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Protected rights / HL Sipp

I am looking to a solution to my protected rights portion of my pension. My pension is currently with Halifax with 20% protected. I am looking to transfer all to a HL Sipp in order to do drawdown (it has a value in excess of 100k before protected rights are added). I have been advised by Financial Adviser that I cannot transfer the protected rights at present, unless I move all to somewhere like Norwich Union/Standard life when I will be able to take drawdown on full sum including protected rights. My protected rights portion is less than 100k so if I leave protected rights portion with Halifax, when govt make changes I cannot then move it to a SIPP and obtain drawdown because it is below the 100k threshold for SIPPS. There must be many people like me with this problem. Any idea when govt will change law, because if its likely to be within next 6 months may as well wait in order that the total of my pension is put into HL SIPP. I am looking to try and take my drawdown money this tax year.:cool:

Comments

  • dunstonh
    dunstonh Posts: 118,574 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Why not use a drawdown provider that takes protected rights?

    Selestia, Transact, Scottish Widows and others all do it.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    There is no 100,000 threshold for SIPPs. There was a recommendation that people not do income drawdown if they have a total pension fund value below 100,000 but that has been withdrawn and now says small sizes instead. Since your total pension fund value is over the 100,000 suggested minimum it doesn't apply to you.

    Pure SIPPs like Hargreaves Lansdown can't currently take protected rights money but hybrid SIPPs can and that appears to be what your adviser has suggested to you.

    If you do want to manage the money yourself in the Hargreaves Lansdown SIPP in drawdown I suggest that you transfer just the non-PR portion at the moment and wait a year or so to see if the anticipated changes happen and allow a pure SIPP to hold PR money.

    If your financial adviser is managing the investments for you, just go with what they suggest. HR is only of value if you want to manage it yourself. It's not the cheapest provider and it's likely that your can completely pay for the costs of investment management with the savings you get by not using Hargreaves Lansdown, given your likely total pension fund value.

    I expect that an IFA using new model basis like dunstonh would be happy to have you as a customer and deliver sector allocation based on your risk preference, annual rebalancing and review of fund choices if managers change at no out of pocket cost to you. Possibly a small rebate on the annual management charges of the funds from the IFA, unlike Hargreaves Lansdown's SIPP, which doesn't discount them - depends on how much renewal commission the IFA gets and the totalvalue of the pension fund.

    It seems eminently viable for you to be significantly better off financially by not using HL at your fund size.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    Hi denlar

    Could you just clarify the value of the 2 bits of the fund, PR and non-PR?

    The Govt has stated clearly that it will allow PR money into SIPPs, but not yet clear when, next year looks likely.

    The best thing to do might be to move the non PR money to HL and put it into drawdown now.

    The PR money could remain invested at the Halifax, awaiting the change in the rules, or be moved to Selestia, which, according to dunstonh, will take small PR funds for drawdown.I have my doubts however about the costs of this option.

    Note that if you split the fund now, it is always possible to move the separate bits to a different provider (eg Standard life) later, placing the larger part of the money in the SIPP and the other in insured drawdwon.There is however no need to incur the excessive extra charges for that offering right now.
    Trying to keep it simple...;)
  • dunstonh
    dunstonh Posts: 118,574 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    The PR money could remain invested at the Halifax, awaiting the change in the rules, or be moved to Selestia, which, according to dunstonh, will take small PR funds for drawdown.I have my doubts however about the costs of this option.

    It can be cheaper than HL. As indeed can Scottish Widows fund supermarket version. HL do not discount the fund based trail commission in any way. Both Selestia and Scottish Widows can. Scottish Widows is generally priced for larger funds though but can be good for cautious investors.
    Note that if you split the fund now, it is always possible to move the separate bits to a different provider (eg Standard life) later, placing the larger part of the money in the SIPP and the other in insured drawdwon.There is however no need to incur the excessive extra charges for that offering right now.

    Seems a bit pointless splitting your pension up into a solution that doesnt do what you want when there are perfectly valid options available which are cost effective and seeing as 90% of SIPPs since A day have gone into unit trust funds, there are options available today that do that.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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