Where are the so called pension bank accounts?

stewart_hart

When the pension changes were announced a few years ago there was much talk about a “pension bank account”; now over a year into those changes it is difficult to find even a mention of such a product. The pension freedoms are great but I would have though many people want quick, regular access to their pension which is invested in a low risk, low cost product, i.e. a “bank account”. Maybe I am missing something but I cannot find this just lots of companies trying to get their hands on my hard earned cash by investing in products which are, at best risky and probably worse than that an outright gamble with money we need to live on for the rest of lives, which have large complex “management” charges. Are there any so called pension bank accounts out there?

dunstonh

Where are the so called pension bank accounts?

No such thing exists or is planned. It was soundbite used for a very short period. There was very little talk about this and it quickly disappeared from the comments. Largely because it would be unworkable and inappropriate.

but I would have though many people want quick, regular access to their pension which is invested in a low risk, low cost product, i.e. a “bank account”.

That product already exists. It is called a savings account. No need to reinvent any new product. Pensions are for retirement. Savings are for rainy day and emergency.

There is also the lifetime ISA.

Maybe I am missing something but I cannot find this just lots of companies trying to get their hands on my hard earned cash by investing in products which are, at best risky and probably worse than that an outright gamble with money we need to live on for the rest of lives, which have large complex “management” charges. Are there any so called pension bank accounts out there?

Yet those products you mention are likely to be far better for you despite you not liking them.

Also, can you use the standard board font in future. The font you chose was very small and difficult to read.

stewart_hart

Thanks for that.
The problem with a normal savings account is that to get my pension savings into it I will be taxed at my marginal rate (less the 25% lump sum allowance) which is not very efficient. I have seen SIPPs to which I can transfer my pension and that allow me to invest in "cash" which appear to be pretty low risk but give me to access my funds as and when I want. However, the charges for this option seem disproportionate to what I need hence my search for something akin to a "pension bank account".

zagfles

stewart_hart wrote: »

Thanks for that.
The problem with a normal savings account is that to get my pension savings into it I will be taxed at my marginal rate (less the 25% lump sum allowance) which is not very efficient. I have seen SIPPs to which I can transfer my pension and that allow me to invest in "cash" which appear to be pretty low risk but give me to access my funds as and when I want. However, the charges for this option seem disproportionate to what I need hence my search for something akin to a "pension bank account".

Have a look at HL, they charge nothing for holding cash as long as you keep the account at least a year IIRC. Though the interest rate is minimal.

dunstonh

The problem with a normal savings account is that to get my pension savings into it I will be taxed at my marginal rate (less the 25% lump sum allowance) which is not very efficient.

The tax incentive is there to encourage you to save for retirement.

I have seen SIPPs to which I can transfer my pension and that allow me to invest in "cash" which appear to be pretty low risk but give me to access my funds as and when I want.

Lots of pensions have cash accounts. Cash may be low risk in terms of investment risk but cash increases the risk in terms of shortfall risk and inflation risk.

However, the charges for this option seem disproportionate to what I need hence my search for something akin to a "pension bank account".

Investing long term in cash would almost certainly result in much lower returns than the alternatives. I can't see how having a product that does what you want would be beneficial. It would be nice to see an improvement in the deposit options for short term money or asset allocation. However, not for what you want to use it for.

Malthusian

Investing your pension in cash will cost you thousands of pounds more than the pension provider's charges so I'm not sure why you are so concerned about the charges. Seems to be a classic case of being penny wise and pound foolish.

zagfles

Depends how old the OP is - it could be a sensible idea if he's close to 55 or older. Why not use a cash SIPP as an alternative to short term savings? Even with zero interest it'd usually be a better deal than interest paying savings accounts, for short term savings (eg a few years).

Just need to understand the rules.

jamesd

stewart_hart wrote: »

When the pension changes were announced a few years ago there was much talk about a “pension bank account”; now over a year into those changes it is difficult to find even a mention of such a product. Are there any so called pension bank accounts out there?

Yes, they are a completely standard feature of most pension products which offer drawdown. It is normal for those accounts to allow the capability to have money uninvested in cash or invested in money market accounts that are similar to savings accounts. The interest rates are typically nil or derisory but for amounts in the several hundred thousand Pounds and up there are SIPP providers which offer a broader range of deposit accounts with outside providers like the major banks and building societies.

While they aren't called current accounts, the uninvested cash can typically be withdrawn within a day or so at fast places, a few days at slower ones.

I'm not aware of any which offer other current account facilities like standing orders, direct debits, cheques, debit cards and such but that's no surprise.

While it's easy to get what you're asking for, what you're asking for is not a wise approach to take for the objective you have given, long term income in retirement, which requires investments to produce the higher levels of income, or, alternatively, state pension deferral also provides very competitive income levels.

Malthusian

zagfles wrote: »

Depends how old the OP is - it could be a sensible idea if he's close to 55 or older.

Only if he is planning on cashing in the entire pot to buy an annuity as soon as he hits 55 / his retirement age or cashing in the entire pot in to do something else (unlikely to be a good idea for tax reasons and other reasons well covered elsewhere).

In the absence of any specific information it seems a reasonable assumption that the money is going to be invested for many years up to and during the course of the OP's retirement (i.e. several decades), in which case leaving it in cash will cost thousands of pounds (on another reasonable assumption that the pension fund is of a size worth talking about). It's a free country and if the OP is happy to pay that price then all power to him, but it seems strange in that case to be so hung up about a few hundred pounds in charges.

EdSwippet

When the government spoke of turning pensions into bank accounts, what they meant was that they intend to turn your pension into their bank account...

xylophone

OP, how old are you?

What is your pension situation at the moment?