Pension Robbery. You can't Have Your Money

Alexland

ProDave wrote: »

I MUST be missing something here, please explain why option 2 is so bad?

I have nothing against the OP transfering to a SIPP but we don't know enough about the old scheme to understand if it would be advantageous or not. The reason people are being so negative us the suggestion that the SIPP should then be cashed out quickly paying crazy amounts of tax in order to invest in property.

Dansmam

We don't know the OPs circumstances. This might be the right thing for them? We don't know and I think it's a shame folk get the kind of comments above when they're just looking for info and support. Cross face.

ProDave

Alexland wrote: »

I have nothing against the OP transfering to a SIPP but we don't know enough about the old scheme to understand if it would be advantageous or not. The reason people are being so negative us the suggestion that the SIPP should then be cashed out quickly paying crazy amounts of tax in order to invest in property.

But even if he cashed the lot, and paid 40% tax he would get £63K less the IFA's fee.

At £1.3K pension, he would have to live to live to 108 to better that by drawing the pension offered so it still seems like a better plan than the pension.

Surely the figures we have been given are wrong, no pension can be that bad can it?

Dansmam

Oooohhh and I have no objection to any contribution to the public good. Why would I? Why would anyone?

capital0ne

Saxonomus, You've taken advice, you don't need to follow it, this means you can do what you like with your pension as long as you provide evidence to the provider that you have taken advice.

Go for it!

AnotherJoe

ProDave wrote: »

But unless the figures are wrong, there are 2 choices:

1) Take the 1.3K pension, live to say 100 and get £52K out (less tax as it will be taxed as income)

2) pay the IFA'a fee to recommend a transfer to a drawdown SIPP and get a total of £90K out less the IFA fee and less tax on what you draw beyond the 25%.

Option 2 seems a no brainer that any IFA would recommend.

I MUST be missing something here, please explain why option 2 is so bad?

Because you missed Option 3, which is take the money out slowly so as not to pay 40% tax on it, for example by waiting ?4? years until he retires. Since OP is NOT going to be able to recoup that lost money to tax ,plus the loss of higher rate tax relief on four years investment in a couple of "modest properties".

If he could recoup and more those losses through his brilliance with property, he'd already be a multi mega millionaire owning hundreds of houses, not a few in which he "dabbles" and such trifling matters as a couple hundred £k would be neither here nor there.

I wonder if OP is a "executive" for a company like Capita whose executives also showed a stunning lack of financial awareness. Point being, being an "executive" is no certainty you have a clue, and OPs post shows that in spades.

kidmugsy

ProDave wrote: »

But unless the figures are wrong ...

Sir Humphrey speaks: It's very courageous of you, Minister, to imply that there might be something accurate in the original post.

happyandcontented

ProDave wrote: »

There is LOT of negativity here. WHY?

First question, is this a defined contribution or defined benefit pot you are talking about?

I can understand the OP being a bit miffed. He is told the pot is worth £90K and been told it would pay a pension of £1.3K Are those figures really correct? If so at age 60, he would have to live to 129 to just get the pot value out in pension.

It seems the best "goal" here is to get that fund into a flexible drawdown SIPP where you can take the 25% tax free ans then decide when to draw any more, paying tax on what you choose to draw.

Go back to the IFA. Just give him those figures and state you will not live long enough to manage to draw the fund value at the pension rate they are offering, so you instead want it in a SIPP so you can draw it at a higher rate of your choosing. That is all you need. A simple plan to enable you to get the full pot value, nothing more, nothing less. Don't waffle on about property, that is irrelevant to the discussion with the IFA, if you choose to spend it later on property that is your business.

I must be missing something, or the figures are wrong because everyone else thinks this is a mad idea. Please explain why?

I think because he intends to draw the whole amount not just the 25% tax-free.

Thrugelmir

AnotherJoe wrote: »

I wonder if OP is a "executive" for a company like Capita whose executives also showed a stunning lack of financial awareness. Point being, being an "executive" is no certainty you have a clue, and OPs post shows that in spades.

Or akin to Conviviality PLC. Two profit warnings in a week, followed shortly by a third. The first due to an arithmetic error in a spreadsheet which resulted in over forecasting of annual profits. Then an oversight which led to a £30m tax bill not being factored into cashflow requirements. Resulting in a cash call for £125m. Without which the Company may well go under. Executives are human like everyone else. No one is immune to making mistakes.

Dox

Who cares? The correct situation has been set out already in terms of legal possibility and either OP listens and learns, or they don't. Nothing more needed - nobody requires permission to damage their own financial standing.

If it's simply a troll post, which looks possible in the light of the supreme arrogance shown, why waste time posting when all that needs to be said (in case it's a real post) has already been said.