Quick and simple pension questions.....

peterg1965

Can you use a PR funded PPP as part of Drawdown from age 55 once the 25% tax free lump sum element has been taken? The plan is that it would be combined with another PPP for the Drawdown.

What is the maximum allowed to be taken in Drawdown, is it the 'GAD' rate?

Edit.... sorry I posted in the worng section!

EdInvestor

peterg1965 wrote: »

Can you use a PR funded PPP as part of Drawdown from age 55 once the 25% tax free lump sum element has been taken? The plan is that it would be combined with another PPP for the Drawdown.

At the moment, only if you do your drawdown via an insurance company, as PR money can't yet go into a SIPP. The total amount needs to be north of 100k.

What is the maximum allowed to be taken in Drawdown, is it the 'GAD' rate?

Yes, varies with age, fund size and gilt yield and is reviewed every five years compulsorily - more frequent reviews on demand from the investor.

peterg1965

Thanks Ed. Total amount will be more than £100K.

dunstonh

It doesnt need to be more than 100k. Ed has been told a number of times but doesnt listen.

EdInvestor

But that is indeed what you will find if you try.That is what advisors and insurance companies will all tell you.

The insurance companies are Not Interested in doing drawdown for small pensions because they can't make any money out of it and they hide behind FSA guidelines, claiming it is too risky.

dunstonh

But that is indeed what you will find if you try.That is what advisors and insurance companies will all tell you.

It is recommended that you dont do drawdown with small funds due to the risk involved. That is where £100k comes from.

The insurance companies are Not Interested in doing drawdown for small pensions because they can't make any money out of it and they hide behind FSA guidelines, claiming it is too risky.

Drawdown is more profitable than annuity. You are the only one that seems to ignore the risk.

EdInvestor

dunstonh wrote: »

It is recommended that you dont do drawdown with small funds due to the risk involved. That is where £100k comes from.



Drawdown is more profitable than annuity. You are the only one that seems to ignore the risk.

There are plenty of people who have total pensions in drawdown at SIPPs worth more than 100k who would be willing to to use an insurer for a small additional PR drawdown even at higher cost and poor investment choice.

But despite the fact it would be easy to document the existence of the additional 100k+ SIPP drawdown, the insurers still won't do it.They either want the entire pension or they won't offer anything.

I think it's called abuse of monopoly power. :mad:

It's certainly got nothing to do with risk.

dunstonh

There are plenty of people who have total pensions in drawdown at SIPPs worth more than 100k who would be willing to to use an insurer for a small additional PR drawdown even at higher cost and poor investment choice.

What higher cost or poor investment choice? You can get income drawdown from an insurer using a fund supermarket with around 1000 funds cheaper than buying your SIPP from HL.

But despite the fact it would be easy to document the existence of the additional 100k+ SIPP drawdown, the insurers still won't do it.They either want the entire pension or they won't offer anything.

Apart from the insurance companies that do offer them for less than 100k....

Also, most insurance companies dont restrict the amount into PR or OR. Why should they fund a product that may only have 10k in PR whilst you decide to put another 100k+ in ordinary rights elsewhere? They have a right to offer products they wish and if they want 100k minimum, that is their choice. There are options that will do drawdown with as little as £3000 with or without protected rights for those that are not so closed minded to ignore them.

I think it's called abuse of monopoly power. :mad:

It's certainly got nothing to do with risk.

With the FSA saying £100k was the minimum you should really consider doing downdown then it was only to be expected that the insurance company legacy products were built with 100k in mind.