAT to those aged over 75) but just £75 per year plus VAT to pensioners in flexible drawdown. It does not charge set-up fees. The Share Centre charges £195+VAT to review your capped drawdown arrangement and £225 to set up a flexible drawdown plan.
The most straightforward platforms are Hargreaves Lansdown and Fidelity, which levy no charges for setting up an income drawdown Sipp and no annual fees either. Alliance Trust Savings is not charging customers for being in drawdown between 6 April and January 2016.
Platform charges
Annual Sipp charges | Drawdown set-up costs | Other income drawdown fees | Changes made for pensions freedoms? | Exit fees | More info | |
---|---|---|---|---|---|---|
Alliance Trust Savings | £155 + VAT p.a. for Sipp Account Savings and £230 + VAT for Sipp Account Income | Free | No charge, £276 p.a. flat fee from Jan 2016 | Scrapped set-up fees and rolled together drawdown admin charges and Sipp admin charges | £150 + VAT transfer out | http://www.alliancetrustsavings.co.uk/forms-documents/fees-charges/charges-guide.pdf |
AJ Bell Youinvest | Annual charge between £5 and £25 per quarter based on value of Sipp. OEICs and unit trusts charge: 0.20% per annum | Free | Annual fee £100 p.a. for regular payments, £50 p.a. where regular payments not required, £25 for one-off income payments UFPLUS payments £75 p.a | Scrapped £150 set-up fee | £75 + VAT transfer out fee plus £25 per holding for in specie transfer | https://www.youinvest.co.uk/charges-and-rates/sipp |
Barclays Stockbrokers | Admin charges £155 + VAT p.a. | £75 for set-up and to pay any lump sum benefit, or to set up UFPLUS and every time payment requested | Annual admin fee for drawdown £100 p.a. Adding funds £75 | No | £75 for accounts opened before 6 April 2015, £250 for accounts opened after | https://www.barclaysstockbrokers.co.uk/Accounts/SIPP/pages/Rates-and-charges.aspx |
Charles Stanley Direct | Annual fee £100 + VAT Annual platform charge 0.25% on stocks, shares and up £500k in funds. 0.15% over that. | Free | Drawing down income £150 + VAT per drawdown event Irregular income payment £25 + VAT | No | Transfer out £125+VAT + £10 per holding, | https://www.charles-stanley-direct.co.uk/Our_Charges/#charges-2 |
Tilney Bestinvest | Management fee - 0.30% on £0-£250k, 0.20% on £250k to £1m, 0% on assets over £1m | £150 + VAT for flexi-access drawdown customers | No annual charge for accounts over £100k, £100 on Sipps below £100k. £25 for ad hoc income payments. No valuation charge on Sipps over £100k and £3 valuation charge per line of stock for Sipps below £100k | Yes, costs reduced in March in line with pension freedoms | Account closure £75 + VAT, exit as stock £125+VAT plus £25 + VAT per holding | http://www.bestinvest.co.uk/the-best-sipp/low-cost-sipp-charges |
Fidelity Personal Investing | Annual fee of 0.35% on assets between £7,500 to £250,000. 0.2% on assets over £1m. 0% on assets over £1m. From December 2015 an annual £45 fee for Supp customers with assets under £7,500 will replace the service fee | Free | None | No, general Sipp charge changes coming in December | No charge | https://www.fidelity.co.uk/investor/pensions/fidelity-sipp/charges-fees.page |
Interactive Investor | Annual admin fee £80 + VAT Annual account fee £20 per quarter | Free | Annual charge £170 + VAT UFPLUS annual fee £40 + VAT | Scrapped set-up costs in April 2015 | In cash £260 + VAT, in specie £360 + VAT | http://www.iii.co.uk/sipp |
Halifax Share Dealing | Quarterly admin charge £45 | Free | Annual fee until age 75 £180 p.a., after 75 £300 p.a. Add funds to drawdown or request review £90 UFPLUS payment £90 | No | £300 account closure fee | http://www.halifax.co.uk/sharedealing/our-accounts/sipp/sipp-charges/ |
Hargreaves Lansdown | From 0.45% on fund assets of £0-£250,000 to 0% on assets over £1m. 0.45% a year (Capped at £200 a year for assets held in stocks | No charge | Free | Scrapped drawdown fees | Transfer to another provider as cash will be £25, transfers of stock will be £25 (per line of stock), account closure £25+VAT | http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates |
iWeb | £22.50 quarterly charge for asets under £50k. £45 over £50k. | Free. £90 to convert from capped drawdown to flexi-access drawdown | Annual fee for income drawdown until 75 £180 p.a, after 75 £300 p.a. Adding funds to drawdown or requesting a review of income levels £90 Charge for taking one-off payments £90 | Flexi access and UFPLUS changes made 6 April 2015, previously charged £75 + VAT for flexible drawdown, now charge that for flexi-access drawdown | £300 to close account | http://www.iweb-sharedealing.co.uk/charges-and-interest-rates/sipp-charges.asp |
TD Direct | 0.25% account fee of Sipp valyue charged every 6 months and platform fee 0.30% on funds up to £250k to maximum £1,500 charged twice a year | Free | Annual charge £75 + VAT Single payments £25 + VAT Capped drawdown £150 + VAT p.a. until 75, £250 + VAT p.a. after 75 | No | Free to leave | http://www.tddirectinvesting.co.uk/rates-and-charges/ |
The Share Centre | £172.8 annual fee | Free for first drawdown and £225 + VAT after one year. | Annual fee £195 + VAT p.a. in advance Capped drawdown review £165 + VAT | No | £250 + VAT | https://www.share.com/accounts/pensions/self-invested-personal-pension-sipp/account-overview/ |
Trustnet Direct | Platform fee 0.25% per year capped at £200 (£221) | Free | Annual fee flexible drawdown £204 Annual fee capped drawdown £180 Uncrystallised funds lump sum payments £48 per payment Capped drawdown review £192 every three years | All charges reduced in April 2015 (claims by around 30%) | Transfer out £100+VAT plus £15 per holding | https://www.trustnetdirect.com/account-charges |
Source: Investors Chronicle as at 29 September 2015.