Should I defer pension until 2015 ?

Savvy_amateur

dunstonh wrote: »

It requires calculating.



What commission are you referring to as there is no commission payable.?


Sorry. I meant her agreed fee for arranging the annuity. I really dont want to see her out of pocket as she has done the work finding the best annuity. Neither of us expected this and its a difficult situation.

Savvy_amateur

Go for a drawdown. Your adviser fee is due whatever you choose, bynthe sounds of it, so that's not the issue here[/QUOTE]

Thanks. I understand we do not have a big enough pot to qualify for a drawdown. ( FA told me this ).

Savvy_amateur

Savvy_amateur wrote: »

Go for a drawdown. Your adviser fee is due whatever you choose, bynthe sounds of it, so that's not the issue here

Thanks. I understand we do not have a big enough pot to qualify for a drawdown. ( FA told me this ).[/QUOTE]
At least not as the law currently stands.
I wonder if defering til 2015 is best option to give us breathing space, as my retirement date is imminent. Annuities may give better returns by then if taking all pot is not the best option.

dunstonh

Thanks. I understand we do not have a big enough pot to qualify for a drawdown. ( FA told me this ).

Under current rules, the regulator still considers drawdown high risk and only suitable for larger amounts or where people have sufficient guaranteed income to be able to afford risks with their retirement income.

The budget proposals about people being responsible is the complete opposite of the views of the regulator and ombudsman. So, it is going to be very interesting how advisers handle this.

Annuities may give better returns by then if taking all pot is not the best option.

If anything, annuity rates will fall as the cross subsidy pool reduces and mortality gain goes down.

atush

Triumph13 wrote: »

In this situation my first instinct would be to move the pot to somewhere that allows drawdown, take the 25% lump sum then just take enough each year to use up your personal allowance. The balance can stay invested for the next 12 years in much the same investments as it has been for the last ten.

That would be my assessment. Or you could wait til next year as you dont' need the money now? Maybe just for the free advice, which might be different (with different products) by then?

atush

Savvy_amateur wrote: »

Thanks. I understand we do not have a big enough pot to qualify for a drawdown. ( FA told me this ).

Your pot is big enough for DD. Many providers would take a pot of 75K at DD. I looked for one for a pot of 34K and found it harder, but knew some started at 50K.

I am wary of your advisor. I would defer until next year if you don't need the money. You might still go with an annuity, but then again maybe not.

dunstonh

Your pot is big enough for DD. Many providers would take a pot of 75K at DD. I looked for one for a pot of 34K and found it harder, but knew some started at 50K.

The lowest I know is £3600.

I am wary of your advisor. I would defer until next year if you don't need the money. You might still go with an annuity, but then again maybe not.

I am not as concerned about the adviser as you. I suspect the problem is internal compliance. It is a high risk transaction needing the person to show a tolerance to loss on investments and a volatility in income and capacity to afford that. Small pots are notorious for causing compliance issues. I do think the regulator is behind the times and yesterdays proposals are at complete odds to how the FOS and FCA view individuals (which is largely that they are stupid unless proven otherwise).

Someone describing themselves as risk averse is typically someone that should not be using drawdown. How the 2015 rules will be perceived under regulation is anyones guess.

atush

Yes, I agree in the main, but she said their pot did not qualify for DD and that was plainly incorrect.

For this alone I wouldn't touch her.

dunstonh

atush wrote: »

Yes, I agree in the main, but she said their pot did not qualify for DD and that was plainly incorrect.

For this alone I wouldn't touch her.

The old £100k after tax free cash rule could still be used by them.

http://citywire.co.uk/new-model-adviser/how-drawdown-questionnaire-reveals-the-mind-of-the-fsa/a561276

Financial services is fast moving. Regulator is slow and inconsistent and the ombudsman is liberal and does not believe in personal responsibility. Advisers have to pick up the bill when things like this happen:

http://www.thisismoney.co.uk/money/pensions/article-2064926/Horror-tens-thousands-middle-income-savers-drawdown-pension-plans-plunge.html

Personally, I would probably have put it better to one of my clients than just saying that they did not qualify for DD as that is technically not true (unless it is a tied agent in which case it may be true for them). However, I would aim to put the person off unless I was really satisfied that it was the right thing to do. A compliance check on someone saying risk averse and having a pot under 100k is just screaming out compensation payout.

With small pots (sub 100k) I am more inclined to say that its not worth the risk, put my case and say if they want to do it then go DIY with HL or someone like that. Hopefully, these new rules from next year will put an end to the compliance and nanny state approach.

sandsy

Just another thought...


Is your adviser's fee conditional on your purchasing the product or do the terms of the adviser agreement mean you have to pay whether you proceed or not? If conditional, that could explain your adviser's encouragement that you proceed and I'd be particularly wary in that case.