AVIVA say I must use an IFA

iwannbejockmctavish

I have recently contacted my pension provider, Aviva, to request information on access to my pension in order to take some of the 25% tax free lump sum. I was sent an information pack and a telephone number to contact. The information I got from them was that I could only access my tax free portion if I made arrangements through an IFA, I could not just request to withdraw any money. Could anyone advise me if this is correct? Can I not sign a disclaimer? I do not intend to use any other money from the fund and intend to leave it untouched until I reach normal retirement age. I feel a bit miffed if I have to pay additional money to gain access to MY money that Aviva won't let me have. Anything helpful will be much appreciated, and sorry if this question has been asked several times over!!!

TadleyBaggie

This is normal, you can't take the 25% and leave it where it is. By taking the 25% you are effectively starting the pension process, so the remainder will need to be exchanged for an annuity or reinvested as a drawdown pension. I did the latter (via an IFA) but opted to take zero drawdown.

Due to good investment advice the pot has grown well past the original amount before the 25% was taken out. I have a number of other PP pots and will be doing the same in the next few years.

Linton

The question has been asked many times before. Strictly speaking it isnt your money, its money held in trust for you. Zealous regulation or the risk of zealous regulation is helping ensure that some pension companies are wary about people taking actions that they may regret some time in the future. The other possibility is that your pension was sold on the basis of servicing via an intermediary and that you arent paying for personal service from Aviva.

Either way if you arent getting the service you want from Aviva you would probably have no difficulty transferring the pension to another provider with less stringent requirements. People often use the online brokers - eg H-L Best Invest, You Invest etc etc.

iwannbejockmctavish

Thanks for the information. Having never used an IFA is it costly? I know I will probably be advised that spending money on good advice is key, but are there any recommendations as to who might be a sound IFA?

iwannbejockmctavish

@Linton, I set up the pension with Aviva myself back in 2002 after transferring out of a different company scheme so I guess my contract is directly with Aviva? Either way, I'll look at the advice given and take it from there, thanks.

Linton

iwannbejockmctavish wrote: »

Thanks for the information. Having never used an IFA is it costly? I know I will probably be advised that spending money on good advice is key, but are there any recommendations as to who might be a sound IFA?

How big is the pension pot? You may find that the costs seem high as a % for less than say £50K. If its a small amount of money and/or a small amount of your total wealth then it may not be worthwhile using an IFA. If an IFA is worthwhile look on www.unbiased.co.uk. Untick the "only show sponsored results" box.

Do you really need the money now? There is little point in taking it out if you dont as the investment options in a flexible pension are as good as if not better than those in an ISA.

PS if all you want to do is to transfer a simple DC pension rather than discuss your wider pension provisions and requirements then there is no problem with getting a transfer done to the standard online brokers without an IFA. You just set up an account with one and ask them to transfer-in your Aviva pension.

iwannbejockmctavish

The pot is larger than £50K and I have looked at H-L site which seems a better bet. I will explore my options and as I also have a final salary pension that is looking hopeful, plus a small pension with BA, I wanted to take advantage of the low interest rates and pay off a chunk of my mortgage thereby using some of the 25% pot. It's not set in stone but I just wanted to make sure that AVIVA weren't trying to hang on to my money!!!

dunstonh

Having never used an IFA is it costly?

Its an area that is higher risk from an advice point of view. Many feel that the claims companies will focus on pension freedom options with cold calling mis-sale allegations once PPI is over. So, the cost is likely to be higher than perhaps it would have been some years ago.

I feel a bit miffed if I have to pay additional money to gain access to MY money that Aviva won't let me have.

You have a product that does not offer the options you want. If you had a iphone 2 would you expect Apple to give you an Iphone 6 free of charge? If you had a black and white TV, would you expect to be given a widescreen colour one free of charge? Products change. Features change and old pensions are just like products. You need a modern one that allows modern options. Not an old one that does not offer options that did not exist when you took it out.

Some providers are fullfilling a second line of defence by going through the risk and consequences discussion with you if they can do the transaction on your current plan. However, if it needs a new pension, then you either need to transfer it yourself or use an IFA to do it.

I wanted to take advantage of the low interest rates and pay off a chunk of my mortgage thereby using some of the 25% pot.

So, you want to take money out of a tax free investment that is probably returning more than the interest you are paying? In the process reducing your retirement pot, not allowing you a further 25% later on (against that pot) regardless of what the fund grows to. Clearing high interest debt could make sense. Clearing low interest date less so.

iwannbejockmctavish

I get the picture and understand I should update my products or at least review them on a regular basis. I will get some advice and decide my optimal route, I still have a long time (at least 10 years) to gain from any investments so will be looking around. Thanks for the pointers as to what I should be doing.

atush

You can do what you want if you transfer your pension. And you seem to have some other good DB pensions coming up- great.

But I personally would not use my TFLS to pay off the mtg by taking it early. Unless your interest rate is high (unlikely right now). money inside or outside a pension invested should bring you more than the 1.5% approx your mtg is costing you. Unless their is a mjaor market correction of course.

what about taking the 25%, and whacking it in S&S isas? that way you can cash it in to use to to pay off your mtg if you need to, otherwise it will provide you TF income later in retirement?

jamesd

What you were telling Aviva is that you wanted to commence flexi-access drawdown. It' not surprising that an old fashioned firm like Aviva would require advice for that. The remedy is easy enough, just transfer to a place that does allow it. No advice required for that unless the policy has some guarantees attached.