Advice re transfer from Drawdown to Flexi

Ellington

I have a SIPP pension ( Drawdown ) with Aegon which I have held for 17 years - I am 74 and wish to cash in the whole of the pension as I have need of the cash - the pension fund is approximately £30000
Aegon say that the only way is for the existing pension to be transferred to a Flexi pension and then the whole amount can be withdrawn
I asked them to do this but Aegon say that first of all I must go through the services of Advice For Aegon
I am acting in person - I do not wish to have any advice
Can they force me to go through Advice For Aegon or can I insist that they accept my direct instructions to transfer the existing pension funds into a Flexi pension from which Aegon can then pay the whole of the Flexi Pension to me

dunstonh

Can they force me to go through Advice For Aegon

Yes. If you wish them to move to their latest product.

Alternatively, you can transfer it to a DIY provider and use them (which will have charges but a different type) or use an IFA (but most wont be keen and will likely price to act as a passive blocker).

Ellington

Thank you for your prompt reply - much appreciated

kidmugsy

If you transfer to another provider's (say) SIPP, you need to know their terms in the event of your then closing the SIPP. The excellent Hargreaves Lansdown will penalise you if you close a SIPP within a year of opening it, though you can avoid the problem by leaving £1k behind. (You'd want to check that I'm up to date on this.)

I believe that Virgin don't exact a penalty: again, check.

Ellington

Thank you iddmugsy - I will make full enquiries before deciding what to

jamesd

Income tax is another thing to consider. That £30k would be £30k more taxable income in the tax year in which you take it. It's very likely that this would cause you to pay 40% income tax on some of the money even if normally you're only paying 20% now. Splitting it over two tax years might be able to save you a lot of tax.

Ellington

Thank you James for raising the point.
For the current year I will be below higher rate tax as the only other income will be my state pension and a small amount of bank interest.