Pension - Flexible Drawdown

Travel-buddy

Hello, I am a male who took early retirement at 60, expects to reach state pension age (65) next April and will be entitled to a full state pension.
I currently receive a pension from my employer in access of £20kper annum.
I also have a Section 32 pension plan with Aviva, which becomes available next April, the minimum amount of the fund will be £36k. So in parallel with assessing annuities, AVIVA have also made me aware ofalternatives such as Flexible Drawdown, which looks good to me as I would like to take custody of the £36k as soon as possible, for example:
1) Initially take a 25% tax free cash lump sum
2) Drawing down the balance say over 8 to 9 years to minimise PAYE at the 20% rate.
The Aviva website indicates that for a Flexible Drawdown, they will not deal with me direct and that I must use a Financial Advisor who would act on my behalf.
There are websites offering fixed price charges for processing a Flexible Drawdown option, but I am wary that these charges are just for their work alone.
I therefore anticipate Flexible Drawdown is going to be acostly affair with each partly i.e. Aviva, The Financial Advisor and probably other Investment providers all making a charge against the pension pot.
So is there anyone out there who can advise me as to what are the steps and their associated costs, with a Flexible Drawdown option, for example say starting from the initial contact with a Financial Advisor, obtaining the initial cash lump sum, then through the 8 to 9 yearly draw downs and finally, the closure of anyassociated financial investments.
Thank you.

xylophone

Could you simply transfer to a SIPP with the likes of HL? http://www.hl.co.uk/pensions/sipp/transfer-to-the-vantage-sipp

dunstonh

I also have a Section 32 pension plan with Aviva, which becomes available next April, the minimum amount of the fund will be £36k.

Are you perhaps misreading the guarantee? A section 32 will often have a GMP which relates to income. If the fund is insufficient to meet the income, then the provider has to pay the income and take the hit. It does not have to increase the fund value on a transfer out as the GMP will be lost on doing that.

I therefore anticipate Flexible Drawdown is going to be acostly affair with each partly i.e. Aviva, The Financial Advisor and probably other Investment providers all making a charge against the pension pot.

But probably still cheaper than the charges on the existing plan.

Travel-buddy

XYLOPHONE - Thank you for your feedback. I’ve had a look at this website / option and on a first pass of the Vantage SIPP key features offered by Hargreaves Lansdown Asset Management (HLAM) I can see they offer to:

1) Transfer in from another fund (@zero cost)

2) Allow you draw an income directly from your fund through income drawdown (@zero cost)

3) Take a tax-free lump sum normally up to 25% of the value of your fund (@zero cost)

4) Management charges - maximum charge of £200 per year.

There is of course the risk that invested funds will fluctuate. The types of investment instruments offered are mainly Stocks/Shares/Investment Trusts/Unit Trusts, but they do indicate that others available. So to minimise risk over say a 9 year drawdown period I would need to identify a safe haven with HLAM.

DUNSTONH - Also my thanks for your feedback. With regard to the Section 32 projected value quoted byAviva. I can only confirm that Aviva have written to me quoting that the minimum amount of the policy next April will be £36k and this may increase dueto the addition of a final bonus, however a final bonus is not guaranteed.

Regardingthe comparison of future charges to those incurred against the existing plan. I took out the Section 32 policy with the then Norwich Union, as I had just changed employment and admit to a big mistake of transferring my employment pension of 5 years. Since then I have made no further contributions and seen zero growth for decades. So yes you are probably right in saying that future charges will be cheaper.

Finally to everyone who reads this thread. Just to add that at this point in time I do not need to convert this Section 32 policy into an annual pension for life. I would rather take the value as soonas possible, so my goal is to define a schedule of events, estimate costs and go for it!.

dunstonh

DUNSTONH - Also my thanks for your feedback. With regard to the Section 32 projected value quoted byAviva. I can only confirm that Aviva have written to me quoting that theminimum amount of the policy next April will be £36k and this may increase dueto the addition of a final bonus, however a final bonus is not guaranteed.

In which case you need to find out if there are GARs and/or GMPs as they would be lost on transfer.

Since then I have made no further contributions and seen zero growthfor decades.

Which would suggest GMP and/or GARs exist.