Into drawdown, which provider was best.

I have now passed my 55th birthday, transferred a pension, moved into drawdown with two providers, and received pension payments from those two. So how did it go and how do the three companies compare?

The larger part of my SIPP was with Hargreaves Lansdown. It’s not the cheapest option but I don’t recall the website being down, the staff respond within a day to messages and are on the phone if I need. They told me that if I wanted the tax-free sum as close as possible to my birthday then to write to them about 3-4 weeks before to start the paperwork. Sure enough, all was in place in plenty of time, they told me to make at least 25% cash (because the tax-free sum has to be cash not funds nor shares), two days after my birthday the drawdown was in place, and the 25% tax free was in my account the day after that. The first pension payment was arranged and arrived on the 28th of the month of my 55th birthday. I struggle to imagine how it could be any smoother.

It could be less smooth and timely. Let me describe Aegon and Interactive Investor. Aegon was my company scheme: no platform charge, small but reasonable choice of funds. I could have stuck with them except that they have always taken several days to respond to messages, and during covid it took longer than before. On the phone they were fine, and went out of their way to get me the right info (such as “we definitely can’t start any paperwork before your 55th birthday so it will be maybe 1-2 months after your 55th birthday before you see your money.”). So I switched to Interactive Investor because the charges should work out a lot less than Hargreaves Lansdown, and if they prove themselves then I could reduce my HL pension over several years and save charges. The impenetrability of Aegon would always prevent me wanting them as my main pension platform.

ii had said that the “illustration” could be done before my 55th birthday but all other paperwork would have to wait until after, so I reckoned faster than Aegon, even if Aegon responded to messages faster than they ever have in the past. The transfer took forever. It’s not easy to deduce the cause of the delay vs a typical transfer, but I’m pretty sure that Aegon caused the delays, and even worse they took me out of the market 2 weeks sooner than they needed to which cost me about 3-5% growth. I have no regrets about leaving Aegon.

By the time the transfer was done, it was only a couple of days before my birthday. I asked ii to provide the illustration. They said I had to wait until my birthday (contradicting the earlier info), but seeing as that was only two days later I waited and made a mental note that I must consider AJBell at some point in future. The illustration (rather pointless because they assumed all my investments would be cash for the rest of my life because they’d just arrived in my SIPP as cash) was done quickly. The to-and-fro of documents was very quick because I could send in scans. The tax-free cash was in my current account 20 calendar days after my birthday. Too late for the first pension payment in my birthday month but OK for a month later.

One quirk is that ii split the uncrystallised SIPP from the crystallised drawdown by saying that the drawdown is a certain percentage of the SIPP value. HL have two separate accounts: an uncrystallised SIPP and a crystallised Drawdown. Personally I far prefer the clarity of the HL approach, and so the little 2880 pension contributions that I’ll be making each year will be into HL’s SIPP, leaving ii as 100% drawdown. Another thing I’ve noticed is that the ii website has been down for maintenance for a couple of weekend days during the 2 months that I’ve had an account with them: I hope it doesn’t recur too often.

The monthly payments arrive on time each month, with pay notification a couple of days before. HL write a message with the info, while ii produce a more professional looking payslip. Both HL and ii communicated with HMRC and the tax codes that HMRC produced for them look sensible.

Now it’s all ticking along with monthly pension payments from HL and ii.

All in all, I like everything about HL except the charges. ii have not got off to a perfect start but might improve overall, and as I now have an ISA and a trading account with them I hope to get a good view. For now I am steadily drawing more from HL than ii, as I’m aiming to bias more to the cheaper ii platform if all goes well.

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