Transfering then drawing a pension at age 55

ProDave

I have a small personal pension from a previous employment currently valued at a few pounds under £30K It was originally taken out with Friends life under a scheme organised by that employer, and has now been absorbed into the Aviva group.

I reach the magic age of 55 in March and I want to unlock, and start "drawing" this pension, mainly to release to me the 25% tax free lump sum. I do NOT want to buy an annuity with it, I want more flexibility.

I have spoken to Aviva and they say drawdown is not an option with them, all they offered me was take the lot and pay the tax, or take an annuity. I asked them for an example and all they sent me was a statement of the funds value. I have decided they are a waste of space, can't carry out a simple instruction, and too inflexible.

So I want to move it to somewhere with more options and easier to deal with. I have confirmed there are no exit fees if I transfer it to another provider.

Hargreaves Lansdown is a company I see recommended often. Their Vantage SIPP seems to tick the boxes. I have been told the procedure is to transfer the fund to them, into the Vantage SIPP then when I reach 55 transfer it to a drawdown package thus releasing the 25% tax free lump.

They tell me I do not have to take anything out of the drawdown immediately. Instead, I expect in a few years time when I retire (at 60) I will have a period where my income will be below the income tax threshold so if I draw it then most of it can be drawn tax free at that stage.

Before I post the transfer forms to HL is there anything in my summary above that is wrong, or any reason not to use HL for this (if so who better do you recommend?)

OldMusicGuy

I have a Vantage SIPP and afaik everything you have stated is correct. Customer service from HL has always been top notch for me, the range of funds is excellent and the website is very good. It's easy to manage funds. The only thing to watch are the charges. They are not the cheapest platform out there with a starting platform fee of .45%, so just make sure you have compared their charging structure with other platforms before committing.

FWIW my wife has a small DC pot with Zurich and we will be transferring that to HL .

Mnd

Your situation is exactly what we have done with my wife's pension fund

1 word of caution..do not take any of the money over and above the tax free money if you intend to make contributions in the future. You will be restricted to 4k a year if you do

ProDave

Thanks

I don't intend to pay any more in, I am at the stage in life of taking out. I have a final sallary pension to look forward to when I reach 60, and should have a lot of equity released from the house soon in he process of downsizing.

OldMusicGuy

Us also, we are taking out now, not putting in (apart from the minimum allowed in a SIPP).

NorthernGeezer_2

How easy is it to set up your HL SIPP and transfer money from your existing fund?
Is it a paper application or electronic?
My current provider subscribes to an electronic transfer system called ORIGO and have told me that if the company you use to 'transfer in' uses it too, you only have to do an electronic application with the new provider.

Mnd

We used hargreaves lansdown for the transfer from reassure...all online easy peasy
To get the 25% tax free (we've only partially doing that) they send a form, like risk awareness to make sure you know what you are doing..send that back and then you get the application form.fill that in and send back (this is where we are now) yesterday they asked for proof of age for my wife, just had to email a photo of her passport and it's proceeding fine
Hl are also very helpful, always get back about messages so give them a ring

ProDave

Interesting.

I found to open the HL vantage SIPP I had to fill in a form with a pen and post it. I even asked them if there was an on line application and they said no. The best they can offer is you can download the form to print and fill in and post but you can't submit it on line.

I understand that once open, you manage it on line.

Can I ask those that have transferred another pension into a HL SIPP, how ling did it take from posting the application form?

The other annoying quirk of the rules, is they say I can't apply to put it in drawdown untill I actually reach 55. Now I fully understand I can't draw any until I am 55, but I would have thought you could do the paperwork in advance so that on my 55th birthday they could send me the 25% tax free lump, but it looks like I can only initiate the paperwork on my 55th birthday so there will be a short delay before I get the lump sum.

Flu_strength_Darren

Just transferred one to HL, it took about 8 working days from signing the consent form, really easy.

AnotherJoe

Another one using HL to get the 25% lump sum.
You end up with two SIPPs one called “SIPP income drawdown” and one called “SIPP.” which is the original and empty and just left for historical purposes so you can look at its history.

Don’t forget to pay your £2880 a year into your remaining SIPP to get your free £720

NorthernGeezer_2

Where has this figure of £2880 come from?
£2880 + £720 = £3700, i thought the annual allowance was £4000?