Difficulty accessing my pension pot

Blackavar

I am 64, retired and planned on using pension pots for income.
I wanted to make a partial withdrawal from my pension of close to the tax free limit.
I am advised that the plan is ‘segmented’ and can either get about 6k or £12k which takes me into a tax bracket when added to bank interest.
Not the end of the world but a bit perplexing as I had assumed I could access my fund as I wanted.
As this is an Aegon policy I asked about moving to flexi access drawdown next year as that was my plan. I am advised that this will automatically generate 25% tax free sum which I don’t want. I just want to take small lump sums as and when required.
Apparently this can be achieved via an IFA. I don’t understand why they prefer to take instruction from IFA rather than the actual policy holder. So I need to pay an IFA to make the same phone call as me or fill in a form, as I can, to achieve what I want?
Maybe this is standard practice?

pip895

You could go to another more flexible outfit such as HL - get them to arrange the transfer for you and then have all the flexibility in drawdown you require.

Linton

Some pension companies are set up to deal directly with large numbers of relatively naive customers. Other pension companies have chosen to minimise costs by only working through IFAs who can deal with the complexities of customer specific details and then make clear requests to the pension company Aegon is one of the latter. Also the pension freedoms are new. It is not worth the pension companies rewriting all the possibly ancient software that currently runs their old pension schemes.

If you want flexible access to your pension you need to move it to an appropriate platform such as one of the range of SIPPs often discussed on this forum (HL for example). Assuming your pension has no guarantees, all you need do is to select a platform and ask them to transfer-in your old Aegon pension. You will then be able to do as you wish with your money.

dunstonh

As this is an Aegon policy I asked about moving to flexi access drawdown next year as that was my plan. I am advised that this will automatically generate 25% tax free sum which I don!!!8217;t want. I just want to take small lump sums as and when required.

each partial withdrawal will be made up of 25% TFC and 75% taxable.

Apparently this can be achieved via an IFA. I don!!!8217;t understand why they prefer to take instruction from IFA rather than the actual policy holder.

They retail their product via IFAs and other intermediaries. Think of them as a product manufacturer and the adviser/intermediary as the shop.

Maybe this is standard practice?

It is if you use a provider that is geared to retail via an IFA/intermediary. However, you should look to use a provider that caters for the DIY market.

Dazed_and_confused

I wanted to make a partial withdrawal from my pension of close to the tax free limit.
I am advised that the plan is !!!8216;segmented!!!8217; and can either get about 6k or £12k which takes me into a tax bracket when added to bank interest.

From 06/04 the Personal Allowance is £11,850 and the two 0% tax rates for savings interest are still available so if you took £12,000 of taxable pension income and your only other taxable income was the interest then yes the first £5,850 of interest you received would be taxed but at 0% so you would have to pay £30 tax (on the pension) in total. And if you live in Scotland it would only be £28.50.

Blackavar

I think I have found a short term i.e. this financial year solution. According to Aegon, I can make a single withdrawal from any pot per calander year.
My annual tax free amount is £11.5 k so if i wanted to drawdown up to my max annual allowance i could drawdown £15333. £3833 would be the 25% tax free allowance and £11500 would be taxable but also tax free as I have no other income.
I could repeat this excercise in April using a different pot prior to moving and consolidating all pots maybe into an HL fund.
Does this make sense or am I making a typical novice (but learning fast) error?

Linton

The general approach makes sense to me. You will need to check whether Aegon can support it given the segmentation.

sandsy

Blackavar wrote: »

I think I have found a short term i.e. this financial year solution. According to Aegon, I can make a single withdrawal from any pot per calander year.
My annual tax free amount is £11.5 k so if i wanted to drawdown up to my max annual allowance i could drawdown £15333. £3833 would be the 25% tax free allowance and £11500 would be taxable but also tax free as I have no other income.
I could repeat this excercise in April using a different pot prior to moving and consolidating all pots maybe into an HL fund.
Does this make sense or am I making a typical novice (but learning fast) error?

Yes, this is a method of accessing your pot called uncrystallised funds pension lump sum (UFPLS). It’s different from drawdown in that it effectively lets you spread the 25% tax free over a number of years. It’s particularly effective for people who have no use for a large tax free lump sum but want to maximise income near a tax bracket.

p00hsticks

Blackavar wrote: »

I think I have found a short term i.e. this financial year solution. According to Aegon, I can make a single withdrawal from any pot per calander year.
My annual tax free amount is £11.5 k so if i wanted to drawdown up to my max annual allowance i could drawdown £15333. £3833 would be the 25% tax free allowance and £11500 would be taxable but also tax free as I have no other income.
I could repeat this excercise in April using a different pot prior to moving and consolidating all pots maybe into an HL fund.
Does this make sense or am I making a typical novice (but learning fast) error?

Bear in mind that if Aegon don't have a tax code for you they may initially be obliged to deduct tax from the £11500 and you'd then claim it back from HMRC (there's a simple form to fill in to do so - possibly P55)
https://www.gov.uk/claim-tax-refund/you-get-a-pension

Blackavar

Thanks very much to everyone than contributed to this thread. It has been massively helpful to someone who is trying to learn as much as I can about managing my financial situation in slightly before SP age. It just seems strange that in my lovely RIP dad's day that you just had a decent annuity that would provide enough for whole life but now you need to be much more aware of where and how to invest your hard earned pension money. I have learned a lot from this forum and reading the often suggested money websites. I just wish I could buy real financial advice that would double check my decisions rather than the last 4 IFA's I have seen that just want a percentage of my fund value and will invest as they see fit - I don't want to see an IFA every time I want to make a withdrawal - I want to see my money online and manage it myself. Still searching

kidmugsy

Blackavar wrote: »

I want to see my money online and manage it myself. Still searching

For our modest SIPPs we like Hargreaves Lansdown. For larger sums you can find cheaper suppliers. Monevator is a good source of comparisons of costs.
http://monevator.com/compare-uk-cheapest-online-brokers/