Pension 25% lump sum

newhorizons

I've just been in contact with Standard Life to tell them I would like to take my lump sum and leave the rest until I decide my next move. I'm considering flexible drawdown but I haven't decided where to put my fund yet. I've been informed I cannot take the lump sum until I close my two funds.
Is this true?
Is there no way I can leave my fund where it is for now and just take the 25% until I have time to see a financial advisor.
I don't want to move the fund and incur fees and tie my fund up until I've studied my options properly. I really don't want to rush this decision but need the 25% as I'm moving house in early August.

dunstonh

I've been informed I cannot take the lump sum until I close my two funds.
Is this true?

To take the lump sum now, you are crystallising the benefits. You are asking them to either do flexible drawdown or capped drawdown now. If the pensions are you in do not cater for that then you would have to transfer them to one that does. So, it is probably correct what they are saying.

Your_Hero

As above what dunstonh said. Standard Life probably can't facilitate income drawdown, i.e. your pension policy/their system only allows the traditional annuity + lump sum route.


You may need to transfer it out to a provider who can do income drawdown. Do check to ensure you aren't losing any guarantees with your current pension though.

PensionTech

*cough*

I've been saying this for a while: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/324932/Govt_NC13_and_NS_5_pension_flexibility_further_amendments.pdf

Theoretically it should be possible (at least when this is passed) to take your lump sum now and leave the rest of your benefits where they are until October 2015 - and you could even transfer the rest elsewhere before taking them, if you really wanted.

The impression I've been getting is that providers are reluctant to offer this because of admin complexities but it is worth at least asking SL if they are aware of the Govt proposals on taking lump sums and leaving the rest of the benefits for an extended period of time (even current legislation allows for them to be left for 6 months) and whether they have any options to allow you to take advantage of that.

Your_Hero

PensionTech wrote: »

*cough*

I've been saying this for a while: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/324932/Govt_NC13_and_NS_5_pension_flexibility_further_amendments.pdf

Theoretically it should be possible (at least when this is passed) to take your lump sum now and leave the rest of your benefits where they are until October 2015 - and you could even transfer the rest elsewhere before taking them, if you really wanted.

The impression I've been getting is that providers are reluctant to offer this because of admin complexities but it is worth at least asking SL if they are aware of the Govt proposals on taking lump sums and leaving the rest of the benefits for an extended period of time (even current legislation allows for them to be left for 6 months) and whether they have any options to allow you to take advantage of that.

Although it may be allowed, there is no obligation for providers to facilitate this. The cost to implement would be too great. They would simply ask you to transfer out if you wanted drawdown and find someone else who can (plenty of "modern" pension plan providers who can do this).


Similar to how it was even before the budget was announced, many older plans simply were not built for drawdown, so they aren't going to change that now unfortunately.

dunstonh

Theoretically possible and actually possible are two different things.

A stakeholder pension, for example, is limited in what it can do by design. A legacy pension set up years ago is limited by what it can do by software and the desire of the company to spend millions of pounds to facilitate an option that is only going to be valid for a short period amd only taken up probably by a handful of people. Those people could transfer the pension to one that does.

It has been acknowledged that the providers don't have to offer the extra options on their pensions.

The rules allow for every annuity to be unwound. Yet barely any will consider unwinding an annuity. The rules allow for people to have the tax free cash taken from one pension and the income from another. Yet you only tend to see that on AVCs linked to a main scheme with a minority of providers.

PensionTech

It has been acknowledged that the providers don't have to offer the extra options on their pensions.

Of course. Simply saying it might be worth asking SL if they do have any options for the OP.