This enables investors in the self-invested personal pension to accumulate money for their retirement through the retirement planning element and draw down an income within one product.
The new option is available on the same administration platform as the retirement planning element, which makes it easier for advisers to manage client money. Assets can be moved into the retirement income element without being sold and repurchased, which means there are no extra charges and risk of being out of the market while the transition is taking.
As the product is one policy, clients can save for retirement in the Retirement Planning element then move completely into drawdown or phase their retirement. Ongoing contributions from clients who have already started to access income drawdown are also allowed.
The product as a whole aims to be flexible and transparent in offering four types of investment option with an unbundled charging structure enabling clients to pay only for what they use. One investment option is the Scottish Widows pension fund range of 37 internally managed and 26 externally managed pension funds from eight fund management groups. This includes four Russell Investment Group multi-manager funds.
Another option is the fund supermarket in association with Fidelity FundsNetwork, allowing access to 1,000 funds. Alternatively clients may choose from a panel of four discretionary fund managers – Brewin Dolphin, Cazenove Capital Management, Citigroup Quilter and Rathbones. The discretionary manager will construct a portfolio to suit the client’s risk profile and investment needs. Finally, the product provides access to commercial property.
The charging structure is also designed for transparency. Charges are split into service charge, investment charge and adviser charges so that the costs of manufacturing, administration, investment management and advice are easily understood. The service charge is tiered so that it will reduce on a sliding scale as the investment amount gets bigger.
Adding an income drawdown option to the retirement account is useful as policyholders do not have to move to another product when they want to take an income. However, the flexibility of the plan in terms of pre-and post-retirement, investment choice and the charging structure could increase the complexity and make it difficult for some clients to understand.
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