Hargreaves Lansdown to offer ATM pension withdrawals
Hargreaves Lansdown has made history by offering pensions that allow holders to withdraw funds free from automated telling machines, in the style of bank accounts.
Hargreaves Lansdown customers can, once George Osborne’s pension reforms take effect this April 6th, use flexible drawdown freedoms make as many withdrawals as they like.
Customers who start drawdown programs after the reforms come into effect will not be liable for ‘set-up’ fees, either. In the past, retirees opting for flexible drawdown plans incurred a one-off fee of £354; capped drawdowns were free, but withdrawals were limited annually to the amount an annuity would pay. Pensioners already enlisted in a capped drawdown plan will remain subject to the existing withdrawal cap.
However, capped drawdowns are not without advantages; holders of such pensions can still contribute up to £40,000 to their pension funds per annum, while flexible drawdowns limit deposits to £10,000 yearly. Those who wish to take advantage of the increased drawdown contribution total must set up a capped plan before April 6th.
Hargreaves Lansdown also intends to introduce an upgrade to the flexible plan, which will reflect new pension freedoms; in future, holders will be able to designate a quarter of their funds for tax-free withdrawal, in line with the new rules. A date for implementation is yet to be set, but details will be announced later this year.
“There have been widespread concerns as to whether policymakers and the pensions industry would be ready in time for the April 6 deadline,” Tom McPhail of Hargreaves Landsdown said. “We think investors will be reassured to see this product launch in good time for the new pension freedoms.”