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Old Mutual Wealth Cuts Charges, Scraps Drawdown Fee

Stephen Little Reporter London 10 October 2014

Old Mutual Wealth Cuts Charges, Scraps Drawdown Fee

Old Mutual Wealth, which rebranded from Skandia last month, is simplifying its charging structure by removing the annual pension drawdown fee and scrapping the current minimum charge on its platform.

Old Mutual Wealth, which rebranded from Skandia last month, is simplifying its charging structure by removing the annual pension drawdown fee and scrapping the current minimum charge on its platform.

The decision to remove the drawdown fee, which is currently set at £58.20 ($93.84) per annum, comes in the wake of pension changes made by the government in the Budget earlier this year.

Old Mutual said that around 8,000 customers currently in drawdown will benefit from the changes which come into effect on 1 January 2015.

The firm is also removing the current minimum charge on its platform. Currently, anyone with investments of less than £20,000 on Old Mutual Wealth’s unbundled charging basis pays a minimum of £8.33 per month.

Old Mutual said the new rules would provide better value for smaller investments and ensure the charging structure could be easily understood by financial advisors and customers.

“By removing our drawdown fee and the current minimum charge on the platform our customers will only pay one fee. Additional layers of charges, such as those for switching, drawdown or exit charges are hazardous for customers as they can never fully predict future behaviour and therefore how much they will pay in the longer term,” said Tom Hawkins, head of financial solutions at Old Mutual Wealth.

“People will be given greater freedom as to how they access their pension savings and they will not expect to be charged extra for those freedoms. For providers, the new rules will remove much of the administration associated with income drawdown making an extra charge unnecessary,” he added.

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