Drawdown charges

fridgability

Hi folks, my first entry into this forum.
I am rapidly appproaching retirement and my private pension pots add up to getting on for £500K. I am seriously considering income drawdown and have spoken to a financial planning company (PKF) who seem on the face of it to be competent.

My questions are; Does any one who has had dealings with this company have any comments, good or bad? and what rate of management charges would be regarded as reasonable?

Thanks for any help that can be offered

jamesd

Typical full charges by an IFA are something like 1.8% of the pension pot in initial commission and 0.5% ongoing annual commission taken out of the fund charges. It would be a bad idea for you to pay costs at that level because agreement of fixed fees is clearly going to be best for the amount of money involved in your case.

You might also find the discussion in Capped Income drawdown savvy of interest.

Drawdown is particularly useful if you want a 100% pension for a spouse without reducing the income level while you're both alive, as an annuity purchase with spouse benefits would.

fridgability

Many thanks Jamesd for the reply, the charges quoted by PKF are fixed at £1000 plus VAT for the initial report plus £750 each year, less any commision received by life insurance companies so I guess that these charges are reasonable.

jamesd

That's certainly more reasonable than the default options! 0.15% ongoing charges instead of 0.5%.

gadgetmind

Has anyone seen a good comparison of capped drawdown providers? I've only ever really looked at Hargreaves Lansdown's SIPP drawdown, and it struck me as being pretty expensive as they try and steer you towards funds and then don't give back the trail commission as they do in an ISA. However, I guess you could use ITs and equities as the 0.5% pa charge is capped at £200, which is <£750.

dunstonh

Typical full charges by an IFA are something like 1.8% of the pension pot in initial commission and 0.5% ongoing annual commission taken out of the fund charges. It would be a bad idea for you to pay costs at that level because agreement of fixed fees is clearly going to be best for the amount of money involved in your case.

On a pot of £500k, you would expect a cap to exist on that initial amount. Typically aiming for no more than £2000.

Many thanks Jamesd for the reply, the charges quoted by PKF are fixed at £1000 plus VAT for the initial report plus £750 each year, less any commision received by life insurance companies so I guess that these charges are reasonable.

Make sure that includes trail commission and not just initial.

Iancfp

Just check that this is an all in fee without any fund charges on top

Its not unknown for their to be a flat advice fee and then a fund based fee on top as well - this is the system Towry Law use for example

If it is a flat charge and then funds with the commission stripped out 01% to 0.85% then would be good deal

If it was flat charge but then you end up it standard retail funds paying 1.5% its not