19th August 2014
Hargreaves Lansdown is offering a low cost drawdown plan which it terms a ‘retirement bridge’ with a minimum fee of £75+VAT.
It says this will allow investors to draw their tax-free cash, take an income between 7.20% to 12.45% if they wish, and to keep their options open until the Government’s pension reforms next year.
HL points out that insurance company annuity sales have collapsed in the wake of the budget, with most reporting sales down around 50%.
Hargreaves Lansdown research shows that more than half (58%) of prospective annuity purchasers who have delayed their decision specifically because of the budget announcement. Four out of five or 79.8% have no specific plan at present but are simply waiting until further details are announced.
Tom McPhail, Head of Pensions Research says: “Some investors are happy to wait until next year but for those who need to draw cash or an income now, it is essential they are offered an alternative to a conventional annuity; preferably without hitting them with thousands of pounds in set up fees or advice costs at the same time.”
Hargreaves Lansdown’s Retirement Bridge is a direct-to-consumer income drawdown plan with a set-up fee of £75+VAT. The firm says this is to cover the cost of the GAD check, which helps determine the maximum income that can be taken until complete liberalisation next April.
The firm says there is no charge for holding cash, while normal charges apply for investing in funds or shares, and no charge for taking a regular income. HL makes a small charge if investors transfer out to another provider, withdraw the whole amount, or change their income payments.