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Tips to help you compare drawdown providers

Important information - please remember that 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.

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. Analysis by consumer group Which? shows that high fees can leak up to £12,000 from a drawdown portfolio over 15 years*. Spent more wisely, this could knock two or three major holidays from your bucket list. 

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.

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, make the 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.

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.

Fidelity has made it a priority to keep fees low, conserving as much as possible for your retirement lifestyle. We offer free drawdown access. All you pay are your fund managers’ ongoing charges and our low-cost service fee. Share dealing transaction fees may also apply. There are no annual drawdown fees, no set up fees and no withdrawal or exit fees.

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.

Have you taken advantage of free tools and resources available?

Many providers offer free guides, insight and calculators for you to take advantage of. They won’t be personalised but can help you get to grips with the options available to you 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.pensionwise.gov.uk or over the telephone on 0800 138 3944. Or, of course, you can speak to an authorised financial adviser of your choice.

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.

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 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.

Important information - tax treatment depends on individual circumstances, and all tax rules may change in the future. Withdrawals from a pension product will not normally be possible until you reach age 55. This information and our guidance tools are not a personal recommendation in respect of a particular investment. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals.

It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. 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 in any doubt whether or not a pension transfer is suitable for your circumstances, we strongly recommend that you seek advice from an authorised financial adviser.

Talk to our specialists

Our specialist retirement team has years of experience and has helped thousands of people make the same kind of decisions you’re making today. For support when accessing or moving your pension pot you can call our retirement specialists on
0800 860 0048. They’re available 9am to 5pm, Monday to Friday.

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