tax free cash

shiredeon

Ed, you were indeed correct, on my executive pension fund of 150k under the old rules i am elegable to take 90k tfc,
having contacted them, if i transfer to a sipp for drawdown the tax free element resorts to 25%, so not worth moving i fear,

when my pension matures at sra and i wish to transfer to sipp for drawdown will i suffer the same fate or will i be able to take the max tax free cash?.
thanks.

EdInvestor

The lifecos have got their knickers into a right old twist over this one.

http://www.ifaonline.co.uk/public/showPage.html?page=340160

You have to laugh, talk about dysfunctional.

Which provider are you with?

shiredeon

originally hambro, then allied dunbar, now zurich,

EdInvestor

According to the story Zurich offers income drawdown (USP) so you should be able to take full TFC and move remaining fund into drawdown but without taking an income before NRD.

However, Lowe points out HMRC rules on USP transfers do require the funds to physically move into a USP contract before they can be seen as active, which means schemes may have to change their rules to allow this, which some might not be willing to do.

But if the scheme can or will change its rules to accommodate a nil-rate USP, Lowe says this is one of the devices for maintaining protection, and although Zurich has a USP contract and can offer this facility, it is not an area it is actively promoting.

He says: “Although there is quite a lot of business going on in this area, as it could be of interest to some individuals, there are concerns somebody taking a PCLS (Tax free cash) early, with say 10 years left to retirement, they may find they are left with a smaller fund than they imagined.”

shiredeon

interesting, thanks ed

shiredeon

i have contacted them, you are correct, they did say that their usp contract is with james hay and that there may be a minimum fund amount of 100k which could be a problem, also i wondered ,
(A)what would the fund be invested in ie what sort of growth or does it stagnate till you drawdown.
(B) as my collegue will continue with his contributions as he is younger and i am entitled to same so could i start a new pention with the contributions as i presume once i take the tfc i can no longer make contributions.

EdInvestor

LOL, you can't win,can you?

Let this be a lesson to anyone who thinks it's a good idea to put money into pensions.

Including you, shiredeon.

Titan

shiredeon wrote:

i have contacted them, you are correct, they did say that their usp contract is with james hay and that there may be a minimum fund amount of 100k which could be a problem, also i wondered ,
(A)what would the fund be invested in ie what sort of growth or does it stagnate till you drawdown.
(B) as my collegue will continue with his contributions as he is younger and i am entitled to same so could i start a new pention with the contributions as i presume once i take the tfc i can no longer make contributions.

I think the minimum fund of £100K is in order for Zurich to cover your fees... otherwise you have to pay your own fees.

a) You can invest anywhere you like if you are in a SIPP, otherwise you would have to invest in Zurich funds

b) Once you take your TFC on the whole of your pension then you cannot contribute further to that particular pension fund, you can allways open a new one and contribute up to age 75 (I think it's 75, but not certain about it)

EdInvestor

There exists something called "phased drawdown" where you don't take all the tax free cash, but leave a bit of it "unvested" ( say about 1k).This means you can continue to contribute to the Sipp. This would get around any nannying tendency to say you can't take the TFC because you might end up with a smaller pension when you're old. :rolleyes:

James Hay has an Esipp which is noteably cheaper than its main version.See if Zurich will let you into that.