AJ Bell SIPP Drawdown: What Retirement Income Actually Costs in 2026

AJ Bell offers two routes to access your [SIPP](https://www. See <a href="/platforms/aj-bell">full AJ Bell platform review</a> for more details.ajbell.co.uk/pensions/sipp/charges) in retirement.

Flexi-access drawdown is the standard approach. You take a tax-free lump sum (up to 25% of your pot), and the rest moves into a drawdown pot. From there, you take income as needed — either regular monthly payments or ad-hoc withdrawals. Income is taxed at your marginal rate.

Uncrystallised funds pension lump sum (UFPLS) lets you take lump sums directly from your uncrystallised pot. Each withdrawal is 25% tax-free, 75% taxable. No drawdown pot is created. This suits people who want occasional large withdrawals rather than regular income.

Neither route carries a fee from AJ Bell. The drawdown FAQ confirms: accessing your pension by flexi-access drawdown or pension lump sums costs nothing. The only pension-access fee is £150 plus VAT if you buy an annuity through them, or a minimum £250 time/cost charge for death benefits or pension sharing on divorce.

For our broader pensions guide, including how drawdown compares to annuities and the state pension, see our pensions hub.

Free drawdown access doesn't mean free drawdown. AJ Bell's ongoing platform charge applies to your entire invested pot regardless of whether you're accumulating or decumulating.

For funds (unit trusts, OEICs): 0.25% on the first £250,000, dropping to 0.10% between £250,000 and £500,000, and zero above £500,000.

For shares (including ETFs, investment trusts, and gilts): 0.25% capped at £10 per month (£120 per year).

The crossover point is stark. A £50,000 pot in funds costs £125 a year; the same pot in shares costs £120 — almost identical. But at £200,000 in funds, you're paying £500 a year versus £120 for shares. At £500,000, it's £875 versus £120.

This is the single most important decision for anyone entering drawdown with AJ Bell: hold shares, ETFs, or investment trusts rather than funds if your pot exceeds £50,000. The £120 annual cap on shares makes AJ Bell exceptionally cheap for larger pots — cheaper than Hargreaves Lansdown's £200 cap on shares, and dramatically cheaper than percentage-based platforms like Nutmeg or Wealthify.

In accumulation, you might rebalance once or twice a year. In drawdown, you're selling investments regularly to generate income. That means dealing charges matter more.

According to the AJ Bell SIPP charges page, share deals cost £5 each (£3.50 if you made 10+ deals the previous month) and £1.50 per fund deal. Regular investments and dividend reinvestments cost £1.50 each.

A retiree taking monthly income from a drawdown pot of ETFs might sell one holding per month — that's £60 a year in dealing charges. If you're selling funds instead, it's £18 a year. Not ruinous either way, but worth factoring in.

The smarter approach: hold enough cash in your drawdown pot to cover 6–12 months of income withdrawals. AJ Bell doesn't charge for holding cash, and you earn interest on uninvested cash. This reduces your dealing frequency to two trades a year (topping up the cash buffer), cutting dealing costs to £10 for shares or £3 for funds.

For a comparison of how AJ Bell stacks up against competitors for different portfolio sizes, see our AJ Bell fees breakdown.

The biggest cost in drawdown isn't platform fees — it's income tax. And AJ Bell gives you the flexibility to manage it.

Flexi-access drawdown lets you control exactly how much taxable income you take each tax year. The personal allowance is £12,570 for 2025/26. If your only income is your state pension (roughly £11,500 for the full new state pension), you have £1,070 of unused personal allowance. Taking drawdown income up to that £1,070 costs you nothing in tax.

Beyond that, you're in the basic rate band at 20% on income up to £50,270. Taking £20,000 from drawdown when you also receive the full state pension means roughly £20,000 taxed at 20% — a £4,000 tax bill. That dwarfs the £120–£500 platform fee.

The lesson: obsessing over a 0.15% fee difference between platforms while ignoring drawdown tax planning is like haggling over the price of curtains in a burning house. Use AJ Bell's flexibility to take income in the most tax-efficient way — spreading withdrawals across tax years, using your personal allowance, and staying below the higher-rate threshold.

When you enter drawdown, AJ Bell offers four Investment Pathways — pre-built portfolios aligned to different retirement goals:

1. No plans to touch the money in the next 5 years
2. Planning to set up a guaranteed income within 5 years
3. Planning to start taking money as a long-term income within 5 years
4. Planning to take all the money within 5 years

These were introduced by the FCA to help people who don't want to choose their own investments. The government-backed Pension Wise service offers free guidance on drawdown options before you commit. AJ Bell's pathway funds carry their own OCF (ongoing charges figure) on top of the platform charge.

For anyone reading this article, the pathways are probably unnecessary. If you're comparing platform fees and thinking about drawdown strategy, you're already engaged enough to pick a global tracker or a multi-asset income fund. The pathways exist for people who'd otherwise leave their drawdown pot entirely in cash — which, given inflation, is the worst possible outcome.

If you do use them, AJ Bell's pathway funds are competitively priced. But they're not magic — they're just diversified funds selected to match broad retirement timelines.

AJ Bell's SIPP drawdown is the strongest option for:

Self-directed investors with pots over £50,000 who hold shares, ETFs, or investment trusts. The £120 annual cap is hard to beat. Hargreaves Lansdown caps at £200, and Interactive Investor charges £143.88 (£11.99/month). Fidelity's percentage-based model costs more above roughly £50,000 in funds.

People who want flexibility without complexity. Regular and ad-hoc income payments, UFPLS option, no exit fees. The platform does what it needs to without over-engineering the experience.

It's a weaker choice for:

Small pots under £30,000 invested in funds. At this level, InvestEngine (0% platform fee for its own ETF portfolios) or Vanguard (0.15% capped at £375) undercut AJ Bell on pure cost.

People who want hand-holding. AJ Bell is execution-only. There's no advice service. MoneyHelper provides free impartial guidance for those who need a starting point. If you need someone to build a drawdown plan, look at restricted advice services or a platform like St. James's Place (though you'll pay substantially more for the privilege).

For our SIPP explainer, including tax relief rules and contribution limits, see our comprehensive guide.

This article is for informational purposes only and does not constitute financial advice. You should seek independent financial advice before making any investment decisions.