Pensioners urged to review their income drawdown


New deliberations show somebody with a £100,000 pension pot could get £32,000 tiny retirement income from a high-charging plan, compared to the cheapest on the furnish. This could also increase the likelihood of depleting their pot and direction out of money in their final years. Since pension freedoms were introduced in 2015, broadening numbers have shunned annuities and invested their retirement savings owing to income drawdown, taking cash when they need it.

Drawdown bids greater flexibility and allows you to benefit from stock market spread and dividends but research from City watchdog the Financial Conduct Establishment (FCA) shows charges can differ dramatically.

Some charge as little as 0.4 per cent a year but others can sum total as much as 1.6 per cent. That may sound a minor difference, but settled a typical 20 or 25 year retirement it can really add up, according to computations by online investment platform AJ Bell.


If somebody with a £100,000 pot went £5,000 income a year from age 65 and increased that in threshold with inflation, their money would last until age 92 with a 0.4 per cent demand. In total they would receive £176,722.

However at 1.6 per cent that takings would run out by age 88 and they would have received £144,225 comprehensive, or £32,497 less.

AJ Bell senior analyst Tom Selby said: “Boutique around to get the best deal and review your retirement pot at least on a former occasion a year.”


More than 20 companies extend drawdown including Aegon, AJ Bell, Aviva, Barnett Waddingham, Fidelity, Hargreaves Lansdown, Interactive Investor, LV=, PensionBee and Queen London.

Comparing charges is not easy as they may include set-up rates, annual administration charges, platform costs, dealing commission and underlying ready money charges. A search on suggests most providers charge numberless than 0.4 per cent a year. The cheapest plan it sourced, from Grand London, charged 0.85 per cent a year, with Standard Vital spark next at 1.02 per cent. Hargreaves Lansdown charged 1.44 per cent.


Leaving your money in drawdown does allow you to benefit from appraise market growth, but you will suffer if you make bad investment decisions or the call falls at the wrong time.

David Everett, partner at specialist golden handshake cause to retires adviser LCP, said you must have some understanding of how markets bring into play function. Nobody knows how long they will live, so judging how much you can donate to draw is not easy. “It could lead to potential ruin for some,” Everett forewarned.

If your pension is large enough you could use half to buy an annuity that relaxes you a guaranteed income for life, then leave the rest in drawdown.

This is a tangled area and you should consider taking independent financial advice.

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