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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.