25% tax free sum at 50 - Help please!

vet8

I hope some of the knowledgeable posters on this board can help me.

Due to EXTREME financial problems we have decided to take out the 25% tax free lump sum from my husband's pension fund, which I now believe you can do at 50. All we want is that money and leave the rest in the fund, however this seems to be impossible. The pension company have sent us the stuff to take out an annuity. We don't want to do that, my husband is not retired.

I assumed we could take the 25% and leave the rest in the fund. Is this possible?

I suppose we should see a "Financial Adviser" but to be honest I would much rather not. Firstly we cannot afford it and, secondly I do not trust them at all. Whenever we have gone to one in the past we have had very poor advice and basically been ripped off. I would rather deal with this myself.

EdInvestor

You need to "take benefits" from the pension, but rather than buy an annuity with the 75%, this gets put into "income drawdown" (aka "unsecured pension".)Under new rules, there is no longer a requirement to take a minimum income in drawdown, you can leave all the money invested for later.

Income drawdown is offered by some pension companies, but many people use SIPPs for this purpose.The cheaper ones are often more cost effective and you also have a much better range of investment options, from cash to direct shares and gilts.

Here are some favoured providers:

https://www.h-l.co.uk
https://www.sippdeal.co.uk
https://www.alliancetrust.co.uk

If your husband's pension is a final salary company one you must get an IFA's help, the providers will otherwise not accept the money. If the pension is invested in a "With profits" fund, you should check you will not lose any valuable guarantees by taking the pension early. Also, if the pension is in WP, make it absolutely clear you are taking immediate benefits via drawdown: if you just transfer the pension, you may be charged an MVR exit penalty.

dunstonh

All we want is that money and leave the rest in the fund, however this seems to be impossible.

Its not impossible.

The pension company have sent us the stuff to take out an annuity. We don't want to do that, my husband is not retired.

That is probably the only option that the company in question has available. They dont have to offer unsecured pensions if they dont want to. However, nothing stops you transferring to a plan that does.

I suppose we should see a "Financial Adviser" but to be honest I would much rather not.

Why not?

Firstly we cannot afford it and, secondly I do not trust them at all.

Why cant you afford it? and you have just slagged off thousands of individuals you have never met. I bet you have never even used an IFA either.

Whenever we have gone to one in the past we have had very poor advice and basically been ripped off.

Really? I hope you never get a bug from eating bad food. You would never eat food again with your reasoning.

lilac_lady

I had a very good IFA to sort my pensions out when I retired. I asked around and he was recommended to me. Why don't you do that? They're not all bad ones.

jem16

vet8 wrote: »

I suppose we should see a "Financial Adviser" but to be honest I would much rather not.

I would not use a "financial adviser" either. They tend to work for banks and tied sales companies and are usually low skilled.

I would certainly see an Independent Financial Adviser though.

Firstly we cannot afford it and, secondly I do not trust them at all. Whenever we have gone to one in the past we have had very poor advice and basically been ripped off. I would rather deal with this myself.

Maybe you actually saw a low skilled adviser from a bank so don't put down an IFA who are usually very good.

vet8

I can never understand why people have to slag off others who write on this board, Dunstonh.

The last Financial adviser we used was recommended to us by good decent people who we know, they had used him and said he had helped them a lot. He sold us a total rubbish pension, so much so that we got several thousand pounds back for pension mis-selling. It later turned out that the guy was a total crook and had ripped £20,000 off from a firm! We were really hacked off with the entire thing as we had done all the right stuff, asked around, gone on personal recommendations etc etc. Previously we have dealt with other advisers and been sold rubbish as well.

I would just rather deal with things myself, that way I know I am doing the best for myself and not being sold something which pays the adviser the most commision.

dunstonh

I can never understand why people have to slag off others who write on this board, Dunstonh.

Me too. That is why I asked why you were doing it.

Judging all others by the actions of one individual is hardly fair. Especially on a legacy transaction and one where the system worked in that you got redress for the transaction. Also, this is not the sort of transaction that a financial adviser can do typically. It requires an independent financial adviser.

I would just rather deal with things myself, that way I know I am doing the best for myself and not being sold something which pays the adviser the most commision.

Fine. However, you need to be aware that you will not get access to whole of market choice and its clear from your post that you dont know what you are doing so there is the potential to make more mistakes on a transaction that you only get one chance to get right. Benefit cystallisation cannot be undone later.

You also need to be aware that you dont avoid paying commission on a DIY transaction like this. They just keep the commission for themselves.

vet8

I was not trying to slag off IFAs, just explaining my personal views. I am sure there are a lot of excellent ones out there, but I unfortunately have never met one. Anyone can only go on their own experience, I know people who have had a nasty experience with a dentist and are now afraid to go, similarly there are a lot of posters on these boards who do not trust estate agents, accountants, bank managers etc. You can only go by what has happened to you in the past and nothing else.

The saying goes you have to kiss a lot of frogs before you meet a prince, I am fed up with the frogs! :rotfl: