Best pension drawdown

Find out the best pension drawdown and why it's important to compare pension drawdown providers.

Cashing out your pension isn’t simply dipping into a huge pot of money if and when you need it. You have the choice between a number of options including annuities and pension drawdown. For the average pension pot of £400,000 the difference between the most expensive and the cheapest pension is £2,120.12 per year. That could get you an all inclusive holiday for 2 adults and 2 kids in Lanzarote. Find out more about what pension drawdown is and compare the best pension drawdown for what you’re looking for.

What is a pension drawdown?

A pension drawdown or drawdown plan keeps your pension savings invested while you take a flexible income. You must be aged 55 or over and have a defined contribution or money purchase pension to get a pension drawdown.

Pension drawdown is a lot like an annuity – you can take 25% of your pension pot tax-free, but unlike an annuity, everything else stays invested. You can then move money from your pension pot into drawdown whenever you want to.

Why should I compare pension drawdown options?

It’s a good idea to shop around to find the best pension drawdown for you, as there may be additional fees. As your pensions will need to stay invested, you will need to continue paying the personal pension or SIPP charges. There might also be setup fees or admin charges so check if your provider has these.

You might choose to go with the drawdown option that your current pension offers – a good choice if you shopped around to find your personal pension and there aren’t any additional fees for drawdown. Some pension plans don’t have a drawdown option, such as Moneybox and others, such as Nutmeg, might use a different provider for the drawdown option.

How do I find the best pension drawdown?

With pension drawdown, there’s not much that sets pension providers apart from one another except for the costs, and it’s not as simple as telling you which one is cheapest as it depends on how much you’ve got in your pot.

We’ve detailed the cheapest choices for different sized pension pots including the drawdown fees.

For smaller pensions, Legal & General offer pension drawdown at no additional charge. As your money will remain invested you’ll continue to pay the platform charge which is 0.25%.

In terms of investments, you choose between four objectives and an “investment solution” is matched to you, which is simply a ready made portfolio and a specific path you’ll follow.

Everything is explained pretty well and Legal & General have retirement agents who can be accessed over the phone to help you out.

Other fees might include a fund management charge, which is the cost to invest in a fund and will differ depending on your choices – you’ll come across this charge with any platforms that let you invest in funds.

Best pension drawdown for pensions over £100,000: interactive investor

If you want to invest more than £100,000, or have more than this in your existing pot then interactive investor is likely to work out the cheapest option for pension drawdown due to its set fee structure, rather than the approach other investment platforms use which works out a percentage of your investments. It charges £9.99 per month for its lowest account tier, plus you need to pay an additional £10 per month for the pension but that means you can set up all the other accounts like ISAs or Junior ISAs (JISAs) without paying any more.

It lets you invest in just about anything you like, including stocks, funds, ETFs and bonds. If creating portfolios isn’t your jam then it has a handy range of ready-made portfolios that you can choose from too.

It’s got other fees too, like fund management fees which cover the costs to invest in a fund. This differs based on your choices.

Promoted
Interactive Investor

Open your pensions account with interactive investor

  • Special offer: Pay no SIPP fee for the first six months, saving you £60 (terms apply)
  • Retire with up to £94,000 more thanks to ii's fair, flat fees*
  • One free trade every month
  • Free regular investing
  • Choose from more than 40,000 investments
*Independent analysis by the lang cat. Go to site for details.

Best pension drawdown for ethical investments: PensionBee

If you’re a bit more conscious of your impact on the environment and want to think more about ethical investing in your pension then PensionBee could be the best pension drawdown for you.

PensionBee’s “Future World” plan aims to help you invest in companies that pledge to move to an environmentally-friendly economy. It’s actually managed by Legal & General, another of our best pension drawdown options.

It’s got one of the higher fees out of the platforms we looked at, but can you put a price on saving the world?

Promoted
PensionBee Pension

Pensions made simple with Pensionbee

  • Get total visibility of your pension
  • Combine, contribute and withdraw online
  • Protected by the FSCS
  • Your capital is at risk. You could get back less than you invest.

Best pension drawdown for stocks and shares: Hargreaves Lansdown

If you’re looking for a pension drawdown that lets you invest the rest in stocks and shares then Hargreaves Lansdown could be a good option for you. It can be more expensive than other pension providers but it has some remarkable guides and information to help you out.

It’s got a nice app to handle your trading and you can choose a pre-selected portfolio, get some suggestions on what to invest in or do it all yourself.

Promoted
Hargreaves Lansdown SIPP

Take control over your financial future with Hargreaves Lansdown

  • Pay in up to £40,000 a year and get tax relief
  • Start your SIPP from £25 a month
  • Transfer your pension from other providers easily

Pros and cons of income drawdown

Pros

  • Your money stays invested, so you still have the chance for it to grow further.
  • Have the control to withdraw money as you need it
  • It’s easier to pass your remaining pension to your loved ones when you die.

Cons

  • If the value of the remaining money left in investments falls then you lose out.
  • Your pension pot can run out.

