Pension drawdown queries

ceegeekay

Thank you.
One thing has been on my mind since last night, which is, how do I go about any of this in a DIY way with two pensions? How can I put them together and get an annuity to later use as a flexible drawdown? I was beginning to think I could do most of this online myself but it sounds a bit trickier with 2 funds. Do I just arrange for both individually or is there some preliminary procedure for which I might need assistance?

And I'm trying to understand when you say I can get the initial 25% now so long as I set it up as an annuity but next year if I decided to use it flexibly it will automatically become that after April. Otherwise it remains an annuity from which I'll get pension payments? Am I understanding this correctly? So isn't it advisable to 'shop around' for annuity providers?

And forgive me if this should be clearer but you say you use BestInvest. Googling them just now they seem to be a financial advice service. Could they do this? Put the 2 funds together? I was led to believe further up that my funds are such I'd be of no interest to FAs.... So they would be free but charge £100 a year if and when I draw down anymore funds?

HarryD

Have a read up on the difference between an annuity which generally speaking pays you a fixed amount of cash each year (or a fixed amount that rises by an agreed percentage each year), and a pension pot that's invested in eg a unit trust. With a pot invested in say a unit trust you can decide how much income to take each year.

You could transfer both existing pensions into BestInvest or Hargreaves and combine them into one pot. Ring your existing providers to check on how (and if?) you can transfer.

Then you can take 25% cash from the one pot. The remaining 75% you could put into an annuity yielding a fixed amount of income (I wouldn't personally do this, but the guaranteed income may be what you need), or you can put the 75% into say a unit trust and take whatever income you like (the restrictions on income disappear next April). With Hargreaves you can manage you pension pot online - presumably it's the same with other providers.

Ring your existing providers, that will shed some light I am sure. And read the blurb on the Hargreaves site about pensions.

Linton

ceegeekay wrote: »

Thank you.
One thing has been on my mind since last night, which is, how do I go about any of this in a DIY way with two pensions? How can I put them together and get an annuity to later use as a flexible drawdown? I was beginning to think I could do most of this online myself but it sounds a bit trickier with 2 funds. Do I just arrange for both individually or is there some preliminary procedure for which I might need assistance?

And I'm trying to understand when you say I can get the initial 25% now so long as I set it up as an annuity but next year if I decided to use it flexibly it will automatically become that after April. Otherwise it remains an annuity from which I'll get pension payments? Am I understanding this correctly? So isn't it advisable to 'shop around' for annuity providers?

And forgive me if this should be clearer but you say you use BestInvest. Googling them just now they seem to be a financial advice service. Could they do this? Put the 2 funds together? I was led to believe further up that my funds are such I'd be of no interest to FAs.... So they would be free but charge £100 a year if and when I draw down anymore funds?

1) Set up a SIPP with your favoured supplier and fill in their forms to request a transfer-in. Wait for it to happen.

2) You then take drawdown using another form and receive the 25%. You dont have to drawdown any further money until you wish. Or sometime later you could take an annuity.

3) BestInvest offer different levels of service. The basic has no advice. Just click on "pensions" on the menu bar and then look at SIPP info. I use BestInvest and am happy with them but you will have to judge which is best for you. Different online brokers target their offerings for different pot sizes/type of assets etc and have different facilities on their websites.

ceegeekay

Thank you.
I will be wanting a flexible setup and I realise my first move has to be to phone my pension providers first and make sure I can do everything in the way I need.
I will look into all the suggestions and unless I come upon an obstacle with the 2 pots I have I'm sure I'll get this done.
Thnks for your time again. Most helpful.

kidmugsy

ceegeekay wrote: »

And does anyone know of a comparisons website for capped drawdown pension providers?! Do they exist?! Or are they likely to be much of a muchness?

Check the monevator blog, and the Lang Cat website.

After your TFLS you'll be left with about £35k: that's within the range where Hargreaves Lansdown aren't too pricey, so they may be a decent place. I certainly rate their service highly.

ceegeekay

kidmugsy - I've had a look at those blogs. Very interesting. Also, as a subscriber to Which I found out they had a financial helpline. Had a chat with them and they more or less backed up advice here.

They mentioned Hargreaves Lansdown too. Seems many people have been happy with their service. As was I several years back.

And it might be I can keep that tax down if I get capped drawdown and use it carefully. It's something to aim for!
I find it galling that I my original contributions were from taxed earnings. Then we have to pay tax again to use our own money.
I sometimes wonder whether keeping savings in a tin under the mattress was such a stupid idea after all!

HarryD

Actually the money you put in wasn't from taxed earnings. You will have paid no tax on money you put into your pension.

mgdavid

ceegeekay wrote: »

......
I find it galling that I my original contributions were from taxed earnings. Then we have to pay tax again to use our own money.
......

Pension contributions are - and always have been in living memory - completely free of tax. How did you not know this?

ceegeekay

Do you really want to know the answer to that question? Since you took the trouble to post the question you must do....
I find finances deeply boring.
Would you like an art history question now?! Or are you looking for an opportunity to do a bit of mansplaining?
Not that anyone on these forums ever does any of that of course.....

Why not keep things respectful?? As I so often force myself to do.

mgdavid

ceegeekay wrote: »

Do you really want to know the answer to that question? Since you took the trouble to post the question you must do....
I find finances deeply boring.
Would you like an art history question now?! Or are you looking for an opportunity to do a bit of mansplaining?
Not that anyone on these forums ever does any of that of course.....

Why not keep things respectful?? As I so often force myself to do.

We could have a good debate about the relative usefulness of basic financial knowledge versus the history of art. I had to look up 'mansplaining'; did you intend the old or new meaning?

"Originally, this term was used to describe boorish men who felt the need to 'correct' what a woman said, even on topics that the man didn't know anything about.
However, the term quickly degenerated into a get-out-of-jail-free card used by angry women when a man dares to point out even the most blatant error."

Best left I think; back on topic, it's important to get the details of your workplace pension - is it a Defined Benefit (aka final salary type) or Defined Contribution? If the former it is far more difficult to transfer it into a drawdown pot, and is in the majority of cases a bad thing to do, which is why IFAs are reluctant to sign it off. If it's DC then as others have said it's relatively straightforward to DIY.
I've recently set up a SIPP with Charles Stanley Direct and transferred three former employers' DC or Stakeholder pots into it. Slightly tedious to do all the forms but not difficult.
IIRC there's a poster called Snowman who maintains a good spreadsheet comparing the costs of SIPP providers, hopefully someone will be along with a link for it soon.