Which pension route

dunstonh

Thanks again, and to dunstonh. Perhaps the FSA's concern is that some IFA's are not too bothered once they have earned initially.

SIPPS typically pay less initially than the other options but the potential for ongoing commission exists. It is that ongoing commission that is still paid to the companies that Ed has listed. Yet they do nothing for it either. Most servicing IFAs will not take any more and provide the servicing required.

Of course, if you agree a fee with an IFA, it can be cheaper than DIY.

SeniorSam

dunstonh wrote: »

SIPPS typically pay less initially than the other options but the potential for ongoing commission exists. It is that ongoing commission that is still paid to the companies that Ed has listed. Yet they do nothing for it either. Most servicing IFAs will not take any more and provide the servicing required.

Of course, if you agree a fee with an IFA, it can be cheaper than DIY.

dunstonh.....

Thanks again. The provider Friends Provident took 10% of the transfers of four pensions back in 1999 and having just e-mailed for help, the reply was that I should contact the administrators James Hay, so I have sent them the same e-mail today.

Sam

SeniorSam

SeniorSam wrote: »

dunstonh.....

Thanks again. The provider Friends Provident took 10% of the transfers of four pensions back in 1999 and having just e-mailed for help, the reply was that I should contact the administrators James Hay, so I have sent them the same e-mail today.

Sam

Sorry...... that was 7% not 10%

Sam

jamesd

SeniorSam, I see that you didn't get an answer about phased retirement or drawdown. The two differ in part in relation to tax. Also drawdown or annuity purchase are the options available for the 75% of the money from phased retirement that can't be taken as a lump sum.

If you simply take a lump sum for 25% of the whole pension pot and use that as income you're losing out on the potential to reinvest it in ISAs to generate tax free income later. That tax free income can be useful for those who will be near to suffering age allowance reduction or higher rate tax in retirement.

With phased retirement the lump sums make some of the current income, the part from the lump sum, tax free today. Since tax allowances are lower for those under 65 it can be more efficient to get the benefit now rather than later, when the higher allowance may reduce the benefit from getting it then.

Personally, I mostly consider suggesting that someone consider phased retirement when they want an income that is higher than annuity purchase or drawdown can offer. That's not so uncommon because many people will get the state pensions and work pensions later than the start of their retirement. Using the lump sums can boost their income until those pensions start, giving them a more even income that starts as high now as it will be later.

If the income isn't needed, I'd instead suggest taking lump sums at a rate high enough to fully use the ISA allowances of both partners. That may take several years, so it may end up being phased just because of the limit on the rate at which you can put money into ISAs.

If you don't need the income at all then not taking benefits at all (neither lump sum nor annuity/drawdown) is the way to go.

Whatever you do, it's not necessary to use all of the money today to do just one thing. No problem at all to spread it out over many years if that makes sense.

It's mostly a case of picking the target income and working out how to get there, avoiding living on tax free cash unless that's required to hit the income target.