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Drawdown plans top 1 million - but shopping around remains a secret

New data reveals that the number of drawdown policies in existence has almost certainly reached a whopping 1 million, but shopping around for another provider is one of the retirement industry’s best kept secrets.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

At the end of March 2019, there were at least 984,583 drawdown policies in existence. Today that figure is likely to have surged to over 1 million.

Despite the number of drawdown policies in existence, and the fact that drawdown is more popular than ever, the Origo transfer service estimate less than 3% of plans are being transferred every year.

Did you know you can transfer your drawdown pension?

According to a recent survey, only 16% of respondents knew they could transfer a pension once in drawdown.

We also know very few people who move into drawdown without advice choose a new pension provider. In fact, 94% stick with the same provider and don’t shop around.

It’s hardly surprising so few people transfer if they don’t know it’s an option.

We believe shopping around becomes most important when you start drawing income from your pension plan, and not necessarily when you first take your tax-free cash. It’s at this point that the service offered by your chosen provider has an impact on your future.

How to shop around for a drawdown provider

Before you buy most things, it’s likely you’ll shop around. You’ll want to make sure you’re getting the best deal out there. Unfortunately it’s not as straightforward with drawdown. There’s a lot to think about: how much to withdraw (if anything), where to invest your pension, and you’ll need to regularly review your account.

But all is not lost.

The government’s independent Money and Pensions Service is developing a tool to help people shop around for a drawdown provider which suits them. For now though, we explain what to look for when you’re choosing a drawdown provider.

You should consider the investment options available, and the tools and help the provider can offer. And how much you’ll be charged.

All this calls for a service that makes managing your account easy.

Added value

Some providers offer more support and guidance than others. Managing your income and investments throughout your retirement isn’t the easiest of tasks. So, you need a provider that supports you every step of the way.

With HL, you’ll get a range of tools and information to help you make your decisions with confidence. For instance, our drawdown calculator can help you decide what income withdrawals might be sustainable, and how different growth rates and life expectancies could affect how long your pension lasts.

If you need help choosing your own investments, we also offer share insight and fund research. You could use our watchlists to create a virtual portfolio to track the performance of funds, shares and other investments to help your decisions.

More useful tools

More control over your account

In drawdown you need to regularly review your account and the investments you hold. We believe it’s a good idea to review your account at least twice a year or when your circumstances change. You might want to find a provider who doesn’t only offer a yearly pension statement through the post.

Our app lets you track and manage your pension 24/7. This can make managing your pension easier. You’ll be able to check on your account wherever you are, at a time that suits you, and make any changes if necessary.

More about our app

Avoiding high drawdown charges

Be clear on what you’re paying for and the benefits you’re getting in return. You might be paying an array of charges, not just management and investment fees. Some providers might charge for each withdrawal you make, or even bill you for changing how much you take.

It’s your money. Why should you pay to take it out?

With HL there are no hidden costs. We won’t charge you a fee for setting up drawdown, making withdrawals or for converting from capped to flexible drawdown. And if you don’t already have an HL SIPP, we won’t charge you to set one up, or to arrange transferring your pensions from elsewhere. Our maximum charge for holding investments in each HL Account is 0.45% per year (the investments you choose may also have their own charges).

Full list of charges

So the secret’s out. It’s possible to transfer a drawdown account and now you know what to watch out for.

This article isn’t personal advice. If you’re not sure whether an investment or transferring is right for you seek advice. All investments can fall as well as rise in value so you could make a loss.

How to transfer to HL- and cashback as a thank you

If you’re considering transferring your drawdown pension to HL, it might be easier than you think. You just need to complete a set of risk questions before we can send you a drawdown transfer form. The quickest way to do this is by calling our helpdesk on 0117 980 9926. If you’d prefer you can request a transfer pack which includes a a set of risk questions to consider, a guide to transferring a drawdown pension and the next steps you’ll need to take to transfer.

Once we’ve received your transfer form we’ll sort the rest. We’ll contact your current provider to arrange everything and keep you posted along the way. Once the transfer’s complete we’ll be in a position to pay you income from your plan.

If you request to transfer to HL by 30 April 2020, you’ll even receive cashback as a thank you. You’ll need to let us know you’d like to receive cashback by either confirming this on the application form or calling the pensions helpdesk on 0117 980 9926. They’re available six days a week: Mon-Thurs 8am to 7pm, Fri 8am to 6pm, Sat 9:30am to 12:30pm.