Questions to ask yourself

There are some questions you’ll need to ask yourself when considering pension drawdown options. These include:

  • How much money do you need in retirement?
  • What are your key priorities when thinking about retirement?
  • How much risk are you willing to take?

Compare pension providers

Name Product Minimum investment Choose from Fee for a £50,000 pension pot Brand description
Interactive Investor Pension
Any lump sum or £25 a month
Over 3,000 funds
Annual fee: £239.88, fund fees: £50-500
interactive investor is a flat-fee platform, which makes it cost effective for larger portfolios. Capital at risk.
Moneyfarm Pension
£1,500 (initial investment)
7 funds
0.35%-0.75%
Moneyfarm has pensions that are matched against your risk appetite, goals and planned retirement date. Capital at risk.
AJ Bell Pension
£1,000
Over 2,000 funds
Annual fee: £125, includes fund fees
AJ Bell has two different pension options, a self managed pension and one that is managed for you. Capital at risk.
PensionBee Pension
No minimum
9 funds
Annual fee: £250-475, includes fund fees
Pension Bee is a newbie in the pension market. It helps consolidate your pension plans into one place. Capital at risk.
Hargreaves Lansdown Pension
£100 or £25 a month
2,500 funds
Annual fee: £225 (£200 cap if holding shares), fund fees included
Hargreaves Lansdown is the UK's biggest wealth manager. It's got three different retirement options. Capital at risk.
Saxo Markets Pension
Saxo Markets Pension
£10
Over 11,000 funds
No annual fee
Saxo Markets gives flexibility and control over your investment strategy. Capital at risk.
Penfold
Penfold
No minimum
4 portfolios
Annual fee: £375-455, fund fees included
Moneybox Pension
£1
3 funds
Annual fee: £225, fund fee: £60
Manage your money with an easy-to-use Moneybox app. Capital at risk.
loading

Compare up to 4 providers

Name Product Price per trade Frequent trader rate Platform fees Brand description
Fineco
UK: £2.95
US: $3.95
EU: €3.95
N/A
£0
Your first 100 trades are free with Fineco (T&Cs apply)
Fineco Bank is good for share traders and investors looking for a complete platform and wide offer. The minimum deposit with Fineco is £0. Capital at risk.
eToro Free Stocks
£0
N/A
£0
Capital at risk. 0% commission but other fees may apply. The minimum deposit with eToro is $200.
Hargreaves Lansdown Fund and Share Account
£11.95
£5.95
£0
Hargreaves Lansdown is the UK's number one platform for private investors, with the depth of features you'd expect from an established platform. The minimum deposit with HL is £1. Capital at risk.
Degiro Share Dealing
UK: £1.75 + 0.014% (max £5)
US: €0.50 + $0.004 per share
N/A
£0
Degiro is widely seen as one of the best low-cost share brokers, for people who are looking to trade regularly. The minimum deposit with Degiro is £0. Capital at risk.
interactive investor Trading Account
£7.99 (with one free trade per month)
N/A
£9.99 per month
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. The minimum deposit with ii is £0. Capital at risk.
loading

Compare up to 4 providers

Name Product Minimum deposit Maximum annual fee Price per trade Brand description
InvestEngine stocks and shares ISA
£100
0.25%
£0
Offer - £50 welcome bonus for new customers. Subject to minimum investment. T&Cs apply. Capital at risk.
Moneybox stocks and shares ISA
£1
0.45% and £1 monthly subscription fee (free for first 3 months)
£0
Moneybox offers a smart and simple way to invest. Sign up in minutes and start investing with £1 via their award-winning app. Capital at risk.
interactive investor stocks and shares ISA
Any lump sum or £25 a month
£119.88
£7.99
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
Nutmeg stocks and shares ISA
£100
0.75%
N/A
Nutmeg offers three types of portfolios. Choose the one that goes with your investment style. Capital at risk.
Hargreaves Lansdown stocks and shares ISA
£100
0.45%
£11.95
Hargreaves Lansdown is the UK's biggest wealth manager. It's got everything you'll need, from beginners to experienced investors. Capital at risk.
Moneyfarm stocks and shares ISA
£1500
0.75%
£0
Moneyfarm helps you meet your investment goals with fully-managed portfolios designed around you. Capital at risk.
Fidelity Stocks and Shares ISA
£1000 or a regular savings plan from £50
0.35%
£10.00
Fidelity is another good all-rounder, offering a good package at a decent price. Not suited for trading shares. Capital at risk.
Legal & General stocks and shares ISA
Legal & General stocks and shares ISA
£100 or £20 a month
0.61%
N/A
Legal & General is a big financial services company which offers insurance, lifetime mortgage, pensions and stocks and shares ISAs. Capital at risk.
AJ Bell Stocks and Shares ISA
£500
0.25%
£9.95
AJ Bell is a good all-rounder for people who to choose between shares, funds, ISAs and pensions. Capital at risk.
Saxo Markets stocks and shares ISA
No minimum deposit requirement
0.12%
£8.00
Saxo Markets offers a wide access to a range of stocks, ETFs and funds. Capital at risk.
loading

Compare up to 4 providers

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

More guides on Finder

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked
Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site