when and where to move pensions for drawdown

jamesd

That timescale should be OK for some pension providers, don't know about yours.

snowcat53

Hi - an update and a follow up query.
I contacted FP and L&G re their rules and plans on drawdown.

FP - require minimum of 70k in fund to drawdown (i have 40k) . No plans to reduce this. They make a surrender charge (about £83) if you close to move out.

L&G - drawdown not possible on stakeholder, and no plans to change this. On other pensions they only allow on pots above 100k (i have 90). They also require it to be signed off by an IFA.
(This last seems iniquitous - it is to cover themselves but the customer has to pay. How many companies insist on this?)
No charges to close/move out

So my options to allow drawdown are
1) move L&G into FP
2) move FP and L&G into a new L&G personal pension, and pay an IFA
3) move both into a SIPP.

Any thoughts? would any/all incur other extra charges ?
I am likely to consult an IFA at some point anyway re choice in investment funds in retirement so perhaps that would not be an extra cost in 2)
I'm favouring 3) at present though i can still wait awhile.

Many thanks

dunstonh

So my options to allow drawdown are
1) move L&G into FP
2) move FP and L&G into a new L&G personal pension, and pay an IFA
3) move both into a SIPP.

4) move the pensions into an alternative provider (either via an IFA or DIY)

I am likely to consult an IFA at some point anyway re choice in investment funds in retirement so perhaps that would not be an extra cost in 2)
I'm favouring 3) at present though i can still wait awhile.

If you are going to use an IFA then let the IFA do the transfer. I personally wouldnt use L&G or FP for drawdown as I feel there are better and cheaper options. If you use a SIPP provider that focuses on DIY (like HL) then they keep the IFA remuneration despite not giving advice. So, if you get advice you will end up paying twice.

[Deleted User]

sippdeal. I moved just 26k into a sipp with them in 2006. I left it there, invested, until 2008 when I vested the pension and took 25%, It had grown by then. I then had approximately 26k left (after the 25% )and went into fixed interest pibs and so on, the interest gives me well over my maximum drawdown so I get the drawdown every year plus my pot is growing. Pot is now valued at 34k and I have had 3 drawdowns at maximum

Very easy to set up and no ifa needed in my case

edit: just to add that I also did it for my husbands company pension and vested that two years ago. Not rocket science

snowcat53

dunstonh wrote: »

4) move the pensions into an alternative provider (either via an IFA or DIY)

.

What are the advantages and disadvantages of using an alternative provider vs a SIPP?
I would expect not to be changing /switching funds much.

snowcat53

kittie wrote: »

sippdeal. I moved just 26k into a sipp with them in 2006. I left it there, invested, until 2008 when I vested the pension and took 25%, It had grown by then. I then had approximately 26k left (after the 25% )and went into fixed interest pibs and so on, the interest gives me well over my maximum drawdown so I get the drawdown every year plus my pot is growing. Pot is now valued at 34k and I have had 3 drawdowns at maximum

Very easy to set up and no ifa needed in my case

Thanks for that. SIppdeal though seem to have quite a few miscellaneous charges - £150(+vat) to set up income drawdown plus £75 every year (£250 a year over age 75), 75 to set up flexible drawdown etc. Are they cheaper in other respects?

dunstonh

What are the advantages and disadvantages of using an alternative provider vs a SIPP?

A SIPP is a product offered by an alternative provider. There are also personal pensions and drawdown plans offered by alternative providers. Which is best would depend on how you want to invest and how you intend to run the drawdown. The investment strategy you intend to use for drawdown may well impact on who you should use.

snowcat53

Ah - thanks dunstonh, sorry fpr confusion . In my option 3 I did mean using an alternative provider (not L&G or FP) for the SIPP but I guess I should consider a standard personal pension allowing drawdown also.

snowcat53

I am now wondering about whether I could go the DIY route. I have done this for the last 10 years on the growth funds (once i realised the ones I was in were poor performers), i am confident about transferring pensions/ setting up a SIPP, and sorting out drawdown. But what I don't much know about is selecting funds for income (good performance and which keep charges low). Any good reading suggestions/sources on this?

Are the same funds available to DIYers as to IFAs?

gadgetmind

snowcat53 wrote: »

But what I don't much know about is selecting funds for income (good performance and which keep charges low).

Neither does anyone else, despite what they say. And don't go thinking that because you're going for drawdown that you need investments that generate income because it's total return that matters. I intend to make close to zero changes to my asset allocation as I approach retirement age nor when moving to drawdown.

Any good reading suggestions/sources on this?

My usual recommendation is "Smarter Investing" by Tim Hale. Well worth the time and money IMO.

Are the same funds available to DIYers as to IFAs?

No, but this isn't something I let concern me. That 30,000* funds are trying to get me to choose them to invest in a far smaller pool of assets just shows that fund management is a good business to be in. I prefer to get closer to the underlying investments, which helps remove both risk and cost.

I currently have most of my investments in trackers (Blackrock and Vanguard) for reasons that will become clear if you poke your nose into the book I mentioned above.