cashing in pension. . or not

dunstonh

SIPPs are also the usual method of doing income drawdown.

The biggest provider in income drawdown uses a personal pension not a SIPP. They have a 37% market share of crystallised funds. Its also cheaper than HL.

It wouldn't be any use in this case (the product allows it but its unlikely that any IFA would want to do what the OP wants). However, just clarifying that your stats are wrong on the assumption that SIPPs are the usual method for drawdown.

SSTEPHANIE

......... deep sigh, I know you are all being REALLY helpful and as someone who used to manage a busy solicitors office i say a real bigh thank you BUT I now have ME and sometimes brain seems to short circuit and %ges drawdown annuity market share crystallised funds just fuse it out completely.

SSTEPHANIE

Ive been single mum for 24 years and have always managed my mortgage money etc., etc, with no problems but the ME does horrid things to a brain.

EdInvestor

There is something about pensions which seems to encourage over-complexity (I blame the actuaries for a lot of it), but the basic problem seems to be that where they can use a new rule to create a new product which enables them to make money, they will.

Thus, instead of just being able to take 25% tfc out of the existing fund and leave the rest where it is, you have to go through this complicated business of transferring to income drawdown (via whatever means).

Of course it's a tremendous turn-off for everyone who's not in the pension business and just adds to the general bafflement.The latter is another ploy the industry uses to make money of course as a baffled investor is far more likely to just do what the salesman says.

dunstonh

Of course it's a tremendous turn-off for everyone who's not in the pension business and just adds to the general bafflement.The latter is another ploy the industry uses to make money of course as a baffled investor is far more likely to just do what the salesman says.

If the industry had its way then the whole lot would be SIPP based.

The faults over complexity lie with the regulator who is anti-SIPP and governments wanting to tweak legislation over the years along with legacy issues going back decades. A stakeholder pension cannot do drawdown for example. It is not part of the stakeholder rules. So, to expect it to offer drawdown is pointless. Its a bit like asking your contents insurance to pay out when you are off ill. Pensions taken out 20 years ago were based on rules in place back then. Not rules, options and features that you can get today. Again, to expect those to know what was going to happen 20 years down the road is wishful thinking.

jamesd

SSTEPHANIE, forget about this. It's not sensible because it will cost you more in lost growth than the interest you can save on the overdraft.

It's not possible to use the income drawdown that EdInvestor mentioned because the amount is too low to meet the bare minimum of £5,000 charged by the well known provider Hargreaves Lansdown. Even if you could do it with that limit, the fixed charges are to high to make it worthwhile.

You might instead consider trying to get a 0% balance transfer credit card from a company like Virgin. They provide the facility to do a balance transfer from your current account overdraft to the credit card for a 4% fee then 0% interest for about 15 months.

EdInvestor

As far as I can see, Sippdeal have no minimum for drawdown.They will charge £150 to set it up.That will come off the 2k, so Stephanie will get 25% of £1,850 in tax free cash and the rest will be put into the drawdown.Initially it will sit in the SIPP's cash account, earning virtually nil interest at present.

She then needs to invest it.She could perhaps choose 3 or 4 funds, splitting the money equally.She will pay a fee to buy these funds to Sippdeal, but nothing after that, no annual fee and no more charges if she sticks with the same funds.The fund manager will charge her an annual fee, typically 1.5%, but Sippdeal will rebate the initial fee.

She need do nothing else from then on.If any fund doesn't perform satisfactorily then she could could sell it and buy another one.She can do this online. A once a year task.

Not rocket science.:) You don't have to be a sophisticated investor to do this.

Jem16 for instance could manage this easily.;):D

jem16

EdInvestor wrote: »

She could perhaps choose 3 or 4 funds, splitting the money equally.

snip

Jem16 for instance could manage this easily.;):D

Ok sounds easy peasy....

How about;

JPM Natural resources
Gartmore China Opps
Investec Global Energy

Will that do?

Steffie - don't take this as a recommendation. I'm just picking 3 funds as Ed told me it's easy.

EdInvestor

Got quite a high risk profile have you jem16? Keen on punting on energy and commodities?


We can help Steffie get a few funds together later if she wants.If she's looking over a 10 year time span (as she will be) the JPM fund might well be one of them.Along with some UK blue chips she will know from the High Street and one or two other bits of diversification......

jem16

EdInvestor wrote: »

Got quite a high risk profile have you jem16?

Heavens no - I'm quite cautious actually. :eek:

Keen on punting on energy and commodities?

No I just fancied the sound of them and my sons work for JPM so thought I'd support them. :D

We can help Steffie get a few funds together later if she wants.If she's looking over a 10 year time span (as she will be) the JPM fund might well be one of them.Along with some UK blue chips she will know from the High Street and one or two other bits of diversification......

Oh dear - so I need to have some knowledge of the funds just in case I manage to pick high risk funds almost all in the one sector and asset class?