Hargreaves Lansdown £500 charge for starting flexible drawdown

middlepuss

I see that Hargreaves Lansdown have a £500+VAT charge for starting flexible drawdown (H-L SIPP charges table).

I don't remember there being a charge for starting drawdown - does anyone know if this is a new charge they've recently started making?

And how does it compare with other SIPP providers?

Apologies if this question has been asked before - I have done a forum search but can't find reference to it.

dunstonh

£500 plus VAT seems fair enough. After all, their model means they earn money on people who have investments with them. Not people who are disinvesting most or all of it.

CannySaver_2

I'd agree, £500 does indeed sound fair enough.

There are many large pension / SIPP providers not offering flexible drawdown as their systems cannot cope with it, so it's a positive step that HL are going to offer it.

My understand is that at the moment it is the more bespoke SIPP providers who are offering Flexible Drawdown. I have a list of those that are, if anyone wants me to post it just say so.

The Canny Saver

CannySaver_2

middlepuss wrote: »

I see that Hargreaves Lansdown have a £500+VAT charge for starting flexible drawdown (H-L SIPP charges table).

I don't remember there being a charge for starting drawdown - does anyone know if this is a new charge they've recently started making?

And how does it compare with other SIPP providers?

Apologies if this question has been asked before - I have done a forum search but can't find reference to it.

By the way, it must be a new charge, Flexible Drawdown was only available from the start of the new tax year and many providers are waiting even longer before the rules are 100% finalised before they will actually offer it.

middlepuss

CannySaver wrote: »

By the way, it must be a new charge, Flexible Drawdown was only available from the start of the new tax year and many providers are waiting even longer before the rules are 100% finalised before they will actually offer it.

Thanks for this.

It must have been the ordinary income drawdown for which, I think, H-L did not make a charge (other than the £75 GAD calculation).

Is ordinary income drawdown still available, or has it been superseded by flexible drawdown?

CannySaver_2

middlepuss wrote: »

Thanks for this.

It must have been the ordinary income drawdown for which, I think, H-L did not make a charge (other than the £75 GAD calculation).

Is ordinary income drawdown still available, or has it been superseded by flexible drawdown?

"Ordinary Income Drawdown" is now called Capped Drawdown. To be fair it looks and feels very similar to they way Income Drawdown was pre 6th April 2011, although the maximum level of income which can be taken has be reduced, from memory you used to be able to take 120% of GAD the maximum is now 100%.

Flexible Drawdown was introduced to allow those people who satisfied the MIR (Minimum Icome Requirement) to access additional income above the maximum allowed by Capped Drawdown.

Hope this helps

The Canny Saver

Loughton_Monkey

Can't expect them to do it for nothing.

In effect, they have to 'set you up' as a sort of 'employee' and start giving you BACS payments, with payslips and calculate tax. Do annual returns to HMRC.....

Not a trivial task and they have to cover their costs.

Tom_McPhail

Just to add to the thread from a Hargreaves Lansdown perspective, we put the charge at a relatively high level on Flexible Drawdown because of the up front admin and because investors can take all their money out the following day; we didn't want to go down the road of a back-end charge.

For now we are applying a reduced set up charge of £295 + VAT, until the end of July.

mania112

They could charge a % commission, but that would normally work out more.

middlepuss

Tom_McPhail wrote: »

Just to add to the thread from a Hargreaves Lansdown perspective, we put the charge at a relatively high level on Flexible Drawdown because of the up front admin and because investors can take all their money out the following day; we didn't want to go down the road of a back-end charge.

For now we are applying a reduced set up charge of £295 + VAT, until the end of July.

Tom, does the £500 charge also apply to starting Capped Drawdown? If not, there should be another line in the SIPP charges table that says "Starting Capped Drawdown £0". If that is the case.

middlepuss

I've been in touch with H-L directly and the £500 charge only applies to starting Flexible Drawdown.

The only charge that applies when starting Capped Drawdown is the £75 GAD calculation. (This £75 charge doesn't apply when starting Flexible Drawdown - I think...).

Anyway, I've suggested to H-L that on their SIPP charges page they have two sections: one for Capped Drawdown and another for Flexible drawdown so it's crystal clear what the charges are for each option.