The most cost effective Drawdown plan
A Drawdown plan in principle is an extremely flexible and tax efficient way of accessing your pension income. If you are already in a drawdown then you will know how good it can be and how personal it can be. Although one plan does not always fit all clients, for example how has your drawdown plan been performing over the last number of years? Late 2012 has seen a resurgence in many plans with many gaining due to the increase in the stock market. Has your plan seen a similar rise?
Some tips when setting up a drawdown plan.
– Which provider to use and how much are they going to cost?
Scottish Life, LV and Standard Life are amongst the usual suspects in providing quality drawdown plans are cost effective prices.
– Standard Life – Most expensive, the plan will cost around 1.8 – 2.5% and they will charge 1.5% to set the plan up and 0.7% to review the plan. If you go for the cheaper funds then this will still be expensive and with the 0.7% review costs and only a review every 3 years its hard to find the value with Standard Life but if you are already with them you may be convinced to stay with this well known brand but is it really right for you.
– Liverpool Victoria – A specialist in this market who offer options that you just wouldn’t have known existed, i.e. drawdown segmentation, flexible drawdown and a wealth of investment options. Cost wise they charge around 1% to 2% depending on the type of investment you go into and the total amount you have.
– Scottish Life – One of the most cost effective policies on the market, they charge between 0.9% and 1.4% for the plan and the investments within the plan. You wont find cheaper on the market and the options they offer are fantastic, from simple investment choices to managed portfolios. The service levels at Scottish Life are easily the best in the industry, they get things done quickly and efficiently.
– Others – There are a many others in the market, from Aegon, Aviva, Scottish Widows who all come nearer the 1.5 – 1.75% fee range, you then have Skandia who have a small buy in fee but the yearly charges are very high with many funds not giving a rebate and costing upwards of 1.7 and 2.5% in total, this is added to yearly administration costs of between £100 – £300.
There are many others within the Market, Prudential for example with their own funds and the higher costs for these funds. Then you need to look at the specialist SIPP providers on the market, Hornbuckle Mitchell, SIPP centre, these guys all offer a good proposition and at a good price.
To really benefit from the full drawdown package, you need to go through an adviser that can help point you in the right direction for a cost effective plan that does what you need. Fill out our free drawdown review and we can show you what you can save and more importantly what you can do with a specialist drawdown plan that suits your needs.
Do it myself – We come across many clients looking at doing things themselves, which we find is a real option and many clients feel they can do it and it not cost them as much to deal with it themselves. This is simply not the case and the providers, such as Hargreaves Lansdowne that offer a £295 SIPP and no dealing costs may well look cheap on the face of it but they neglect to tell you about the average yearly fund costs, These can range from 1.45% to 2.5% and really make them one of the most expensive and they did not offer advice.
Taking a drawdown without advice is really not recommended and in fact the FSA insist on reviews at least every three years, so at some stage a drawdown has to be reviewed anyway. It all goes to show that if you shopped around took advice and went for a cost effective product then your drawdown will cost less than if you were to do it yourself and you have the added comfort of knowing your fund is covered by The Financial Services Compensation Scheme which without advice it would not be.