IFA Pension Advice

rorysdad

Hi all,

I am struggling to find an IFA who will advise on a smallish pension pot I have which I can draw on when 55 in October of this year.

Been told that I can take 25% cash lump sum and then, rather than an annuity I can take a drawdown plan with the company the pension is currently with which would mean I could dip in and out and take lump sums as and when I wanted.

BUT, in order to set-up the drawdown plan I must take advice from an IFA.

I have spoken to two IFA's and neither is interested because the amount of money involved is less than £100,000.

The last one I spoke to said that although I could be capable of dealing the arrangements for the drawdown plan that is not allowed.

He also said that the advice could cost me £1,000!!!

Seems you can't do anything without having IFA advice?

I am seeing Pension Wise tomorrow but that is not counted as independent financial advice.

RD

sandsy

Do you have any guarantees attached to your pension pot regarding the rate of income it will provide in retirement? This may require compulsory advice.

But otherwise, move your pension pot to a different provider that doesn't require advice for drawdown.
Many on here suggest Hargreaves Lansdowne but there are also others that allow flexible access by individuals themselves.

dunstonh

He also said that the advice could cost me £1,000!!!

Thats not bad.

Seems you can't do anything without having IFA advice?

yes you can. There are basically two types of product out there. One that you use when you have an intermediary. One when you want to DIY. You currently have one that deals with intermediaries. If you want to DIY, then you transfer the pension to a DIY provider.

You only need advice if you have safeguarded benefits which equate to a value of over £30,000.

rorysdad

Thanks everyone. I am hoping that things will be clearer when I see the Pension Wise lady tomorrow.

RD

rorysdad

sandsy wrote: »

Do you have any guarantees attached to your pension pot regarding the rate of income it will provide in retirement? This may require compulsory advice.

But otherwise, move your pension pot to a different provider that doesn't require advice for drawdown.
Many on here suggest Hargreaves Lansdowne but there are also others that allow flexible access by individuals themselves.

Just had a look at the Hargreaves web site. Are you saying I could transfer to them and not need an IFA - their site just asks for a form to be filled in and it takes 10 days?

I am really nervous that I will be charged lots of money and that the pot may be depleted with charges etc!

Also, this idea that the money in the pot could go up or down - so I could end up with nothing!!

RD

zagfles

rorysdad wrote: »

Just had a look at the Hargreaves web site. Are you saying I could transfer to them and not need an IFA - their site just asks for a form to be filled in and it takes 10 days?

I am really nervous that I will be charged lots of money and that the pot may be depleted with charges etc!

Also, this idea that the money in the pot could go up or down - so I could end up with nothing!!

RD

Yes you can transfer to them without advice (assuming no guarantees etc as above). But it's a SIPP, self invested, which means you need to choose what to invest in. You could leave it all in cash if you want, there would be no charges normally unless you take it all out within a year or so, but the interest rate would be very low and likely less than inflation.

Obviously if you choose to invest in shares, funds etc, they can go up and down. The pension you have now can probably go up and down. Why do you want to drawdown? If you don't want to take any risk, as it seems, why not go with the annuity?

rorysdad

zagfles wrote: »

Yes you can transfer to them without advice (assuming no guarantees etc as above). But it's a SIPP, self invested, which means you need to choose what to invest in. You could leave it all in cash if you want, there would be no charges normally unless you take it all out within a year or so, but the interest rate would be very low and likely less than inflation.

Obviously if you choose to invest in shares, funds etc, they can go up and down. The pension you have now can probably go up and down. Why do you want to drawdown? If you don't want to take any risk, as it seems, why not go with the annuity?

---

I have a partner who has stage 4 cancer and other than this pension I have no other money and I want my partner and I to have some enjoyment out of the money whilst we are still around. The annuity pays very little out each year. I have met with Pension Wise and spoken with HL today and I reckon I will transfer to HL thus obviating the necessity for an IFA and then I will take the 25% cash tax free. Leave the rest in the pot and take one withdrawal per year of an amount that will keep me under the £11K personal relief - so if my income from work is £8,000 in a year I will take £3K lump sum out of the pension pot etc. which means no tax?

I know nothing about stocks and shares and I want to take as low a risk as possible with the money.

RD

rorysdad

Just a follow-up on my original post. I have spoken with my pension provider today and been told that the advice I was given sometime back is in fact INCORRECT - I can draw the 25% tax free when I am 55 and I DO NOT need advice from an IFA in order to do that!

They told me today that the pot will move to become an income drawdown plan and will continue to make money in the same way as it does currently.

RD

dunstonh

rorysdad wrote: »

Just a follow-up on my original post. I have spoken with my pension provider today and been told that the advice I was given sometime back is in fact INCORRECT - I can draw the 25% tax free when I am 55 and I DO NOT need advice from an IFA in order to do that!

They told me today that the pot will move to become an income drawdown plan and will continue to make money in the same way as it does currently.

RD

And how much are they charging on the drawdown plan?

Over the last 3-6 months, a number of providers have started to offer in-house drawdown plans but require a product transfer. The charges on the new product often include a cost to pay the in-house sales rep. This can make it appear cheaper than an IFA but it can actually be more expensive as the IFA product will not factor in salesforce remuneration/commission but the direct product will. i.e. IFA product could be £1000 for IFA but 0.45% p.a. but the direct product may not cost anything up front but be 1% p.a. That extra 0.55% p.a. covering their costs. So, whilst it initially appears cheaper, it can quickly become more expensive. So, check your costs.