How long does procedure take?

Val_Davies

I wish to take 25% of my Pension pot tax free in accordance with the new rules. I want to do this so I can clear the remainder of my mortgage. Can anyone please advise the exact procedure, from calling my pension provider to request this.
Do they then send you forms, for you to complete and return. And if so, because of the volume of people wanting to do this, is there a long wait due to backlog?
When will they suggest I speak to an IFA?
When forms are completed, signed and returned how long does it take for you to receive the cheque or BACS?

Thanks in advance

mgdavid

depends on the type of pension you have, and also will vary from provider to provider.
You need to phone the pensions company and ask them these questions as without all the fine detail we are only guessing.
- they may have a website that has the information, and enables you to download the form to request the lump sum
- they may want a letter, or in some cases an email
- they may not offer lumpsum at all and just want you to buy an annuity, in which case you will need to transfer the whole pension to a provider that does offer what you want.

peterg1965

Taking 25% of a pension as a tax free lump sum is not part of the new pension rules, this has been available as an option for a very long time. What you can do with the remaining element is what constitutes the new rules.

jamesd

How long it takes and what is involved just depends on the pension provider you're using. It can be a simple online process or lots of form filling.

Taking a pension tax free lump sum to pay off a mortgage is one of life's significant financial mistakes, in general. That's because pension growth rates are normally higher than mortgage rates, so doing it makes a person worse off financially. It's unlikely that just using the saved mortgage payments will ever catch up with the loss made.

Exception here if it started out as a pension mortgage and the higher pension contributions for that were being made over the years.

dunstonh

I wish to take 25% of my Pension pot tax free in accordance with the new rules.

Does your current pension allow you to use a drawdown option?

Mysteek

This is a question I also have Val. I want to draw all my pension out as a cash sum (Its not a great deal of money btw).

In March of this year I rang my pension provider to ask about my intention to do the above. I was told that the Trustees had not decided at that time what, if any, of the new regulations coming out in April, they were going to adopt. I was told that we would all be getting a letter to explain all this by the end of the month.

Nothing arrived and I waited another month before ringing them again and they said they would be send me an 'option' form out within 5 days, which I did receive in the timescale.

This form just basically set out the options (was not very detailed I have to say) and I selected the option I wanted. I now have to wait for another form to arrive, which hopefully will give me actual figures.

As an aside, their website has been down for over 2 months due to changing over providers/administrators so everything has to be done by phone/post.

I would say that it depends on the company as to how quickly this process takes. I've got a feeling that mine is going to take some time

greenglide

Mention of "trustees" and "changing over providers/administrators" would lead me to wonder - is this an occupational scheme run by / for your employer (past or present)?

This will make a difference.

Mysteek

Yes its a company scheme I left at the end of last year greenslide.
What difference?

dunstonh

What difference?

It probably means you cant do what you want to do with that pension.

You want to do income drawdown. An option that is not new and has been available for almost 10 years. It is rare for any occupational pension to offer income drawdown. Typically, you would have to transfer the pension to one that offers income drawdown.

johnbfan

We are going through the process with hubby's pension pot at the moment. Notified the occupation pension administrators in February 2015.

Hubby requested drawdown. The Trustees won't allow drawdown. Has to remove the whole amount to a pension scheme that allows it, at which time the lump sum will come to him.

Won't allow a withdraw every so often with 25% tax free (not taking a lump sum). Will only allow an annuity to be set up and then the lump sum comes out.

Hubby asked if he could take the lump sum and then decide what to do. No. Has to be one process, not lump sum then decide whether to do drawdown with another company or annuity.

Hubby has a CAB pension interview next week to get a better idea of what is available under new rules, then he will reconsider his choice but looks like it may be an annuity, for the simple reason it will cost less (fees to move and set up new fund and costs to run could be, we have been told at least £2,000 then ongoing fees to re-invest every three years if drawdown).

We don't feel that there is any pension freedom. If there is its at a high price. A local radio had a financial adviser on a month ago. he says the pension freedom has not been set up to benefit the pensioner but the government who expect to make over £1 billion in extra tax in the first year because people will get sick of trying to work out what to do and say sod it take the lot, even if it results in a high tax bill that year.

mgdavid

johnbfan wrote: »

..........
We don't feel that there is any pension freedom. If there is its at a high price. ........

the only price is the time it takes to educate oneself on the jargon and whys and wherefores of current pension rules, and then to DIY.