Standard Life will unveil its flexible drawdown proposition later this month, over a year after the Government introduced the regime as part of reforms to abolish compulsory annuitisation at age 75.
Standard Life has contacted advisers outlining plans to launch a standalone flexible drawdown product on 29 October. The Flexible Income Drawdown plan, or FID, will also be available on the provider’s wrap.
There will be no charge or increase in charges for using the facility, although there will be a one-off “depletion fee” of £300 if the client withdraws their entire fund or the value of the pot falls below £20,000.
Standard will charge a set-up fee of £200 if a client enters the FID plan and invests in external funds such as cash, but not if they stick with insured funds.
Standard Life declined to comment on the move.
The Treasury set out details of its capped and flexible drawdown pension regime in December 2010.
The new rules, which came into force in April last year, allow people with a secure pension income of more than £20,000 a year to withdraw as much income from their pension fund as they want.
Major insurers have been reluctant to develop products which facilitate flexible drawdown. LV= is the most prominent provider in the market, having launched its proposition in April 2011.
A number of bespoke Sipp providers, including A J Bell, Hornbuckle Mitchell and Suffolk Life, also offer flexible drawdown to their clients.
AWD Chase de Vere head of communications Patrick Connolly says: “Flexible drawdown has not really taken off yet but I expect it will grow as people come to retirement with significant pension assets and become more reluctant to buy annuities.
“I am surprised at how slow off the mark providers have been on this but I expect Standard’s rivals will keep a very close eye on how the market develops.”