Before transferring please check you won’t lose any valuable benefits or incur excessive fees. Pensions are usually transferred as cash, so your pension won’t be subject to the ups and downs of the stock market for a period.

MORE ON TRANSFERRING

Cashback offer now on

Get £50 to £500 when you transfer to HL.

Our cashback offer is now on. Transfer pensions worth £5,000 or more to HL and we’ll give you between £50 and £500 as a thank you. See below for our full terms.

To keep the cashback, all we ask is that you hold your pension with us for at least a year. The offer closes on 30 April 2020. If you need more time to decide, let us know and we’ll give you an extra six months to qualify.

You transfer We pay you
£5,000 - £24,999 £50
£25,000 - £49,999 £75
£50,000 - £99,999 £100
£100,000 - £124,999 £200
£125,000 or more £500

Terms of the cashback offer – Spring 2020 – SIPP transfers only

1. You’ll receive a cash amount between £50 and £500, depending on the amount you transfer, when you transfer into an HL SIPP an existing pension from another provider, worth at least £5,000 (“the Offer”), subject to these terms and conditions. Please be aware the following are excluded from the Offer: (1) the lodgement of certificated shares; (2) new money cash subscriptions into any HL account; (3) the transfer of previous pensions provided by your current employer, if the HL SIPP is already your current workplace pension; (4) defined benefit/final salary pension transfers.

2. The Offer does not apply to investments already held in the HL service or to switches or transfers between or within existing HL accounts or to income and interest received on any assets held in those accounts.

3. The Offer is funded by Hargreaves Lansdown’s money. The cashback will not come from your own cash or investments. The Offer will be available until 30 April 2020 inclusive. However, we reserve the right to remove or suspend the Offer if necessary, including for legal or regulatory reasons or otherwise, by posting a notice on our website. If the Offer closes early, all qualifying applications already received at the time of the posting of the notice will still be accepted.

4. The Offer will only apply to cashback transfer forms coded SCCB5, SCCB6, SCCB7, OTMQC, OTK, OTP, OTD, AWSC4, AWSC5, APSC3, APSC4 received by us between 22 January and 30 April 2020, inclusive (the “Offer Period”), whether received online or in the post. The application code should be found in the top right of a form. If transferring a pension for drawdown, you must include a note requesting cashback with your application to qualify. As long as we receive your transfer form within the Offer Period, even if the transfer itself isn’t completed until after the Offer closes, you‘ll still qualify. If you need more time to decide whether you want to transfer to us, please let us know and we’ll extend this deadline for you by up to six months. To request more time simply call our Helpdesk on 0117 980 9926 or email transferoffer@hl.co.uk with your full name and address.

5. The cashback payment will be paid into your Loyalty Bonus Account after the Offer has closed and within one month of completing your transfer, which will be determined by us. Your Loyalty Bonus Account is separate from your HL ISA, Fund and Share Account, and SIPP. The cash can be kept in your Loyalty Bonus Account for fee collection, withdrawn or moved into whichever HL account you choose. If moved into an ISA or SIPP, it’ll count towards your annual allowance.

6. The value of your cashback will be based on the cumulative total value of transfers you make within the Offer Period into an HL SIPP, not the value of each transfer. The value of the cashback will be determined in accordance with the tiers identified in the table accompanying these terms and conditions. It isn’t possible to combine the value of transfers into accounts with different client numbers for the purpose of this offer. The maximum amount of cashback you can receive under this offer is £500.

7. We ask you keep your HL SIPP for one year from the date of the transfer. Please feel free to switch between investments and in or out of cash within your account, but if you decide to transfer away or close your account within 12 months of the date your initial transfer completes, then we reserve the right to reclaim the cashback paid. If cash is to be reclaimed then you’ll be notified and the cash will be taken within 7 days of the account closure or transfer.

8. We also reserve the right to determine how the cashback offer is calculated. Therefore, if you are not sure how your transfers will be treated under the terms of this Offer, please contact us before you return your transfer form. By submitting a qualifying application, you agree to be bound by the terms of this Offer.

9. These terms are governed by the laws of England and Wales and subject to the exclusive jurisdiction of the courts of England and Wales.

10. The Offer cannot be used in conjunction with any other transfer offer.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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