Tips to help you compare drawdown providers

Important information - the value of investments and the income from them can go down as well as up so you may not get back what you invest. Eligibility to invest in a SIPP and tax treatment depends on personal circumstances and all tax rules may change in the future. You cannot normally access money in a SIPP until age 55 (57 from 2028). It’s important to understand that pension transfers are a complex area and may not be suitable for everyone.

We live in an era of choice. From electricity to broadband providers, we recognise that switching has its benefits. Yet many of us are reluctant to shop around for better options at retirement, believing that staying with an existing provider may be the easier option.

It is perhaps easy to understand why: retirement planning is complex enough without introducing additional choices. However, changing providers can have a meaningful impact on your long-term returns due to the variation in fees, options and services available when accessing a pension.

But how do you navigate your way through the choices and big decisions you need to make? Here we give you some key questions to ask when considering your drawdown options.

1. What investment options are available?

The range of investment options available vary by provider. Having a broad spectrum of investment options – from investment trusts and collective funds, to individual shares - can help you build the type of portfolio you need. So, once you know what your goals and ambitions are for retirement, take time to think about what investment choices you want to make (now and in the future), and pick a provider with the options you need.

2. How much do you pay?

Investment costs and platform charges can mount up. Today’s retirement pot may need to last 20-30 years and high costs can compound over time. As such, it is worth understanding the fees you’ll pay on your drawdown portfolio. There are charges which cover the day to day running of your investments, such as fund charges and platform service costs, but there may also be set up fees, withdrawal fees, exit fees and transaction charges. Not all providers will charge fees for all services, and the amounts vary considerably, so it’s important to do your research beforehand.

With Fidelity, there is no additional charge to drawdown your pension from our award-winning SIPP. There’s no set up, one-off withdrawal or annual drawdown fees. All you pay is our service fee for our SIPP and any charges for the investments you choose e.g. fund management charges. Share dealing and transaction fees may also apply.

3. How easy is it to take an income to suit your lifestyle?

Your drawdown portfolio should be able to adapt to your needs, which will change over the course of your retirement. For example, in the early years you may retain paid work, so your income needs may be different in your later years, when you may no longer be working, and you are considering things like care costs. So, you’ll want to make sure you choose a provider that makes it easy to do this.

4. Have you taken advantage of free tools and resources available?

Many providers offer free guides, insights and calculators for you to take advantage of. They won’t be personalised but can help you get to grips with the options available and aim to help you make the most of your money.

In the first instance you may want to contact the Government's Pension Wise service, which offers free, impartial guidance to help you understand your options at retirement. You can access their guidance online at www.moneyhelper.org.uk or over the telephone on 0800 011 3797.

At Fidelity, we have a wealth of information and tools available, from a useful Drawdown calculator - which can help you understand how much flexible retirement income you could take and how long your money might last, to an essential read about everything you need to know about drawdown, and the latest tips and insights from our personal finance experts.

5. Do you have easy access to the support you want?

Have you thought about how much support you’ll need? If you’re thinking about taking tax-free cash from your pension, or a more regular income, you can choose to do much of the research yourself, including getting some free guidance, or, you can take paid-for advice.

Retirement guidance can help you understand your retirement income options and help you avoid potential pitfalls. Whereas retirement advice will provide a personal recommendation, based on your individual circumstances. There is typically a fee for advice (which varies by provider). Fidelity's retirement specialists can provide both guidance and advice, depending on the level of support you need.

Once you’ve decided how and when to access your money, you’ll want to monitor your drawdown account and review your investments over time. As such, you need to be able to manage your money in a way that suits you. This may mean good online access, with an account that’s intuitive and easy to use, but also telephone or face to face support if you need it. If this is important to you, pick a provider with these options.

Whether you are considering staying with your own pension provider or switching to a new drawdown provider, considering these questions should help guide you to a provider that is right for your needs in retirement.

Here are several reasons to consider Fidelity as your drawdown provider:
 

• Our retirement team offer guidance and advice
• Our award winning Self-Invested Personal Pension (SIPP) could be cheaper, if our service fees are less than you're currently paying
• There is no additional charge to drawdown your pension. There are no set up fees and no exit fees. All you pay is our service fee for our SIPP and fund/investment charges based on what you choose.
• There are thousands of funds and shares to choose from to help you reach your retirement goals
• Access your money how you want, when you want, normally from age 55 (57 from 2028), including tax free cash.

Important information - this information and our guidance tools are not a personal recommendation for any particular product, service or course of action. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are unsure about the suitability of a pension investment, retirement service or any action you need to take, including whether to transfer a pension, please contact Fidelity’s retirement team on 0800 860 0048 or speak to a financial adviser of your choice.