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  • FIRST POST
    • olleym
    • By olleym 5th Oct 17, 10:40 AM
    • 4Posts
    • 0Thanks
    olleym
    drawdown
    • #1
    • 5th Oct 17, 10:40 AM
    drawdown 5th Oct 17 at 10:40 AM
    I have a small pension pot of £25,000 with LV and hoped to drawdown all of it on my 55th birthday. I have now found out that they have a £30,000 minimum pot policy before they allow drawdown.
    I can put in £5000 to reach their minimum or move to a new provider.
    I am not looking for any growth between now and my 55th birthday in March but due to failing health wish to have access to all the money as soon as possible.
    Any suggestions?
Page 1
    • AlanP
    • By AlanP 5th Oct 17, 10:52 AM
    • 998 Posts
    • 708 Thanks
    AlanP
    • #2
    • 5th Oct 17, 10:52 AM
    • #2
    • 5th Oct 17, 10:52 AM
    Moving it to a provider that does offer drawdown on £25k sounds like the best option if you really MUST take it all out.

    Few points to consider:

    1) It will count as taxable income so, depending on your circumstances, you may not get the full £25k.

    2) You are likely to be taxed on it, irrespective of your circumstances, as the provider's system will look on it as a £25k per month situation. You then have to reclaim tax paid, assuming you can, from HMRC.

    3) Failing health - If serious enough (life threatening within 12 months I think it is) you can take it tax free I believe. Don't know much about this but have seen comments along those lines on here before.

    4) If it isn't "life threatening" (and I hope it isn't) what are you going to live on for the rest of your life? Other pensions / savings / salary??
    • Linton
    • By Linton 5th Oct 17, 11:06 AM
    • 8,636 Posts
    • 8,610 Thanks
    Linton
    • #3
    • 5th Oct 17, 11:06 AM
    • #3
    • 5th Oct 17, 11:06 AM
    You can transfer the pension to another provider who doesnt have LV's restriction. Any SIPP provider should be OK and allow you to take any amount at any time. You should choose your SIPP provider after carefully checking all the fees - for example some will charge an exit fee if you close your pension within a year.

    Does the LV pension have any guarantees? At £25K these should not stop you transferring but may lead you to reconsider your strategy.

    As cash taken from a pension is taxed as income it may be beneficial for you to take the money over more than one tax year to stay in your minimum tax band.
    • Chickereeeee
    • By Chickereeeee 5th Oct 17, 11:11 AM
    • 423 Posts
    • 262 Thanks
    Chickereeeee
    • #4
    • 5th Oct 17, 11:11 AM
    • #4
    • 5th Oct 17, 11:11 AM
    If you added £5k to your £25K 'pot' it would take you to the £30K limit, over which you have to have a financial advisor sign off on any transfer. I am not sre if it applies AT £30K or OVER £30K but worth looking out for.

    C
    • Linton
    • By Linton 5th Oct 17, 11:14 AM
    • 8,636 Posts
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    Linton
    • #5
    • 5th Oct 17, 11:14 AM
    • #5
    • 5th Oct 17, 11:14 AM
    If you added £5k to your £25K 'pot' it would take you to the £30K limit, over which you have to have a financial advisor sign off on any transfer. I am not sre if it applies AT £30K or OVER £30K but worth looking out for.

    C
    Originally posted by Chickereeeee
    That only applies to DB pensions, not to DC pensions as the OP's one would seem to be.

    PS: or a DC pension with guarantees which this one may well not have.
    Last edited by Linton; 05-10-2017 at 11:23 AM.
    • olleym
    • By olleym 5th Oct 17, 11:43 AM
    • 4 Posts
    • 0 Thanks
    olleym
    • #6
    • 5th Oct 17, 11:43 AM
    • #6
    • 5th Oct 17, 11:43 AM
    Thanks for the replies, illness is not, fortunately, terminal.
    I do still work and have access to a final salary Civil Service pension as well.
    • AlanP
    • By AlanP 5th Oct 17, 1:19 PM
    • 998 Posts
    • 708 Thanks
    AlanP
    • #7
    • 5th Oct 17, 1:19 PM
    • #7
    • 5th Oct 17, 1:19 PM
    Thanks for the replies, illness is not, fortunately, terminal.
    I do still work and have access to a final salary Civil Service pension as well.
    Originally posted by olleym
    Glad to hear that.

    It looks like anything you take from this pension will be taxable then, and depending on your CS salary might be at 40%.

    Do you really need to withdraw as a lump sum, or even over 2 tax years?
    • olleym
    • By olleym 5th Oct 17, 5:38 PM
    • 4 Posts
    • 0 Thanks
    olleym
    • #8
    • 5th Oct 17, 5:38 PM
    • #8
    • 5th Oct 17, 5:38 PM
    Alan P
    I will have virtually no other income this tax year, so it is a good time to make use of my PA
    Last edited by olleym; 05-10-2017 at 6:10 PM.
    • OldBeanz
    • By OldBeanz 5th Oct 17, 6:58 PM
    • 703 Posts
    • 546 Thanks
    OldBeanz
    • #9
    • 5th Oct 17, 6:58 PM
    • #9
    • 5th Oct 17, 6:58 PM
    In that case if possible take the money over 2 years and you should be able to have it all free of tax after 6/4/18.
    • xylophone
    • By xylophone 5th Oct 17, 7:43 PM
    • 23,666 Posts
    • 13,794 Thanks
    xylophone
    Do you mean that you wish to take the whole pension as a lump sum once you turn 55?

    LV would allow that?

    https://www.lv.com/pension-specialists/pension-access/retirement-options/tax-free-cash

    Or do you mean that you want to take the 25% PCLS and then draw down the balance on a regular basis?

    For example, you might consider a transfer to HL SIPP, remain in cash, and then in March take the PCLS and whatever of the balance would bring you up to your tax free personal allowance - (you could well find that you had overpaid tax, so would need to reclaim from HMRC).

    http://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/

    You might then set up an arrangement to draw down the balance ( around £500 a month?) over the 2018-19 tax year.

    Don't close within the year - see charges http://www.hl.co.uk/pensions/drawdown/charges-and-interest-rates
    http://www.hl.co.uk/pensions/drawdown

    HMRC should supply a code for this to get the tax correct.
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