Withdraw 25% Tax Free from Pension

IvyJay

Hi Guys

I have a very small private pension (less than £30,000). I want to withdraw 25% but Aviva doesn't allow that so I will have to transfer it to another company and then do the withdrawal.

I was just wondering if anyone has done this and what your experience was. When I do some research what are the main things I should look out for? I'm assuming that the company will charge a fee for this so what is reasonable? Are there any other fees that I might have to pay?

Which company did you have a good experience with?

MK62

Have a look at Hargreaves Lansdown......one of the bigger DIY platforms, they are often thought of on here as being expensive, but for smaller pots they can be very competitive, especially as there are no further charges for drawdown.....their website is fairly slick and easy to use too.

There are a couple of sites where you can compare platform charges.....but they don't include drawdown charges, and many platforms charge explicit fees for this, often making what initially might seem a cheap option, suddenly become relatively expensive, especially for a small pot.

PS......HL will charge you 0.45%pa of any money invested (ie put into funds or shares etc), and nothing on cash. There are no drawdown charges (or at least there were none a few months ago, the last time I looked). Fidelity are similar....but even cheaper....0.35%...(if you can live with their website).
There are lots of others too, with varying charges.....As said though, most will charge drawdown fees on top of account fees.
There are also some flat fee platforms, who charge a flat fee rather than a percentage......these are however usually more expensive for small pots.

IvyJay

MK, thank you for taking the time to reply. Your information has given me a good starting point for my research. I appreciate your help.

sandsy

Presumably, it's the pension you referred to in this earlier post:

https://forums.moneysavingexpert.com/discussion/5810509/can-i-cash-my-pension-plan

Was it a final salary pension administered by Aviva?

tacpot12

What do you want to do with the remaining 75% of the money? If you want to invest it for the long term, you need to understand how you will manage this money and what the costs will be in order that you can select the best SIPP platform for you.

IvyJay

tacpot12, as it's quite small I'm just thinking about a secure investment so that the funds are readily available if I want to drawdown more funds but I am aware that it will be taxable. Thanks for replying.

mum_of_joey

I have only very recently discovered a pension from Aviva (long story, described elsewhere) and when I asked about it, they actually said to me that I could take out 25% tax free. This is less than £30,000 also. Was yours a 'special' type pension, where you aren't allowed to take the cash out?

IvyJay

Thanks for your reply Mum. I phoned Aviva again and asked if I had the option to drawdown 25% tax free and was told that the product I currently have isn't flexible but I have the option to transfer to another product that will allow me to do the drawdown. I wasn't told that when I first called them. The agent I spoke to told me that I would have to transfer to another company in order to do so. For such a small pension it's hardly worth the hassle of going to another company so I'm pleased you mentioned that.

dunstonh

mum_of_joey wrote: »

I have only very recently discovered a pension from Aviva (long story, described elsewhere) and when I asked about it, they actually said to me that I could take out 25% tax free. This is less than £30,000 also. Was yours a 'special' type pension, where you aren't allowed to take the cash out?

Most Aviva pensions allow UFPLS but only their drawdown plans allow drawdown. Most of their SHP and PPPs do not support drawdown.

Your other thread seemed to suggest that you were looking at drawdown and annuity and UFPLS. It was hard to tell as you didnt know what you were doing.

Brynsam

If you referred to drawdown when talking to Aviva, rather than just taking a 25% tax free lump sum, they correctly pointed out that the product you haven doesn't offer drawdown.

jamesd

If you do flexibly take out any taxable money your annual allowance for pension contributions will be cut to 4000 a year. Flexibly means UFPLS or taking taxable money from a drawdown pot.

You can instead use the small pots rule up to three times in your life. This allows taking all of a pot worth up to £10k as a lump sum. Must be all of the money in the pot.