After six months of intensive build, we’re incredibly excited to announce the launch of our very own – entirely paperless, fully digital and comprehensively automated – drawdown pension.
Following hot on the heels of our accumulation SIPP, which went live towards the end of last year, it’s the latest piece in our growing jigsaw of easy-to-integrate investment APIs – and represents an important milestone in our ambition to bring an outdated, heavily analogue industry kicking and screaming into the automated, digital present.
To hear more, we sat down with James Holmes, our chief commercial officer, who oversaw its development…
What problem does it solve?
Since the introduction of pension freedoms in 2015, flexi-access drawdown (FAD) has become an increasingly popular method of taking income in retirement – allowing investors to retain greater flexibility over their accumulated pension pots than traditional annuities.
With our drawdown functionality, financial advisers can crystallise a certain portion of their client’s pension, instruct an initial tax-free lump sum up to 25% of the amount crystallised, then keep the remainder invested – allowing clients to benefit from continued investment growth as well as regular taxable income payments.
And, just as with our accumulation SIPP, advisers can create multiple ‘pots’ within the same client account, each with its own ringfenced investment strategies.
In other words, our drawdown pension is designed to offer advisers an intuitive and flexible way of planning their clients’ retirement – one that can adjust to the many and various scenarios within their client bank.
But hang on, couldn’t advisers using Seccl-powered platforms instruct drawdown before?
It’s true, Seccl-powered platforms have been able to facilitate drawdown for some time. But until now, this service has only been available through a third-party pension provider.
To ensure full control and flexibility – and to provide the fully automated and paperless experience we and our clients expect – we knew we had to build it ourselves.
So what makes the Seccl drawdown pension different?
While many platforms allow advisers to instruct drawdown digitally, behind the scenes they typically rely on internal workflows and manual processes to make it happen.
As a result, the pension drawdown process still takes far longer than it should – especially at times when platform operations teams are particularly busy – and creates too much opportunity for manual error.
It’s why we set about building what we think is the market’s first fully automated drawdown SIPP – one that removes all back-end manual processing and helps advisers to manage their clients’ drawdown journeys more quickly and easily than ever before.
And, because it’s been built on the same API-first principles as the rest of our technology, we can be fully agnostic in how it’s used.
While we expect it typically to be offered to platform clients on a white-label basis – with Seccl (an HMRC-registered SIPP and ISA manager) providing the underlying custody and wrapper administration – it can be used on a standalone basis by other custodians or SIPP scheme administrators, or fully embedded via API into any number of other applications elsewhere in the advice journey.
How long did it take to build?
Less than six months. We wrote our first lines of code at the end of January and placed it in the hands of our first customers at the beginning of June – all with zero downtime.
For context – and as you can probably imagine – developing a pension is rife with technical complexity. It’s no accident that most pensions rely on technology that’s been built by a small number of software vendors over twenty-odd years – the barriers to entry are high.
We’re especially proud, then, that we’ve been able to ship such complex functionality in record quick time. It’s all because we build using an iterative engineering process that focuses on continuous deployment – favouring the frequent deployment of smaller functionality changes over larger, less frequent upgrades. (Our developers now release new code four times a day, with the aim of daily double-digit releases by the end of the year.)
Why should we get excited?
Drawdown represented one of the key remaining infrastructural pieces of the puzzle left for us to build. With our own custom-built decumulation SIPP, we’re able to bolster our pension offering and move yet closer – tantalisingly so – to full functional parity with incumbent technology providers that have been in the market for several decades longer.
And all in record-quick time. This time last year we had no SIPP offering whatsoever; now we have accumulation and decumulation options, built fully in-house and free of any external dependency, to a market-leading standard.
It goes to show the speed with which we can tick off major items from our roadmap and, hopefully, demonstrates our potential to rapidly innovate a market where innovation is well overdue…
To take a closer look, watch James give a brief demo of the new functionality here (and check out our other end-to-end system demos, too). And if you’d like to know more, get in touch – we’d love to hear from you.