flexiaccess draw down

NightNurse24

I took early retirement last year and am in receipt of an NHS pension. This is adequate for my needs. In addition I have been paying into an AVC fund for some years, and have not as yet accessed it. With the new laws relating to pension I have decided that I'd like to access my £60,000 pot as rapidly as possible whilst remaining within the lower tax bracket, I am of an eligible age. Having read around the topic I believe that flexi drawdown is the way to go, but have no knowledge of how to go about this and realise that I need IFA. Having approached an IFA he has informed me that to set up the fund for me, which will require a transfer from my existing provider as they do not provide flexi drawdown, will cost £2250. My question is what do people think to this sum? Is it par for the course, or do you think I should be paying less? Their usual fee is 3% of the pension pot, but with a minimum cost of £2250, which is where this figure comes in for me. The company in question has been recommended via an NHS retirement seminar. Any opinions gratefully received.

xylophone

If it is just the mechanics of drawdown, that is the problem, you might consider a transfer to a SIPP with the likes of Hargreaves Lansdown which would make the process simple?

At all events you could ring and explore the option?

http://www.hl.co.uk/pensions/drawdown

Or perhaps Fidelity? https://www.fidelity.co.uk/investor/retirement.page

There are others - http://www.ftadviser.com/2015/03/23/ifa-industry/companies-and-people/another-provider-unveils-post-april-pricing-ANAJUYHMqJQJydqxvKaxEJ/article.html

You could draw a 25% tax free lump sum and then calculate how much to draw down to stay within the basic rate band thereafter.

You can choose whether to stay in cash or invest in funds etc.

Hargreaves do not charge to stay in cash and do pay a small amount of interest.

You might choose to keep some in cash (perhaps the amount you hope to draw down in the next tax year) and the rest in acc units in the fund of your choice, selling when you wish to take the next lump of income?

dunstonh

My question is what do people think to this sum? Is it par for the course, or do you think I should be paying less?

It is fairly typical.

The problem with retirement income options at the moment is that they are currently sitting in a high risk situation. The regulator has historically treated drawdown as high risk. As has the ombudsman. Effectively a niche transaction for a small part of the market. The Govt has come along and turned it into mainstream and told people to buy a Lamborghini. However, the regulator and ombudsman has not issued any guidance or clarification on how they will be treating it in future.

So, effectively, it is still being priced as a higher risk transaction due to fears of claims companies generating complaints later and the FOS and FCA still treating them as high risk/niche transactions.

The company in question has been recommended via an NHS retirement seminar.

That may also explain why the cost is higher.

EdGasket

Just transfer it to AJ Bell Youinvest (forms available on their website) which is free. Then start your flexi-access drawdown. No need to pay anyone other than the provider's fees but they are nothing like the ££££'s you have been quoted.

Also compare AJ Bell with Hargreaves Lansdowne, as suggested, because they don't charge anything for flexi drawdown but instead make a % charge on the fund each year. Which one works better for you depends on the fund size and what withdrawal options you choose. Also take advice from the free pension advice line.

EdGasket

xylophone wrote: »

Hargreaves do not charge to stay in cash and do pay a small amount of interest.

Really?? Someone else said they don't charge for drawdown either (and this seems to be right according to their website) so how would they make any money? They are not going to provide this service for free? I am with AJ Bell Youinvest who have a whole raft of charges for entering drawdown and for withdrawals( however they have a fixed annual charge against the pension itself which is a lot less than HL over the years in my case.) How can one provider do it for free and another seemingly charge quite a lot?

xylophone

http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

sandsy

EdGasket wrote: »

Really?? Someone else said they don't charge for drawdown either (and this seems to be right according to their website) so how would they make any money? They are not going to provide this service for free?

From the link provided by xylophone, it looks like there's a charge of 0.45%pa for the SIPP wrapper.

jamesd

If you want to save money you could consider a transfer to a DIY platform then starting income drawdown before you ask an IFA. Since it's already in drawdown that may reduce risk and IFA cost.

maximumgardener

NightNurse24 wrote: »

I took early retirement last year and am in receipt of an NHS pension. This is adequate for my needs. In addition I have been paying into an AVC fund for some years, and have not as yet accessed it. With the new laws relating to pension I have decided that I'd like to access my £60,000 pot as rapidly as possible whilst remaining within the lower tax bracket, I am of an eligible age. Having read around the topic I believe that flexi drawdown is the way to go, but have no knowledge of how to go about this and realise that I need IFA. Having approached an IFA he has informed me that to set up the fund for me, which will require a transfer from my existing provider as they do not provide flexi drawdown, will cost £2250. My question is what do people think to this sum? Is it par for the course, or do you think I should be paying less? Their usual fee is 3% of the pension pot, but with a minimum cost of
£2250, which is where this figure comes in for me. The company in question has been recommended via an NHS retirement seminar. Any opinions gratefully received.

Hi - well done on achieving your £60k
as others have posted AJ Bell , HL and Fidelity all offer good choice reasonable fees and some pointers for the DIY route.
I d say that your fee quoted at £2250 is very steep for £60 k arrangement of drawdown. so shop around a bit ask friends / get personal recommendations. you should get something for 1% max.
good luck.
a lot will depend on the rate that you will plan to deplete your fund. you may wish to phase it over 5 to 10 years. everyone is different!:beer: