New pension reforms not so good for small pots?

matty17r

After reading article in Daily Mail it advised that if you wanted to cash in your pension in April start the process now as they will be overloaded. Spoke to Aviva this morning and because my pension pot is under 30k after the lump sum no drawdown is offered. Does anyone know if I could transfer this to any other company that can offer drawdown on smaller pots. I do not take want to take ana annuity and if I take the whole lot in one go I will be liable to tax even though I only have very small earnings. Thank you in advance for any help offered.

kidmugsy

matty17r wrote: »

Spoke to Aviva this morning and because my pension pot is under 30k after the lump sum no drawdown is offered. Does anyone know if I could transfer this to any other company that can offer drawdown on smaller pots.

(i) Check whether Aviva will charge you for a transfer.
(ii) Visit the Hargreaves Lansdown website, and perhaps phone too, to see whether their SIPP would suit you.
(iii) Check the websites of Monevator and The Lang Cat to see whether there's another provider you might prefer to HL. Our experience of using HL for drawing down modest pensions towards extinction has been good.

dunstonh

New pension reforms not so good for small pots?

Small pots are largely unaffected by changes in April.

Spoke to Aviva this morning and because my pension pot is under 30k after the lump sum no drawdown is offered.

Although other providers are available and Aviva do offer a contract that allows it. Just probably not the contract you are on and either an internal transfer would be needed or an external one.

Does anyone know if I could transfer this to any other company that can offer drawdown on smaller pots.

yes.

matty17r

Can I just add this bit of info? I took early retirement in June this year drawing MY lgps pension early at 60. Could I still add some money to my Aviva stakeholder leaving in the £30k required after drawing TFLS or would this be pension recycling as I am already taking my LGP? Thank you so much for all the helpful replies. I will look into what you are saying.

kidmugsy

matty17r wrote: »

I took early retirement in June this year drawing MY lgps pension early at 60. Could I still add some money to my Aviva stakeholder leaving in the £30k required after drawing TFLS or would this be pension recycling as I am already taking my LGP?

The recycling rules are there to constrain recycling of a lump sum from a pension. Did you take a lump sum from the LGPS?

matty17r

Yes but only a 3 figure sum took a higher pension which was better value.

kidmugsy

matty17r wrote: »

Yes but only a 3 figure sum took a higher pension which was better value.

Then you are OK: that's a sum so small that it passes all the tests. So the recycling restraints don't apply to you.

jamesd

matty17r wrote: »

Spoke to Aviva this morning and because my pension pot is under 30k after the lump sum no drawdown is offered.

That's their business choice. It's possible to enter capped income drawdown today using that size of pot at other places, though the value is low enough that it won't be very cost-efficient and your best move would probably be to take it out as fast as tax efficiency allows to reinvest the money in a S&S ISA, even the same investments if you like. S&S ISAs generally have lower administration costs than SIPPs.

matty17r wrote: »

Does anyone know if I could transfer this to any other company that can offer drawdown on smaller pots.

Yes, no problem at all.

matty17r wrote: »

I took early retirement in June this year drawing MY lgps pension early at 60. Could I still add some money to my Aviva stakeholder leaving in the £30k required after drawing TFLS

Where does "the 30k required after drawing TFLS" come from? Has someone claimed you have to keep that much in the pension for some reason?

Yes, you can still pay money into pensions until you are 75. You'll get the usual tax relief though since you won't have any earned income you will be limited to £2880 net, £3600 gross contribution each year. Except the 2013/14 tax year because you retired in June so probably had more than that in earned income this year.

Pension recycling is not barred. There are limits on how much lump sum recycling can be done but no limits on income recycling.

matty17r

Update on my case. I have rung HLansdown. They do not have any costs associated with flexible drawndown as from April as these are still being discussed. No charges for transferring in to HL or out of Aviva. If we wish to consider flexible drawndown Aviva said we will need an IFA which on such a small pot is it worth it? I also discussed topping up my pot to leave in £30k which Avivia told me this morning I needed to have for flexible drawndown. I have some earnings from my LG employment april, may and june plus some self employed earnings and was told that I could put 100% of this into my stakeholder pension not to exceed £40k. I think I am now even more confused than this morning. Not sure if I need an IFA for HL. They will offer flexible drawndown from april from just £1k pots but figures not released yet for charges. Please any more advice? Thank you all for reading. My head is buzzing makes kangarooing currrent accounts easy(lol).

gadgetmind

matty17r wrote: »

I also discussed topping up my pot to leave in £30k which Avivia told me this morning I needed to have for flexible drawndown.

Um, what?

The £30k is the *upper* limit for withdrawing the lot under triviality rules, which I don't think you qualify for. For flexible drawdown, you need £12k of guaranteed (DB pension, annuity, etc.) income, which you don't qualify for either.

All you can do is wait until April (plus a while for things to settle down) and then use the new flexi drawdown that (some) platforms will provide.

gadgetmind

Or maybe Aviva don't allow capped drawdown for <£30k, but I don't think you want that either at this stage.