Is this possible (Pension)

peter4076

Hello there this is my first sojourn into the world of high finance :rolleyes:

Anyway here goes. My wife aged 54 pays into a personnel pension, and she would like to know if it is possible for her to take 25% lump sum now--Not Retire---and carry on paying into her pension scheme.

your help gratefully appreciated.

EdInvestor

Yes, but she will have to take benefits from the fund, which means she has to put it into income drawdown, now known as "unsecured pension".This probably means she will need to transfer it to a SIPP first.

dunstonh

I honestly think that this has the potential to end up a right mess and is going to be open to all sorts of abuse and potential mis-sale claims.

peter4076

Thanks for the response. She has looked at a SIPP but knows nothing about them, but is willing to learn.
Her pension for the last few years as been according to all the figures she receives been performing really bad, but since the FTSE gone past the 5900 so as her pension, so rather than risking another crash, I think she wants to take the money (if possible) and run, and put her pension somewhere safer.

dunstonh

so rather than risking another crash, I think she wants to take the money (if possible) and run, and put her pension somewhere safer.

So why not switch investment funds within the pension to non stockmarket linked funds. That would seem the more sensible solution

EdInvestor

peter4076 wrote:

Thanks for the response. She has looked at a SIPP but knows nothing about them, but is willing to learn.

Because the whole issue of SIPPS tends to create arguments on this site, I'm going to suggest she looks at the SIPP board at the Motley Fool here for more info and help.

There is an FAQ there which needs a bit of updating for A-day, but is basically correct for what she wants to do.The people over there are very helpful with advice on SIPP costs and which one to choose for the style of investment you want to follow.

dunstonh

The issue regarding the arguments on SIPPs is that they are given as the best option for every person by some people. Do you need a mortgage? Take out a SIPP..

There is nothing wrong with SIPPs. Its just the way they are presented here by some that is at fault.

peter4076

Thanks all. Have printed out pdf from Hargreaves Landsdown (SIPPS) (all 24 sheets) for my wifes perusal, and she is sure she will do the wrong thing, because her quote " I always seem to make the wrong decision " but I informed her, that surely marrying me was a good decision, which she replied in the affirmative :rolleyes:

Once again thankyou for all your input. :beer:

dunstonh

Can I ask why you are looking at the SIPP option then (which is potentially high risk) and not switching to lower risk funds within the pension itself (or switch to a provider that offers lower risk funds and lower costs than a SIPP?

EdInvestor

Peter

If your wife wants to keep paying into the drawdown, rather than taking an income, make sure you choose the "phased drawdown" option, which splits the fund up into 1000 bits and puts them into drawdown a few at a time to suit you. If you put the whole fund into drawdown you can still invest it and you don't need to take an income, but you can't pay in new money.


Here's what the FSA says about drawdown

There is a mistake: it says there is a minimum income - this used to be the case, but it's not so any longer.

One warning: if the original pension is in a With-profits fund, check to make sure you won't lose any valuable guarantees by moving it before maturity.

peter4076

dunstonh.....I think my wife is looking into the SIPPS option because her FA (known him since they were children together) mentioned it over the phone a couple of weeks ago, but she is open to all advice at the moment with no comittments yet.
EdInvestor...Thankyou for the extra input on the drawdown option.