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Product matters

Pru does drawdown, just like it does everything else, by the numbers. It probably read a book about it and thought it would give it a go.

The Prudential drawdown plan makes all the right moves and may prove popular. Certainly, it is likely to be more popular than the complicated flexible annuity which Pru launched a year or so ago.

The drawdown plan has simple, clear charges which are directly linked to the commission terms. Maximum payment to introducing IFAs is 3 per cent, with up to 0.5 per cent trail commission.

There are 25 investment funds to choose from, including the Pru&#39s with-profits fund, three lifestyle investment strategies and a Sipp option. You can hold investments in up to 19 different funds at any time and get six free switches every year, which should be enough to keep most people happy.

External investment managers include Merrill Lynch, Newton, Invesco Perpetual, Schroders, UBS Global, and M&G, mainly offering managed or UK equity funds.

The fund transfer option allows investors to move money between the drawdown plan and the Pru&#39s flexible annuity without having to cash in any investments. I can see this being well received and if you buy into the package, then the total retirement management will go down well with clients who want a complete pension solution.

This is a simple package without any serious flaws. The company&#39s brand awareness should help sell the product, even if the brand image is taking on the air of a bicycle which has been left in the shed too long.

Tom McPhail is pensions research manager at Hargreaves Lansdown


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