Hargreaves Lansdown launches free withdrawals scheme for pensioners

Hargreaves Lansdown, one of Britain’s biggest financial firms, has launched a new “drawdown” service that offers free cash withdrawals to pensioners.

The company said it will allow customers who use its service to make an unlimited number of withdrawals once the so-called “pension freedoms” are implemented in April.

Pensioners starting a new drawdown plan before or after the 6 April deadline will pay no set-up charges, compared to the current flexible plan, which costs £354, while the existing “capped drawdown” plans were already free of charge.

“We have made this new drawdown accessible by stripping out any upfront charges and developing a suite of information and planning tools to help investors make the most of their retirement savings,” said Tom McPhail, the group’s head of pensions research.

“This is what the government’s pension freedom revolution is all about; giving investors the tools and information to take control of and responsibility for their own retirement income, as well as financial advice if they need it.”

The FTSE 100 group said it has already received over 175,000 requests for information relating to the new regime, amid widespread concerns as to whether policymakers and the pensions industry would be ready in time for the deadline.

Under current regulations, pensioners wanting to withdraw money out of their pension funds without buying an annuity have to start a capped drawdown plan, unless they can prove they have at least £10,000 in guaranteed income from other sources.

Savers who have already set up a capped drawdown plan will remain subject to the current cap regulations on withdrawals, while their income will have to be assessed against the cap by the pension provider.

“The Financial Conduct Authority and the government are beavering away to produce the final rules and regulations which will apply from 6 April,” continued McPhail.

“Given the uncertainty over whether the pensions industry would be ready in time, we think investors will be reassured to see this first product launch in good time for the new pension freedoms. “

On Wednesday, Hargreaves shares closed up 3.44% to 1,053.00p.