small pension fund

x9J3Nb

Hi,
Pension fund just over £20,000.
65 years old.
Is there any legitimate way to reduce this to below £18,000 so I can draw cash.
A reputable IFA agrees it would be in my best interests to do so but their compliance dept. say no to charging abnormally high fees for advice.
Thanks for any help.
D

Lokolo

Invest in something really high risk and hope it drops by 10%?

dunstonh

A reputable IFA agrees it would be in my best interests to do so but their compliance dept. say no to charging abnormally high fees for advice.

That is the position my compliance suggests as well. Whilst the FSA set no rule or guide on the level of a fee, it would have to be reasonable and a 10% fee would not be reasonable.

As Lokolo says, using a high risk fund may be the best option. If it goes down to £18k you get your objective. if it goes up then at least you get more.

Lokolo

Can you "overrule" an IFAs risk assessment?

If the OP has used the IFA services and everything has been set up, and the OP was, for example, classed as medium risk, this wouldn't help the OP in this situation. Could the OP then say "actually I'd rather you invest in higher risk funds"? Or could that still set the IFA up for a beating in court?

mania112

Before Retirement transfer your pension to another provider and allow the IFA to take enough charges to fall below the limit.

x9J3Nb

@Lokolo Nothing is set up, just had the problem looked at and transfer documents sent.
@mania112 enough charges is the problem that compliance comes up against.
the irony is that the random fund has performed really well, if it had performed averagely no problem. (averagely) is that even a word?
A poorly performing, as opposed to high risk, fund would be an option but not ideal regarding time frames.
Is there any reason why the fund could not be transferred from one fund to another racking up charges at each transfer, preferably with the same IFA as they have been very helpful? I expect that would have to be on an execution only basis.
Another snag is that it has a pretty generous guaranteed annuity
Thanks for any help

GhIFA

Multiple transfers over a short period would also not get past most compliance departments.

What level are the guaranteed annuity rates?

x9J3Nb

returns about 7½% I think.
thanks

gadgetmind

x9J3Nb wrote: »

Is there any legitimate way to reduce this to below £18,000 so I can draw cash.

My understanding is that if your pension company allow partial transfers out, you could move (say) £1.5k to each of two other pensions as these would then be less than £2k each and could therefore be drawn down under the stranded pot regulations.

What's left can then be removed under triviality. If this pot is split down again, it could be taken over two tax years but both must be taken within one year of each other.

http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0285

Finding pension providers to make this work might not be easy but isn't that you pay IFAs for?

Quite why there should be an issue with you drawing the money in one go I'm not too sure other than because it will be worse for you from a tax POV unless done with care.