Are pensions capital?

r_i_c

jem16 wrote: »

There's no need for a letter to HL. You can ...

1. Take the 25% from Prudential and transfer the 75% to HL but making sure that HL understand it's the taxable amount that's being transferred.

Thanks - that looks about what I ought to be doing, the AVC is small but the 25% tax free lump sum would be ideal to bridge the gap till next March when my TPS begins. Otherwise, I will be nibbling into my raw savings from the word go, & I'd like to preserve them wherever possible until I know exactly what's what.

Now where would I deposit the remaining 75% (after tax) - must it be in my HL SIPP or could I look for another HL income trust fund? I think I have already met the ceiling for contributions to my HL SIPP for this tax year?

Is it really that simple, I just tell Prudential I want the tax free sum and ask them to transfer the rest (ideally) to HL, after first informing HL of what I an about to do?

Many kind thanks for this help & advice.

jem16

r_i_c wrote: »

Now where would I deposit the remaining 75% (after tax) - must it be in my HL SIPP or could I look for another HL income trust fund? I think I have already met the ceiling for contributions to my HL SIPP for this tax year?

You're still a bit confused.

If you transfer the AVC to HL (or another provider) it will not form part of your annual allowance as there is no new money. If you are transferring there would be no tax due on the 75% as you are not taking it as income yet.

If you cash in the whole pot, you can take 25% tax free and tax would be due on the remaining 75%. How much tax, if any, would depend on the size of the pot and income you are already receiving ( or are going to receive ) this tax year. If you cash in the whole lot you can put the proceeds where you want but it sounds like that would not be your SIPP so therefore the proceeds would now be in a taxable environment.

As to the fund you use, that is a whole different matter. It can be accumulation or income both in and out of a SIPP. Which fund you choose will depend on your strategy for withdrawal as has been said already.

Is it really that simple, I just tell Prudential I want the tax free sum and ask them to transfer the rest (ideally) to HL, after first informing HL of what I an about to do?

To be honest I would discuss all of this with an IFA before making any decision as to what to do with your AVC pot as you do seem quite confused over the whole process.

Why do you not want an annuity? I'm not saying this is right or wrong - I'm just interested in your reasons.

r_i_c

atush wrote: »

Having read your thread, I really feel that DIY might not be the way to go for you, as you seem so confused and hesitant (which is ever understandable). So an IFA might be best.

I will phone them next week - the sooner the better I am now beginning to think. The figures are very fresh in my mind so it won't take long to draw everything together to be looked at.

But your remarks on your fathers investments make me think you are being very emotional about this- and investments should not be married to emotion.

I'm afraid that's unavoidable - I have lost the greater part of my direct family in an extremely short time period, so I am still in shock. Shock probably enabled me to cope with probate - went on 'auto pilot' for a while - but emotion will inevitably begin to colour my actions more and more, as the grieving process progresses. Another good reason to visit an impartial IFA of course.

Dad was pretty far-sighted in many respects but he never foresaw what happened earlier this year, there was no 'plan' he'd left, so things have been chaotic for a while, and I'm waiting to see what dividends the investments pay because they form an important aspect of the future - I imagine the dividends will begin appearing on statements towards the end of September / beginning of October. In other words, I am not in receipt of all the figures yet to begin to look at a wider picture, but things do look positive: I already received a small dividend from the M&G investment I set up a short while ago - so the stocks & shares investment plan certainly seems to be working at the moment:)

Many thanks.

r_i_c

jem16 wrote: »

Why do you not want an annuity? I'm not saying this is right or wrong - I'm just interested in your reasons.

After the lump sum the annuity would be very small, £25 a month or something, enough to settle a direct debit but that's it. So as an annuity it would be useful, but the 75% directed into a (new or one of my established ISA) multi-managed income trust funds might generate more in the way of dividends?

The AVC was confused-sold me early on in my teaching career. I asked the salesperson if it was 'back years' and they said yes. It wasn't. The salesperson then changed companies, disappeared. When the mistake was discovered the Pru was dropped, but the small amount deposited with them remained. This is my AVC currently about £10K.

I'm not saying I was miss-sold the AVC, there did appear to be quite a lot of confusion around at this time, when state pensions were giving way to private companies. My TPS is now care of a private company for example, prior to this it would have been administered by the local authority I believe.

For my HL SIPP however - a larger amount - the choice would still very much be an annuity I should think. I'm not planning on touching the SIPP for a while though.

r_i_c

jem16 wrote: »

DC is Defined Contribution pension schemes. Your Teachers' pension Scheme is a Defined Benefit scheme, your SIPP and AVC are Defined contribution.

A very good idea [the IFA]. Are they a small company or a large national company?

Thank you. They are a small company, very 'local' in fact. Is it a wise move or should I look for a larger, nationwide company please?

jem16

r_i_c wrote: »

After the lump sum the annuity would be very small, £25 a month or something, enough to settle a direct debit but that's it. So as an annuity it would be useful, but the 75% directed into a (new or one of my established ISA) multi-managed income trust funds might generate more in the way of dividends?

It might, it might not. Would need a yield of 4% to do so.

The annuity is guaranteed, the dividends are not. So it depends what you're looking for.

My TPS is now care of a private company for example, prior to this it would have been administered by the local authority I believe.

The TPS has been administered by Capita since 1996. Prior to that it was the Teachers' Pension Agency, not local government. In Scotland it is administered by the Scottish Public Pensions Agency.

jem16

r_i_c wrote: »

Thank you. They are a small company, very 'local' in fact. Is it a wise move or should I look for a larger, nationwide company please?

No a small company would be good. That way you can see the owner/director/partner if you want an ongoing relationship.

That would not be possible with a large company and staff turnover tends to be higher.

r_i_c

jem16 wrote: »

It might, it might not. Would need a yield of 4% to do so.

The annuity is guaranteed, the dividends are not. So it depends what you're looking for.

Then I'd stick with the small annuity.

The TPS has been administered by Capita since 1996. Prior to that it was the Teachers' Pension Agency, not local government. In Scotland it is administered by the Scottish Public Pensions Agency.

Thanks for pointing this out

r_i_c

jem16 wrote: »

No a small company would be good. That way you can see the owner/director/partner if you want an ongoing relationship.

That would not be possible with a large company and staff turnover tends to be higher.

Thanks. Potentially, the small firm looks like a good find then. I have already worked out where they are in the city and how to visit them. All I need to do now is to formally contact them.