Our best pension drawdown providers

Pension drawdown lets you take a regular income from your pension pot while the rest of your fund continues to grow.

We explain how pension drawdown works and outline our top pick of providers below.

• What is pension drawdown?
• Who are the top pension drawdown providers?
• How do we rate pension drawdown providers?

Read more: Best ready-made personal pensions

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What is pension drawdown?

Pension freedom rules introduced in April 2015 allow people aged 55 and over to take money from their pension, rather than buying an annuity, which provides you with a guaranteed income for life.

Pension drawdown offers more flexibility and control over your pension savings. But you need to be clued up and disciplined to ensure you don’t withdraw too much, or invest it badly, and run out of money in retirement.

We go into lots more detail in our guide on pension drawdown.

Our top-rated pension drawdown providers

Vanguard

Best low-cost provider

The US investing giant only entered the UK pension market in February 2020 and is already providing value for money:

-Only product to gain five stars for its drawdown pension plan.
-Very low charges for the money invested at 0.15% capped at £375 per year
-Ongoing costs between 0.06 and 0.78% and fund transaction costs between 0.02% and 0.93% depending on whether you choose a ready-made portfolio or individual funds
-No additional annual SIPP admin fee
-No set-up charge or account closure fees
-Transferring to another provider is free
-Setting up drawdown or withdrawing your tax-free lump sum is also free

But you can only choose from Vanguard’s own range of 75 low-cost pension funds. This includes its selection of ready-made investment portfolios designed specifically for your pension plan, which more experienced investors may find limited. 

Capital at risk. The tax treatment of your investment will depend on your individual circumstances and may change in the future.

Aviva

Best for customer service

Aviva offers a SIPP and drawdown product that can be managed through the online portfolio service, called MyAviva.

Here are some points about the product:

-Allows customers to buy and sell funds and shares
-No trading charges, which makes the charging structure for this product simpler than many others
-Two ongoing charges for the product: a platform fee and a fund management charge

Platform charges vary depending on the value of the account. As a customer invests more in their pension, their annual charges decrease.

For example:
-The fee is 0.4% on the first £50,000 (a £200 fee)
-This falls to 0.35% on the next £200,000 (£700)
-And then 0.25% on the next £250,000 (£625)
-After £500,000, there is no charge

Capital at risk. The tax treatment of your investment will depend on your individual circumstances and may change in the future.

Interactive Investor

Best for online traders

Interactive Investor* offers one standalone account which is the Pension Builder plan:

-Costs £12.99 a month
-Customers with an existing ii ISA or Trading Account can add a SIPP for an extra £10 a month on top of the monthly fee
-To buy or sell shares and funds, trades usually cost £5.99
-The platform doesn’t charge a drawdown fee on its SIPP, allowing retirees to access their pension pot flexibly without facing extra costs
-Better suited to online traders, as telephone trades cost £49

If there is insufficient cash in the account to pay fees, Interactive Investor charges £25 to sell their holdings in order to make up the outstanding balance.

Capital at risk. The tax treatment of your investment will depend on your individual circumstances and may change in the future.

Go to provider site*

AJ Bell

Best for low cost and a wide choice of investments

AJ Bell’s self-invested pension plan has been awarded a five-star rating from Times Money mentor, but it gets four stars for its drawdown product. The provider misses out on five stars because it charges £100 + VAT each year for taking regular income drawdown payments.

Here are the main features:

-The SIPP allows trading in shares, funds, investment trusts and ETFs
-Maximum platform fee charged is 0.25%
-£150 to purchase an annuity
-Free to set up drawdown

Capital at risk. The tax treatment of your investment will depend on your individual circumstances and may change in the future.

Go to provider site

Considering a drawdown pension?

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Need advice?

Fees can really cut into your investment returns, so make sure you understand what you are paying. There are lots of pensions options, if you are unsure it’s always best to consider speaking to a financial adviser. Kellands* is offering all of our readers a free hour-long session* with one of its independent financial advisers. They can get a good idea of your financial goals, and help you take the first step to achieving them.

*All products, brands or properties mentioned in this article are selected by our writers and editors based on first-hand experience or customer feedback, and are of a standard that we believe our readers expect. This article contains links from which we can earn revenue. This revenue helps us to support the content of this website and to continue to invest in our award-winning journalism. For more, see how we make our money and editorial promise.