The new UK pension rules will remove the cap on income that can be taken from drawdown plans for investors over the age of 55, which is expected to make income drawdown funds the main alternative to a traditional annuity.
Hargreaves Lansdown said its new fund will offer investors no set up fee, no transfer in fee, and no annual drawdown fee. There will also be no charges for one-off or regular withdrawals, or for changing income instructions, though standard platform fees and dealing charges remain.
“The only addition to our normal pension charges is an early closure fee for people who open and then close their account within a year,” said Tom McPhail, head of pensions research at Hargreaves Lansdown.
McPhail said this would prevent investors utilising the new fund to transfer savings from less flexible pension providers as a cheap way of accessing all their money within a year.
Hargreaves Lansdown said it has already received over 175,000 requests for information relating to the new pension regime and noted that annuity sales have halved in the year since the 2014 Budget, when the changes were first announced.
This had created an estimated 200,000 to 400,000 people waiting to take advantage of the new freedoms in the first weeks and months after 6 April, McPhail said.
“The Financial Conduct Authority and the government are beavering away to produce the final rules and regulations which will apply from 6 April. Drawing on our experience as the UK’s leading direct to consumer drawdown provider and annuity broker, we have been able to launch our new drawdown product in plenty of time,” he said.
